Axiom Ince Failures by SRA
The Solicitors Regulation Authority (SRA) faces unprecedented scrutiny as enforcement action looms following a damning review of its handling of the Axiom Ince collapse in 2023, which has found a series of critical failures in the regulator’s approach to the high-profile law firm’s demise.
The report by Northern Ireland law firm Carson McDowell said that the SRA did not “act adequately, effectively and efficiently” and that the SRA failed to “take all the steps it could or should have taken” following the SRA’s discovery in July 2023 that around $64m had been taken from Axiom Ince’s clients account.
Seven people were arrested by the SFO following the collapse of the firm, according to a Reuters report.
In a statement the Legal Services Board (LSB) said a “change in its procedures to mitigate the possibility of a similar situation arising again” was necessary.
The review highlighted several areas where the SRA fell short:
- Inadequate, ineffective, and inefficient action over the Axiom failure;
- Failure to take necessary steps
- Procedural deficiencies that require significant reform
The shortcomings underscore the need for substantial changes in the SRA’s operations to prevent similar situations in the future, the report said.
Axiom Ince Collapse
The closure of Axiom Ince in October 2023, resulting from an SRA intervention, had far-reaching consequences:
- Approximately 1,400 employees lost their jobs
- Over £60 million in client funds were discovered missing
- The legal profession faces a staggering 270% increase in Compensation Fund contributions to cover the losses[5]
This unprecedented enforcement action against the SRA under the Legal Services Act signals a critical juncture for legal regulation in the UK.
The fallout from the Axiom Ince case has exposed significant vulnerabilities in the oversight of law firms, particularly those engaging in rapid expansion through mergers and acquisitions.
Commenting on the report and enforcement action, Alan Kershaw, chair of the LSB, said:
“The Axiom Ince case has caused significant consumer detriment. Our decision to commission a thorough independent review reflected the importance of understanding the SRA’s actions leading up to its intervention in the firm. It was essential to uncover what went wrong to reduce the risk of it happening again.”
