SRA issues warning for firm mergers and acquisitions
updated on 19 June 2024
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The Solicitors Regulation Authority (SRA) has issued a new warning notice in light of several recent high-profile law firm collapses, emphasising that firms carrying out mergers and acquisitions (M&As) need to prioritise their clients’ interests.
The notice applies to all firms and individuals regulated by the SRA who are considering or currently involved in acquiring other law firms or looking to sell or merge their firm with another regulated entity. The SRA warns that failure to comply with the warning notice and new principles will result in “disciplinary action”.
The SRA’s main concerns are M&As that undermine public trust, threaten the integrity of the solicitors’ profession and fail to prioritise the interests of clients.
This warning comes after a string of notable failures following M&A transactions in recent years. For instance, the Metamorph Group acquired several high street law firms in quick succession before being shut down by the SRA earlier this year. Some clients of the merged firms reported financial losses.
SRA’s chief executive, Paul Philip, says that approximately 100 M&As occur annually and many have valid reasons, so the regulatory body does “not seek to stand in the way of a healthy, competitive legal market”. However, Philip adds: “We have seen some firms making multiple acquisitions in a relatively short period of time which can create challenges in respect of business integration, organisational culture, and maintaining standards of service to increased client numbers.”
