What is on the SRA’s radar this year?

At the Law Society’s Risk and Compliance Annual Conference on March 12, the Solicitors Regulation Authority (SRA) discussed its key regulatory priorities amidst a rapidly evolving legal landscape. The conference provided a platform to discuss pressing compliance challenges and the SRA’s strategic focus areas.

The SRA underscored its commitment to upholding high standards of professional behavior. This involves setting and enforcing expectations that are fair and effective, ensuring consumer protection and fostering public confidence in legal services.

The SRA and emerging risks

In response to the dynamic nature of the legal sector, the SRA highlighted several emerging risks:

Economic crime: With the increasing complexity of financial transactions, the SRA is focusing on preventing and detecting economic crimes.
Technology: The rise of AI and other technologies presents both opportunities and challenges. The SRA is keen on understanding and regulating the implications of AI in legal practices to ensure ethical adoption.
Cybersecurity threats: Recognising cybercrime as a significant concern, the SRA is working to bolster firms’ defenses against sophisticated cyber threats, safeguarding both client information and the integrity of legal services.

Handling client money and high-volume consumer claims

The SRA reaffirmed its stance on the proper handling of client money. This includes ensuring client funds are safeguarded and transparently managed to prevent misuse or financial mismanagement. A consultation provides some indication the model of how solicitor’s handle client money could see some changes this year.

Additionally, the rise of high-volume consumer claims has prompted the SRA to scrutinise firms handling such cases. Ensuring that client funds are not inappropriately retained or mismanaged remains a key focus, with regulatory action to be taken where necessary to uphold consumer protection.

AI and technology in the legal sector

The legal sector continues to be transformed by technology and the SRA’s focus is on how opportunities can be enhanced while still maintaining the right protections. The SRA indicated that it would be producing resources and guidance on this topic and would work with developers to let them know what the legal sector needs to improve processes.

There’s no doubt that the increasing adoption of AI in legal services has raised both compliance and ethical considerations. The SRA acknowledged the potential of AI to improve efficiency, reduce costs and enhance processes. But it was noted that an AI-driven decision-making should be accompanied by adequate human oversight.

A compliance culture

The SRA emphasised the importance of cultivating a culture of compliance within law firms. This involves:

ongoing learning to stay abreast of legal, ethical and regulatory obligations
modeling and promoting compliance by senior leadership, setting the tone for ethical practices

SRA’s 2025 focus

The key areas for SRA’s regulatory focus this year were laid out by Aileen Armstrong, SRA’s executive director for strategy innovation and external affairs:

Consultations

A review of its enforcement framework, with a focus on greater financial penalties as a stronger deterrent
Align its regulatory strategy with the objectives set by the Legal Services Board (LSB)
Reviews of consumer protections, indemnity insurance and compensation mechanisms
Improve anti-money laundering (AML) regulations, ensuring effective supervision and compliance

Guidance

Implement targeted training programs to ensure legal professionals remain compliant
Clarity on identifying and handling sham litigation cases
Guidance on the scope and limitations of legal professional privilege for in-house lawyers
Implementing preventative measures to avoid facilitating fraud

Sanctions

Firms will be required to conduct comprehensive risk assessments
Compliance with trade sanctions regulations will be enforced, ensuring that law firms do not inadvertently facilitate illegal transactions

As the legal landscape continues to evolve, the SRA’s strategic priorities aim to ensure that legal practitioners are equipped to navigate the challenges that lay ahead.

Want to learn more about implementing AML programmes in your law firm? Download our free guide.

How are you managing your GDPR compliance requirements?

GDPR added a significant compliance burden on DPOs and data processors. Data breaches must be reported to the authorities within 72 hours, each new data processing activity needs to be documented and Data Protection Impact Assessments (DPIA) must be carried out for processing that is likely to result in a high risk to individuals. Penalties for breaching GDPR can reach into the tens of millions of Euros.

“In a world older and more complete than ours they move finished and complete, gifted with extensions of the senses we have lost or never attained, living by voices we shall never hear.”