Written by The collapse of Axiom Ince has laid bare the failures of the Solicitors Regulation Authority (SRA) in its duty to protect clients, creditors, and the profession at large. With administration costs now expected to exceed £3 million and the Compensation Fund drained to cover client claims, the SRA has yet to demonstrate the slightest hint of accountability. Instead, its leadership has chosen deflection over responsibility, leaving the profession and the public to shoulder the financial and reputational fallout of this regulatory catastrophe.
A Regulator in Denial
During the SRA’s recent compliance conference, Chair Anna Bradley and Chief Executive Paul Philip faced direct questions about the regulator’s handling of Axiom Ince. When asked if they would apologise for their failures, neither showed any contrition. Bradley’s response—“We have said what we are going to say”—was as dismissive as it was outrageous, encapsulating the regulator’s shocking disregard for accountability. This contemptuous stance was compounded by both Bradley and Philip confirming they had no intention of resigning, despite presiding over one of the most significant regulatory failures in recent memory.
This appalling lack of accountability has fuelled anger within the profession, particularly among the many solicitors now forced to pay higher Compensation Fund levies to rectify the damage. Bradley’s claim that the issues surrounding Axiom Ince are now “history” is a slap in the face to those still grappling with the fallout. For sole practitioners facing additional levies of more than £2,000 and firms bracing for disruptive regulatory proposals, these issues are anything but resolved.
A Litany of Failures
The independent report commissioned by the Legal Services Board (LSB) paints a damning picture of the SRA’s oversight. Despite multiple red flags, the regulator failed to investigate serious concerns about Axiom Ince’s client accounts and financial practices. These missed opportunities allowed the firm to continue trading recklessly, putting client money and the profession’s reputation at risk.
Paul Philip’s attempts to dismiss the report as mere “opinions” rather than findings of fact further illustrate the regulator’s refusal to engage with its failings. While criminal investigations into individuals such as Axiom’s former managing partner, Pragnesh Modhwadia, are ongoing, this does not absolve the SRA of its responsibility. The profession deserves answers about why the regulator failed to act decisively when warning signs first emerged and why Axiom was allowed continued access to its client account despite serious concerns.
Financial Fallout: The Profession Pays the Price
While the SRA evades accountability, the financial burden of Axiom Ince’s collapse has fallen squarely on the profession. The Compensation Fund, designed to protect clients in cases of misconduct, has been used to cover claims stemming from the debacle. This has resulted in increased levies on solicitors and firms, many of whom had no involvement in the collapse.
For smaller firms and sole practitioners, these additional costs are especially punitive. The £100,000 advanced by the SRA to administrators, ostensibly to safeguard client interests, remains a recoverable loan. Meanwhile, administrators’ fees alone have exceeded £819,000, with total administration costs projected to surpass £3 million. Employees of Axiom Ince, classified as preferential creditors, are unlikely to receive full payment, and unsecured creditors, including HM Revenue & Customs, face minimal recoveries.
The human cost is equally devastating. Former employees, clients, and other stakeholders continue to suffer the consequences of the SRA’s failure to act when it mattered most. This is not merely a financial crisis; it is a failure of regulation on a profound level.
“We Have Said What We Are Going to Say”: A Disgraceful Deflection
Bradley’s infamous response—“We have said what we are going to say”—is emblematic of the SRA’s contempt for the profession it claims to regulate. By refusing to apologise or engage meaningfully with its critics, the regulator has shown that it prioritises its own reputation over the interests of solicitors and clients. This is not the behaviour of an organisation committed to upholding trust and transparency.
Philip’s comment that “if you want someone to blame, you have to blame the people subject to criminal investigations” is equally troubling. While individual misconduct played a role in Axiom’s collapse, this does not absolve the SRA of its responsibility for regulatory oversight. The profession is right to demand answers about why concerns were ignored and why opportunities to intervene were squandered.
Confidential Agreements and Disruptive Proposals
The administrators’ progress report reveals a confidential agreement with the SRA, allowing asset realisations to cover some costs. While this arrangement may expedite the administration process, it raises questions about the regulator’s transparency and willingness to assume financial responsibility. Adding insult to injury, the SRA is now floating proposals, such as the potential abolition of the client account, that could destabilise firms across the profession. For the regulator to propose such sweeping changes while failing to acknowledge its own failings is both reckless and hypocritical.
A Call for Resignations and Reform
The SRA’s handling of Axiom Ince has been nothing short of disgraceful. Its leadership has failed to protect clients, squandered trust within the profession, and refused to take responsibility for its regulatory failures. Bradley and Philip’s refusal to apologise or step down is a betrayal of the profession they are supposed to serve. Their continued leadership undermines confidence in the SRA’s ability to regulate effectively.
The time has come for meaningful accountability. Bradley and Philip must resign to pave the way for new leadership committed to transparency, responsibility, and reform. The creation of a dedicated accountability fund, financed through practising fees, could ensure the regulator bears a proportionate share of the financial fallout from its oversight lapses. Legislative changes may also be necessary to enforce higher standards of accountability and transparency within the SRA.
Conclusion
The collapse of Axiom Ince is not just a failure of one law firm but a damning indictment of the SRA’s inability to regulate effectively. By refusing to apologise, take responsibility, or demonstrate meaningful reform, the regulator has further eroded trust in its ability to protect clients and the profession. Its leadership’s contemptuous dismissal of valid concerns reveals an organisation out of touch with the realities faced by those it is meant to regulate.
For the SRA to regain credibility, it must start by acknowledging its failures and implementing meaningful changes. The resignation of its current leadership would be a necessary first step towards restoring trust and ensuring that the regulator serves as a safeguard rather than a liability. Anything less will leave the profession and the public questioning whether the SRA is fit for purpose.
References
Hyde, J. (2024) ‘SRA wants profession to move on from Axiom Ince but won’t apologise’, Law Gazette. Available at: https://www.lawgazette.co.uk/commentary-and-opinion/sra-wants-profession-to-move-on-from-axiom-ince-but-wont-apologise/5121442.article [Accessed 25 November 2024].
Hyde, J. (2024) ‘Axiom Ince administration set to cost £3m and last four years’, Law Gazette. Available at: https://www.lawgazette.co.uk/news/axiom-administration-set-to-cost-3m-and-last-four-years/5121616.article [Accessed 25 November 2024].
Legal Services Board (2024) Independent Report on Axiom Ince. Available at: https://www.lawgazette.co.uk/news-focus/in-depth-axiom-ince-report-makes-grim-reading-for-defiant-sra/5121413.article [Accessed 25 November 2024].
Solicitors Regulation Authority (2024) Public Statements on Axiom Ince Collapse. Available at: https://www.sra.org.uk/sra/news/press/2023-press-releases/axiom-ince-intervention-statement/ [Accessed 25 November 2024].
Disclaimer
This article is intended for informational purposes only and reflects the author’s opinions based on publicly available information. It does not constitute legal advice. Readers should seek independent legal counsel for specific guidance regarding regulatory matters and compliance. The author disclaims liability for actions taken or not taken based on the content of this article.