The regulator has begun an investigation into solicitors involved in gagging Sir Philip Green's staff in a move which could result in sanctions including being struck off, the Telegraph can reveal.
The Solicitors Regulation Authority (SRA) is understood to be looking into the grievance procedure and subsequent non-disclosure agreements (NDAs) signed by at least one of Sir Philip’s previous employees who accused the billionaire of sexual harassment.
The Topshop owner paid huge sums, in one case in excess of £1million, to staff members to keep quiet about their allegations.
The news of the regulator’s involvement comes as the Telegraph revealed how crucial witness testimonies were left out of a report into sexual harassment.
The SRA is understood to have begun looking into the use of NDAs at Arcadia after receiving a complaint from Jess Phillips, the Labour MP who sits on the women and equalities committee.
In a response the SRA said in a letter to Ms Phillips: “We are looking into this matter and whether our principles of professional behaviour and guidance have been followed.”
They noted that concerns were raised about Sir Philip’s in-house solicitors and asked for “information about particular solicitors working at [Arcadia] Group, and involved in NDAs”.
It is understood that information regarding the internal investigation and the NDAs has now been provided to the regulator.
Last week, the Telegraph revealed that two male executives told a lawyer working for Arcadia that they had witnessed Sir Philip as he “slapped” a woman’s bottom on several occasions.
However, their comments did not appear into a final report which is understood to have concluded that the business had not sexually harassment a female executive.
Deborah Cooper, a lawyer working for Arcadia, carried out the investigation.
One witness, a senior finance executive, is understood to have said that although he could not remember a specific meeting where an incident allegedly took place, he had witnessed Sir Philip "slap" the woman's bottom and threaten to "smack" her on other occasions.
However, it is understood that the final report only stated that the executive could not "recall" a specific meeting in question.
A second witness also appeared to back up the woman's claims when he told the lawyer that he had seen Sir Philip "slap" the woman's bottom on the way to a meeting, which made her "distressed" it was later claimed he had retracted his evidence.
Shortly after the initial report was delivered, the female executive is believed to have appealed, amid allegations of a "cover up".
Ms Cooper later alleged that she was bullied by the businessman during the course of the probe, a court was told during a hearing about the case.
The SRA put out a warning to legal professionals about the misuse of NDAs to cover up potentially criminal behaviour in March after Zelda Perkins, a former assistant to Harvery Weinstein broke her agreement to reveal the details within it.
Late last year in advice to lawyers regarding balancing duties in litigation the SRA added: "NDAs have a legitimate role to play, but it has become clear that some might include clauses that seek to prevent lawful disclosure of issues such as discrimination, harassment or even sexual abuse."
Ms Philips said: “Lawyers are there as officers of the court and they have got a responsibility to hold up the law and were they work in their clients’ interests above the letter of the law they must be held responsible. “Sexual harassment is a clear breach of the law.”
The SRA did not respond to a request to comment. They have previously said that they do not comment on ongoing investigations.
If misconduct is found to have taken place the SRA can issue written warnings, fines or even suspend or strike off solicitors and issue unlimited fines. Neither Arcadia nor Ms Cooper responded to a request for comment
DAC Beachcroft, the firm called in to advise Arcadia on the settlement agreements, have said that they cannot comment on client matters.