A regulatory settlement agreement(RSA) is used between the Solicitors Regulation Authority (SRA) and a regulated firm of solicitors or an individual solicitor to settle a disciplinary proceedings investigation in full. Offering to conclude a disciplinary matter by entering an RSA is a regulatory decision made by the SRA, the terms of which are then accepted by the firm or individual solicitor.
The SRA may be willing to enter into an RSA when the solicitor or firm is prepared to accept that they have breached the solicitors code of conduct or SRA principles and, where appropriate, are prepared to put the matter right. An RSA is not a “commercial” settlement but a proportionate regulatory decision which allows the SRA to protect both consumers and the public interest by reaching appropriate conclusions to an investigation swiftly and regarding incurring proportionate costs.
The RSA may record, for example, that the firm or individual being investigated by the SRA has agreed to:
• a sanction, such as a fine or a rebuke;
• practicing certificate restrictions;
• implementing changes to their firm’s management or supervision controls so that the breach of the SRA principles being investigated does not occur again;
• issuing an apology to those affected by the breach of the principles; or
• returning money to clients who have been adversely affected by the conduct of the solicitors.
Matters suitable for an RSA
The matters that might be dealt with by an RSA are issues relating to misconduct. The SRA will generally only consider an RSA once it has finished its investigation of facts and received an explanation of the issues raised. Discussions relating to an RSA will be without prejudice and run in parallel with formal disciplinary proceedings. The SRA is under no obligation to consider an RSA and at times it may be difficult to persuade the SRA to entertain negotiations.
The SRA is unlikely to consider an RSA if it believes the solicitor will not comply with its terms, for example in cases of dishonesty or lack of integrity, if there is a history of persistent non-compliance with rules and regulations, if the matter is particularly serious such as in fraud cases or the outcome of the disciplinary proceedings requires a substantial fine which can only be ordered by the Solicitors Disciplinary Tribunal (SDT).
An RSA is a written agreement containing the following general terms:
• relevant facts
• identification of admitted failings
• mitigating factors for breaches
• confirmation of the action the person has taken or has committed to take
• specification of the sanction imposed and the factors considered in deciding on the outcome
• provisions on costs
After completion of a regulatory settlement agreement
After an RSA has been entered into, the SRA will supervise the firm or solicitor to ensure that the terms of the agreement are being complied with. The firm or solicitor must cooperate with the SRA in this regard. Failure to cooperate or breach of the agreement terms will result in further regulatory action being brought by the SRA.
The SRA may publish RSAs in the same way as any other disciplinary outcome.
Practical points to consider
When deciding whether to consider an RSA, thought should be given to the following practical points:
• the SRA’s disciplinary powers are generally limited to fines, rebukes, warnings and referrals to the SDT. An RSA presents greater flexibility as the parties can agree sanctions usually outside the SRA’s scope, for example payment of compensation, introduction of management systems, or not acting for a certain type of client (for example mortgage lenders) for a specified period of time;
• if you want to consider an RSA take the first step and, approach the SRA; do not wait for the SRA to make the suggestion as it may not be forthcoming;
• an RSA avoids the uncertainty of disciplinary proceedings in the SDT;
• an RSA can bring a swift conclusion to disciplinary proceedings;
• consider the pros and cons of making mitigating statements. Mitigating factors are often set out in full in the RSA which may help protect your reputation. However, consideration should be given to the likely publication of the RSA and it may be a case of the less said the better;
• linked to this is the fact that there is no statutory right to publish warnings and findings as opposed to fines and rebukes which must be made public. If on an assessment of your case, it is likely to result in a warning or finding, you may want to take that risk, avoid an RSA and avoid the associated adverse publicity;
• if your case has been referred to the SDT, costs will increase significantly and accordingly negotiation of any potential agreement should be conducted swiftly. If proceedings have already been issued, the SDT may refuse an application to withdraw the proceedings in favour of entering an RSA.
Jonathan Goodwin can help and advise you in confidence in relation to all aspects of an RSA.
Jonathan Goodwin has over 20 years’ experience in regulatory and professional disciplinary law relating to solicitors. I am a solicitor advocate and regarded as an expert in this area of law. Please call me on 0151 909 2380 for a confidential no obligation discussion.
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