The Solicitors Regulation Authority (SRA) is developing a new risk profiling tool designed to detect early warning signs of law firm instability. This is a direct response to the high-profile collapses of Axiom Ince, SSB Law, and, most recently PM Law. For solicitors across England and Wales, this signals a fundamental shift in how the regulator intends to monitor the profession under the leadership of incoming chief executive Sarah Rapson.
A Change In Direction Under New Leadership
The SRA is moving away from its historically reactive, enforcement-led approach. Speaking to the Law Society Gazette, Rapson acknowledged that waiting until investigation or enforcement becomes necessary means the regulator is already probably too late. They are now committed to identifying indicators of potential harm earlier, before firms reach the point of collapse. Rapson told the publication:
“‘If you wait until you are investigating or enforcing, you are probably too late… The organisation has historically been enforcement-led and investigation-led, and if that is your big focus, that is late and after-the-event. What people want to see is a more proactive regulator looking for indicators of potential harm earlier”.
The SRA oversees approximately 9,000 law firms, and the new tool, referred to internally as a ‘law firm profiler’, will give SRA staff a single-page view of key data for each firm. This will include details on firm size and practice areas, complaints data from the Legal Ombudsman, and financial information drawn from Companies House.
How The New ‘Profiler’ Will Work
The first iteration of the law firm profiler has already been created, and the SRA intends to develop it further by incorporating external data sources. Rapson has confirmed that the long-term goal is to use the tool to bring firms back into compliance, rather than waiting until enforcement action becomes the only option. Crucially, this marks a departure from the previous regulatory philosophy, under which the SRA was generally considered to have no role in the ongoing monitoring of firms’ financial performance. Warning signs of instability are often visible in a firm’s accounts, and preventative action is both possible and necessary.
The SRA board has also approved improvements to decision-making within its triage team, including new guidance, training, and quality assurance measures to ensure the right cases are prioritised for investigation. Staff are additionally being trained in best practice for supporting vulnerable consumers, an area where the SSB and Axiom Ince failures exposed serious gaps.
Background Of Rising Costs
The Compensation Fund held net assets of £41 million at the close of the 2024/25 year, following an expected deficit of £3.3 million, and the PM Law intervention is likely to place further significant pressure on reserves. At the time of writing, the fund had already received 80 applications from PM Law clients seeking emergency payments.
The SRA is also facing legal action from Axiom Ince’s insurers, Travelers, who allege a breach of regulatory duty causing losses of up to £3 million. A separate subrogated claim has been brought by the SRA against Travelers on behalf of clients of Axiom Ince who made claims on the compensation fund.
Are We Seeing A Wider Regulatory Reset?
Rapson has acknowledged that the SRA is currently ‘stretched too thin’, and this has prompted a broader re-evaluation of which cases receive regulatory prominence. One consequence may be a revised approach to prosecuting so-called SLAPP cases (Strategic Lawsuits Against Public Participation), where the SRA has seen three unsuccessful prosecutions. A reconsidered strategy in this area is understood to be in development.
The Legal Services Board (LSB) has also demanded transparency about what the regulator knew in the build-up to the PM Law collapse, with the firm being compared to Axiom Ince, whose collapse was subject to an independent review commissioned by the LSB . Following this independent review, in May last year, the LSB issued formal directions on the SRA, one of which says that the SRA must “put in place measures to enable more effective risk-based scrutiny of firms undergoing sale, merger or acquisition, including where relevant ensuring that the SRA receives advance notice of such activities”.
Final Words
The SRA’s planned law firm profiler represents a significant shift in how the regulator intends to supervise the 9,000 firms it oversees. Driven by the failures at Axiom Ince, SSB Law and PM Law, the new tool will bring together firm size, practice area specialisms, complaints data and Companies House financials into a single view for SRA staff. Under Sarah Rapson’s leadership, the SRA has confirmed it intends to move away from an enforcement-led approach toward earlier identification of risk, with the long-term goal of bringing firms back into compliance before intervention becomes necessary.
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