PLAG is a growing group of lawyers drawn from across the legal profession, which has recently formed to promote the rule of law in all branches and the vital role of lawyers within it. It seeks to promote the idea of practising law in a modern manner by improving access to the professionalism of its members, not crude consumerism.
Axiom Ince (Axiom)
The unfortunate collapse of Axiom is well documented. The SRA has published a deeply controversial proposal to issue an extraordinary levy to cover a massive hole in the balance of funds held in the Compensation Fund (CF) because of the Axiom collapse, Metamorph and others.
The Fund was brought into existence by the Solicitors Act 1941. and contributions were £5 per annum. The 1942 rules for the Fund continued until 1966. The 1966 rules were almost identical to the recent rules of the Fund. The Fund has been described as a ‘discretionary fund of last resort’ there being no legal entitlement to a grant from it.
The circumstances surrounding the Axiom crash and subsequent events raise several concerns, which are of the utmost concern for all lawyers:
what were the reasons for the actions of the SRA at a time when Axiom had itself grown off the back of its purchases of several financially distressed law firms such as Plexus;
were the SRA’s actions prudent and did they meet its regulatory objectives;
would the actions of the SRA be deemed to be sufficiently perverse at law to justify judicial review;
when the SRA seeks to micro-manage law firms, how can it now argue, that it did everything it could have done to avert the Axiom disaster;
why were there unexplained delays by the SRA during its regulatory oversight of Axiom during the critical period leading up to the disaster;
what urgent technical strategies are being developed now, such as ‘tracing’ to preserve the position of the legal profession and/or to mitigate losses to it;
has a working party of experts been appointed to consider the criminal law, regulatory and insolvency issues arising from the Axiom disaster;
have the actions of the Axiom directors been referred to the DPP; and
how could the SRA even consider at one time winding down the CF, but now seek to ‘radically’ increase contributions by the profession to the CF, potentially creating a ruinous precedent, especially for small to medium law firms and consultants, by changing the status of the CF to a ‘non-discretionary fund of last resort’ providing a fund to cover the collapses of even the largest/listed law firms.
As a result of the Axiom disaster, PLAG considers that all Law Society members are now entitled to ask a fundamental question: are our regulatory arrangements still fit for purpose?