Dentons v SRA
Dentonsv SRA: AML Breaches, Misconduct, and the True Cost of Regulatory Appeals
The Court of Appeal’s decision in Dentons UK and Middle East LLP v Solicitors Regulation Authority Ltd [2026] EWCACiv 6551 will prompt firms to look carefully at two questions they may previously have treated as settled. These are: when does an AML failure become professional misconduct, and what happens to costs when a regulator takes a disciplinary dispute into the appellate courts?
The facts and procedural history
The proceedings had their origins in Dentons’ work for a politically exposed person between 2013 and 2017. The SRA alleged that the firm had failed to establish the client’s source of wealth under the Money Laundering Regulations 2007. The Solicitors Disciplinary Tribunal found that a breach had occurred, but concluded it was not culpable enough to amount to a breach of the regulations and imposed no sanction. The SRA appealed successfully to the High Court, which quashed the tribunal’s decision. Dentons then took the matter to the Court of Appeal, which partially reversed the High Court.
The line between breach and misconduct
The Court accepted that a breach had taken place. What it rejected was the decision that such breach automatically translated into professional misconduct as the High Court had found. The judgment insists that seriousness remains an essential element, and tribunals must evaluate the gravity of the failure, the firm’s culpability, and the impact before concluding that professional misconduct had occurred.
For practitioners, the implication is where a firm has documented its risk assessment, escalation procedures, and the reasoning behind its decisions at onboarding, it gives a tribunal material to weigh. A record of non-compliance without evidence of the process leaves firms more exposed when a regulator seeks to review their conduct and label it as misconduct or otherwise.
What the costs order means for regulators
The SRA had argued that the Baxendale-Walker authority that shields regulators from adverse costs orders should have effect in the appellate proceedings. The Court of Appeal disagreed. It stated that once proceedings leave the tribunal and enter the Administrative Court or highercourts, the ordinary CPR 44.2 regime applies. Costs follow the event and are subject to the court’s discretion.
The order made against the SRA was 65% of Dentons’ costs, said to exceed £500,000. That figure was reportedly more than 4.5times the SRA’s own expenses. The Court’s decision to award less than full recovery also reflects a concern about proportionality where there is a wide disparity in parties’ costs.
The case will have notable consequences for how regulators approach appeals going forward. Now the Baxendale-Walker protection ends at the tribunal door, the SRA faces the same costs discipline as any other litigant. Therefore, if the regulator’s objective could be achieved another way or the question is genuinely uncertain, the costs are now part of that calculation.
For firms on the other side the decisions also instructive, in that winning the case will not guarantee full cost recovery, and the gap between a commercial firm and a regulator spends can self influence the proportion awarded. As a result, any firm considering an appeal into the higher courts needs to build an understanding into its strategy, and ensure that it maintains complete and transparent records of client onboarding processes to minimise the risk of potential claims of professional misconduct.
To read the full text of the judgment,please click here.
Footnotes
[1] The case will have notable consequences for how regulators approach appeals going forward. Now the Baxendale-Walker protection ends at the tribunal door, the SRA faces the same costs discipline as any other litigant.
<https://caselaw.nationalarchives.gov.uk/ewca/civ/2026/655#download-options>.
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FAQ
Some questions we get, which may help you in this moment
When you receive a Letter of Claim or a formal Claim Form, you are at a critical crossroads in a legal dispute. While they may look similar, they represent two different stages of litigation, and mishandling either can lead to unfavourable financial and legal consequences.
A Letter of Claim, also known as a Letter Before Action, is a formal warning that someone intends to start court proceedings against you. Under the Civil Procedure Rules, parties are expected to exchange enough information to understand each other’s positions and attempt to settle without involving the court.
Ignoring this letter is a high-risk strategy. Even if you believe the claim is meritless, the court can penalise you later by ordering you to pay the other side’s legal costs, because you failed to follow the required Pre-Action Protocols. This stage is actually a vital window of opportunity. It allows for strategic negotiations or Alternative Dispute Resolution (ADR), which can resolve the matter privately and more cost-effectively than litigation.
If you receive a Claim Form, on the other hand, the matter has officially entered the court system. This is more urgent than a preliminary letter. From the moment you are served (which is deemed to occur 2 business days after the documents were posted to your last known address) the countdown begins.
If you do not engage with a claim, the other side can request a default judgment 15 days after you are deemed to have received the Claim Form. Once this judgment is entered, it is a matter of public record that can significantly damage your credit rating for 6 years and allows the other side to take enforcement measures.
There are procedural steps available to protect you in such situations. For instance, filing an acknowledgement of service is a vital holding position and allows you more time to prepare a proper defence. Engaging with a solicitor at this moment is essential to identify potential flaws in the claim that can allow you to have the claim stopped or struck out.
A court judgment (often called a CCJ) is a serious matter that allows a creditor to take aggressive enforcement action, such as sending bailiffs to seize goods or freezing your bank accounts. However, there are solutions to put your mind at ease. The first priority is to determine if the judgment was entered correctly. If you were unaware of the original claim, perhaps due to documents being sent to a previous address, there are procedural mechanisms to apply to have the judgment set aside. This process effectively cancels the judgment and reopens the case, but the court will only grant this if you act quickly after discovering the order.
Immediate legal guidance is essential to ensure your application meets the court's strict requirements.
A judgment is a major indicator of financial risk that stays on your credit report for 6 years. During this time, it can prevent you from obtaining a mortgage, securing a loan, or even getting a mobile phone contract. Many private landlords and letting agents also check these records, meaning a judgment could even stop you from renting a home.
To minimise this damage, paying the debt in full more than 30 days after the order will mark the judgment as satisfied. While the entry remains for the full 6 years, a satisfied status shows future lenders that you have fulfilled your obligations.
Contractual breaches can range from minor failures to fundamental violations that render the entire agreement void. Before initiating a formal claim, the court expects parties to follow certain Pre-Action Protocols, which involve clear correspondence detailing the breach and the resulting loss. This structured approach often provides a solution to the dispute through negotiation or mediation, and helps parties avoid the costs of litigation.
If a claim becomes necessary, the objective is to secure damages that place you in the financial position you would have been had the contract been fulfilled. Depending on the nature of the breach, other remedies may be available, such as specific performance, where the court compels the other party to complete their original obligations, or an injunction to prevent further harm.
Recovering a debt requires a careful strategy to ensure the process remains cost-effective. We begin with formal demands that comply with court standards for debt claims. If the debtor remains unresponsive, obtaining a court judgment is the next step, which then unlocks a variety of enforcement tools to turn that judgment into actual payment.
Depending on the debtor’s assets, the legal solution may involve a Charging Order to secure the debt against their property, an Attachment of Earnings to deduct payments directly from their salary, or a Third-Party Debt Order to recover funds from their bank account. In cases where a debtor is a company, insolvency-based procedures like a Winding-Up Petition can also be considered as a powerful means of prompting payment.
A limitation period is a statutory deadline imposed by the Limitation Act 1980, typically giving you 6 years from the date of a breach or damage to issue a claim. Once this period expires, the claim is time-barred, and the other side will have an absolute defence to block your case, regardless of its merits.
Because these deadlines are non-negotiable, waiting too long can mean losing your right to justice entirely. We recommend a prompt review of any potential claim to ensure you meet all statutory time limits and protect your ability to recover your losses.
