Watchdogs need teeth

Despite recent research showing that lawyers work longer hours than accountants, solicitors have reason to be looking over their shoulders in 2016. A recent report published by RBS found that although mid-tier law firms have enjoyed a change of fortunes following the recession, enterprising accountants are primed to spoil the party and eat into their market share. Following the Legal Services Act, some say accountants’ cheaper cost centres and use of technology make them better placed to provide clients with legal services.

However, whether accountants will be competing with law firms on a level playing field remains to be seen. At present, The Solicitors Regulation Authority (SRA) can charge a maximum fine of £2,000 to law firms or solicitors who do wrong. While this rate is rightly accommodating of small high street firms and sole practitioners, it is certainly on the lenient side towards some of the UK’s bigger law firms. The Magic Circle firms are enormous multinational organisations generating well over £1bn in revenue each during the last financial year. 

Given the size of these organisations, and the serious misconduct they are theoretically capable of, it surely makes sense that the regulator should be able to levy much greater fines. Two thousand pounds is nowhere near the levels that organisations in the financial services sector routinely face – with Barclays receiving a record £284 million fine.

Accountants trying to break into the industry face much more stringent penalties however, with SRA regulations allowing it to impose a fine of up to £250 million on Alterative Business Structures (ABSs). This inequality must be reviewed to ensure a level playing field for crucial competition in the sector.