Outcomes focused regulation (OFR) has been hailed by the Solicitors Regulation Authority as regulation in the public interest and for the benefit of clients. In introducing OFR, the SRA has moved away from what it describes as a “detailed and prescriptive rulebook” to one that is “targeted, risk-based” and allows “greater flexibility for firms in how they achieve outcomes (standards of service) for clients.”

But is this in fact the case or have the SRA simply replaced a clear and explained system with one that is full of uncertainties and ambiguities?
The following item looks at the implications of OFR, what it will require and how the SRA will need to adapt its processes to implement it.

What does outcomes-focused regulation involve?

The view which had developed within the SRA (if not within the profession) was that the Solicitors’ Code of Conduct (the Code) was overly prescriptive, too detailed and often misunderstood both by those whom it was intended to regulate and those who were intended to benefit from that regulation. Despite being substantially shorter than the Guide to Professional Conduct which it replaced, and despite being more logical in the way in which it was set out, nevertheless it was felt by the SRA and the Legal Services Board that the Code was still too detailed in many areas and not fit for regulating the legal profession in the brave new world of alternative business structures.

What was needed, it was decided, was a more flexible approach to regulation – one in which firms could determine themselves what was needed to achieve client satisfaction – although within an overall framework of checks and balances.

Enter outcomes focused regulation.

The key aims of OFR are to:

• replace overly detailed, prescriptive regulation with a system whereby firms are provided with principles and outcomes that will inform them as to what they, as a firm, need to implement to ensure that a good standard of service is provided to clients, and
• allow the SRA to concentrate on those firms who cannot, or will not, put things right themselves.

In their own words, the SRA perceive that their approach will include:

• working with firms to focus on acting in a principled manner to deliver good standards of service to clients, rather than compliance with detailed rules;
• a sophisticated desk-based research and analysis capacity to assess potential risks to the regulatory outcomes and support the delivery of targeted proactive regulatory action;
• an approach to authorisation that is risk and evidence based, making sure that legal services are delivered by principled and competent firms and individuals;
• an approach to supervision which encourages firms and individuals to tackle the risks themselves, allowing the SRA to concentrate on those who can’t, or won’t, put things right;
• an approach to enforcement which creates a credible deterrent and is effective, fair and proportionate; and
• concentrating resources on dealing with those firms who pose a serious risk to regulatory objectives, such as protecting and promoting the interests of consumers.

Thus, the move to OFR means that:

• there is a greater emphasis on principles and high level rules,
• there are fewer rules,
• there is the establishment of outcomes that firms must achieve, rather than prescriptive rules which they must not breach,
• firms who can deliver the required outcomes may not always need to do so in a manner prescribed by the SRA,
• firms are expected to take responsibility for identifying and managing risk within their practices and for exercising judgement on how to deliver good outcomes,
• the resources of the SRA can be focused on those firms who are unwilling or unable to manage their own outcomes and client expectations.

Thus, put in a nutshell, firms themselves will become empowered to identify risk and manage client service delivery. Those firms who adequately manage their risk will, as the SRA put it, “experience a less intrusive relationship with the SRA”.

Does this mean no rules and no guidance?

The SRA have given assurances that the move to OFR does not mean the absence of rules and no guidance. Firms will not simply be left to flounder and to create their own interpretations of everything. However, many commentators have, since OFR was introduced, criticised the SRA for the lack of support they have given and condemned the way that many firms have been left to be confused by what exactly are the implications for them.

Many feel that the SRA could have done a great deal more to prepare the profession for OFR and provided much more practical guidance as to what they were expecting of firms – especially the smaller ones without the resources to invest in costly and time-consuming consultancy.

Part of the difficulty that firms are having is that, because there is a no “one-size fits all” approach, there are no off-the-peg solutions. The SRA expects each firm to put in place those provisions which are appropriate to their practice and their clients. Each firm has to assess the risk to their particular practice and deal with that risk.

That does not mean to say that there are no rules – the new SRA Code of Conduct contains, amongst the general principles and high level objectives, a number of quite prescriptive requirements – especially in those areas deemed to be high-risk. The problem is that it is not immediately obvious where those rules are and the extent to which they are rules and not just examples of principles.

The rules as a whole are contained within the Solicitors Handbook – a lengthy document which in printed form extends to well over 500 pages. This covers not just the SRA Code of Conduct but encompasses the Accounts Rules, various authorisation and practising rules (such as the Practice Framework Rules, Authorisation Rules and Practising Regulations), client protection provisions such as the Indemnity Insurance Rules and Compensation Fund Rules, rules dealing with discipline and cost recovery and finally the specialist rules such as those which apply to property selling and financial services.

The SRA Code of Conduct

The key element in the move to a principles-based system is clearly the new SRA Code of Conduct (the Code). Rather than being a prescriptive set of rules, this is made up of a number of high-level mandatory principles, followed by a series of Chapters dealing with specific aspects of regulation. These chapters are made up of outcomes which define what it is expected that a firm will achieve plus indicative behaviours which are examples of what the SRA will be looking for in order to evidence compliance with the outcomes.

Whilst indicative behaviours will not be mandatory, nevertheless the absence of an indicative behaviour will act as warning to the SRA that it needs to ensure that the firm is achieving the outcome notwithstanding the absence of the behaviour.

You will find more information about the Code of Conduct elsewhere on this web site.

How will OFR operate in practice?

An important element in OFR is that of managing risk – both in terms of the firm itself and how the SRA interfaces with the firms which it regulates.
The SRA have stated that their approach to regulating the profession will involve encouraging firms to identify, manage and mitigate those risks involved in meeting the various requirements of the Handbook allowing them to concentrate on those who can’t or don’t manage risks.

Their expectation is that firms will be “forward-looking and able to identify emerging risks”, although how that risk is dealt with will vary depending on the way in which the firm practises.

In managing risk, the SRA will look at a range of intelligences including information supplied by firms, information from consumers, market intelligence, trends and economic factors to assess where risk lies most and will direct its regulatory activities at addressing those risks.

In particular, the SRA will look at:

• risks to overall regulatory objectives posed by the wider economic environment ? e.g. a down-turn in the economy,
• risks posed by individuals and firms who are not complying with over-arching regulatory principles,
• risks posed by individuals and firms who are not achieving required outcomes,
• the likely impact that events may have upon the way in which firms deal with consumers and issues which are in the public good.

In addition to assessing risk, the SRA will use the processes of authorisation and re-authorisation as a means for ensuring that only those firms who operate in the best interests of clients are permitted to deliver legal services. They will adopt a risk-based approach to authorisation and will more rigorously check individuals and firms, not just when they are setting up, but on a regular basis.

Thus, if a new firm is setting up, the SRA will analyse information about its proposed structure, its governance and its planned systems for compliance.

The SRA will consider whether conditions or limitations should be placed upon the firm’s ability to practice and in doing so will consider issues such as the extent of any external influence on the firm, the firm’s business model and how it proposes to obtain business.

In addition, the SRA will continue to exercise supervisory activities aimed at helping firms to improve standards, reduce risks and enhance the reputation of legal services providers. Thus, firms will be assessed on the quality of their systems and not just on whether they possess a system. It is intended that this assessment will take place through a nominated individual within the firm.

The extent to which the SRA exercises supervision of a firm will depend upon a number of factors including:

• the risk posed by the firm,
• the size of the firm,
• the firm’s approach to risk management,
• positive engagement with the SRA,
• the firm’s compliance history, and
• the firm’s ability and willingness to put things right.

In the case of the larger and more complex firms, there are likely to be dedicated supervisory staff who will have regular one-to-one contact with these firms and who will establish an ongoing dialogue with supervisors and nominated individuals.

Firms that present a particular perceived risk – for example firms in the assigned risks pool – may have temporary intensive relationship management system imposed upon them until such time as it is perceived that they no longer pose a threat.

There will continue to be risk-based audits of firms who are not subject to relationship management. It is still not certain that all firms will automatically receive an audit visit. Possibly those firms that do not present a risk may not be visited, possibly they will receive a far less in depth visit.

It is not intended that the SRA will hold itself out as being able to approve the risk management procedures of individual firms. However, where they see examples of good risk management they may publish information about it as an example to other firms.

In addition to these systems, the SRA plan to use a number of other tools to achieve regulatory compliance, including:

• “Dear Managing Partner” letters to alert senior management in firms to our views on specific matters and our expectations of firms in relation to those matters;
• road shows on particular themes;
• remedial plans for individual firms to support their improvement of standards;
• mystery shopping to identify firms who may not be delivering good standards;
• unannounced visits or visits with little notice; and
• where a firm is in financial difficulties, overseeing the management and resolution of those difficulties, including an orderly wind-down if necessary.

What are the risks of OFR?

Inevitably there are risks in the move to any new system and OFR is no exception.

The very nature of the system means that there is likely to be both ambiguity and uncertainty. The very essence of OFR is that it deals with broad principles which, by their very nature, can be ill-defined and capable of various interpretations. The test of the adequacy of the system will come when the interpretation of the SRA differs from that of the firm, yet each genuinely believes that the outcomes have been satisfied.

Thus, although the system is dealing with broad principles and outcomes, it must nevertheless be such that those who are regulated can be sure of that which is expected of them and can be certain that when they make an interpretation of risk, that it is an interpretation within the parameters that the SRA would regard as acceptable.

To achieve this, therefore, there will need to be some interpretative content as well as pure principles. Hopefully the indicative behaviours and guidance will be adequate to provide this. However, if the indicative behaviours become too rigidly followed by either the regulator or the regulated, then the system will move away again from an outcomes-focused one and back to prescriptive system.

The risks, therefore, lie mainly in:

• ensuring that both those who are regulated and the consumer understand what the regulations are intended to achieve,
• ensuring that those who are regulated know when it is required to achieve an outcome,
• ensuring that the consumer knows when an outcome has not been achieved,
• achieving a balance between prescription and principle,
• ensuring that enforcement is proportionate and allows that there may be more than one viewpoint,
• ensuring that there is sufficient guidance,
• acquiring good intelligence as to who is managing risk well and who is not, and
• providing advance intelligence to those who are regulated if there is a change in the views as to enforcement or a raising or lowering of the risks involved in any particular regulated area.

To achieve the SRA is going to have to become more holistic in the way in which it approaches regulation. The feeling in the past among many practitioners is that, if they are subject to an SRA investigation then, even if the SRA do not find that the thing they came to investigate is incorrect, they will go out of their way to find something else. This approach has got to be changed.

If a firm has satisfied clients, is not in breach of major rules, is acting honestly, fairly and not to the detriment of clients, then the SRA should at worst be simply pointing the firm in the right direction.

Summary

Approached sensibly and with adequate support for those practices most likely to have problems in moving towards an OFR system, then there is no reason why OFR should not work. The growth in the number of firms, and the future complexities of the legal market place, means that regulators across the board are not going to be able to continue to work on a prescriptive system where breaches are weeded out and punished.

OFR can work, but care must be taken to ensure that the outcomes are sensible and achievable and actually deliver genuine benefits to the consumers of legal services. Outcomes which do not deliver a perceptible benefit to the consumer must be avoided. Every rule must be tested with the question – is this really necessary to protect the public or are there other, more light-touch ways in which the same outcome could be achieved?

Above all, however, the SRA must ensure that the way in which it administers the new system is fair, proportionate and takes account of the change in emphasis. If it continues to adopt the heavy-handed, over regulated approach which it has at present, where those in practice can be penalised for failings they were unaware existed, then it will not work and the SRA will not win the trust of the profession and the public.

(revised December 2011)

The move to outcomes focused regulation has been accompanied by the publication of a new definitive source of those rules and regulations by which solicitors, recognised bodies, alternative business structures and everyone else involved in a solicitors’ practice must abide. This is the Solicitors Handbook.

The Handbook is broken down into 8 main sections:

1. The principles – these are the core, underlying commandments which underpin everything else in the Handbook;
2. The SRA Code of Conduct – this replaces the Solicitors Code of Conduct 2007 – we will look at this in slightly more detail shortly;
3. The Accounts Rules – still in basically the same form as they have always been and still somewhat opaque in the way in which they are written;
4. Authorisation and Practising Requirements – these are the new rules that contain issues such as the appointment of COLPs and COFAs, notification requirements on admission etc. and are made up of:
   • SRA Practice Framework Rules;
   • SRA Authorisation Rules for Legal Services Bodies and Licensable Bodies;
   • SRA Practising Regulations;
   • SRA Recognised Bodies Regulations;
   • Solicitors Keeping of the Roll Regulations;
   • SRA Training Regulations – Part 1 – Qualification Regulations;
   • SRA Training Regulations – Part 2 – Training Provider Regulations;
   • SRA Training Regulations – Part 3 – CPD Regulations;
   • SRA Admission Regulations;
   • SRA Qualified Lawyers Transfer Scheme Regulations;
   • SRA Higher Rights of Audience Regulations; and
   • SRA Suitability Test.
5. Client protection requirements which provide vital financial protections for clients and covers issues such as negligence claims against firms, their managers and their employees, provision for compensation if client money is misappropriated and provisions relating to firm intervention. They comprise:
   • SRA Indemnity Insurance Rules;
   • SRA Indemnity (Enactment) Rules;
   • SRA Indemnity Rules;
   • SRA Compensation Fund Rules; and
   • SRA Intervention Powers (Statutory Trust) Rules.
6. Disciplinary and cost recovery rules – which sets out the SRA’s new approach to fining and disciplining firms through the SRA Disciplinary Procedure Rules and SRA Cost of Investigations Regulations
7. Specialists services rules – dealing with specific activities undertaken by some firms. These comprise:
   • SRA Property Selling Rules,
   • SRA Financial Services (Scope) Rules and the SRA Financial Services (Conduct of Business) Rules, and
   • SRA European Cross-border Practice Rules.
8. Glossary – this provides definitions for the whole handbook.

There are, it has to be admitted, some omissions which would have made the handbook – in its guise as a single work – slightly more useful, for example the Solicitors Act, appropriate extracts from the Legal Services Act and so forth, but on the whole it is better than the previous situation where some things were in the Code and some were in a section called Framework of Practice.

The Principles

It is not possible to have a system of principles-based regulation without principles. The ten principles set out at the beginning of the handbook are therefore all important – and all solicitors should really keep them on a piece of paper pinned to the wall where they can all see them all of the time. They really are that important. Aside from the fact that they govern what is to be found elsewhere in the Code of Conduct, there is always the cynical point of view that if the SRA cannot find anything else against a solicitor or firm they can, if they want to, bring proceedings under any of the ten principles which, it has to be said, are sufficiently vague that almost any activity could be caught.

Under the ten principles, solicitors must:

1. uphold the rule of law and the proper administration of justice – in other words observe obligations to clients, the courts and third parties;
2. act with integrity – personal integrity as well as in relation to work;
3. not allow independence to be compromised – independence means both the solicitors own independence and that of the firm – in particular it means not allowing a firm to become controlled by someone not subject to these rules;
4. act in the best interests of each client – in other words act in good faith, maintain confidentiality and not allow conflicts of interests to arise;
5. provide a proper standard of service to clients – provide services competently, diligently and taking account of the needs of each individual client;
6. behave in a way that maintains the trust the public places in the solicitor and in the provision of legal services – behaviour here means both inside and outside of the practice and not to do anything which damages the public’s faith in solicitors as individuals or the profession;
7. comply with legal and regulatory obligations and deal with regulators and ombudsmen in an open, timely and co-operative manner – this includes all of the reporting and notification requirements in Chapter 10 of the code;
8. run the business or carry out role in the business effectively and in accordance with proper governance and sound financial and risk management principles – specifically expressed to apply equally to managers and employees and to relate specifically to “management of your business” section of the Code;
9. run the business or carry out role in the business in a way that encourages equality of opportunity and respect for diversity – equality requirements impinge upon everyone; and
10. protect client money and assets – a duty upon everyone to ensure that client money and property does not go astray.

Whilst these principles contain much that was to be found in the principles in the Solicitors Code of Conduct 2007, there are some important differences, which the following table will help to explain:

Some additional points to bear in mind are:

• that it will be regarded as a breach of these principles if any solicitor or other person regulated by the SRA permits anyone else, on their behalf, to do any act which would be a breach of these principles;
• 3 of the principles, numbers 1, 2 & 6 apply outside of the practice – that is to say they regulate how a solicitor, registered European lawyer or registered foreign lawyer behaves outside of the legal practice; and
• that, although the principles are expressed to have general applicability, some will apply more to certain people within a firm than others. Thus, for example:
  • principle 2 “act with integrity “ will apply to everyone in the practice whether they have any involvement with clients or not,
  • principle 5 “provide a proper standard of service to clients” will apply to everyone in the firm who has any dealings, or contact, with clients, but
  • principle 8 “run the business or carry out role in the business effectively and in accordance with proper governance and sound financial and risk management principles” will be of greater relevance to those who manage the business.

A final point is relation to principles is not actually dealt with in the Principles section itself but later in the Code of Conduct, and that is that “Where two or more Principles come into conflict the one which takes precedence is the one which best serves the public interest in the particular circumstances, especially the public interest in the proper administration of justice. Compliance with the Principles is also subject to any overriding legal obligations.” Why this was not included in the section dealing with principles is not clear – but nevertheless it is an important caveat to bear in mind.

The SRA Code of Conduct

The SRA Code of Conduct is an important part of the Handbook and contains guidance as to how the general principles translate into actual practice.

The Code is divided into 5 sections. They are:

• You and your client;
• You and your business;
• You and your regulator;
• You and others;
• Application, waivers and interpretation.

Each section is then divided into chapters each of what deals with a particular regulatory issue. The breakdown is as follows:

Section 1 – You and your client

• Client Care,
• Equality and diversity,
• Conflicts of interests,
• Confidentiality and disclosure,
• Your client and the court, and
• Your client and introductions to third parties

Section 2 – You and your business

• Management of your business,
• Publicity,
• Fee sharing and referrals.

Section 3 – You and your regulator

Section 4 – You and others

• Relations with third parties,
• Separate businesses.

Section 5 – Applications, waivers and interpretations

• Applications and waivers provisions,
• Interpretation,
• Transitional provisions.

Each chapter then follows roughly the same format.

First it provides an overview of what is being dealt with in the Chapter – an introduction as to what is in it and why it is there.

Secondly, the chapter sets out what are known as Outcomes. Outcomes are what the solicitor is expected to achieve in order to comply with the ten principles looked at earlier. They are the “what you must do” rather than the “how you must do it”.

Outcomes are mandatory. All practices must achieve the outcomes. Failure to achieve the outcomes is breach of the rules.

Thirdly there are the Indicative Behaviours. These are (allegedly) non-mandatory examples of the kind of things that need to be done in order to achieve the Outcomes. However, being non-mandatory they do not have to be done provided that which is done still enables the firm to achieve the Outcomes. However, if a firm is not achieving the Outcomes then failure to follow the indicative behaviours will be taken as evidence of that failure.

On the whole, indicative behaviours are positive indicators – e.g. IB (1.4) – explain any arrangements, such as fee sharing or referral arrangements, which are relevant to the client’s instructions. However, some Indicative Behaviours are expressed in the negative – in other words you are likely not to be achieving an outcome if you are following some of the behaviours – e.g. IB (2.5) discriminating unlawfully when accepting or refusing instructions to act for a client.

We will consider each chapter separately elsewhere on the web site.

(revised December 2011)

Outcomes focused regulation (OFR) is, so the Solicitors Regulation Authority tell us, all about putting the client first and achieving the right outcomes for clients. It is appropriate, therefore, that the first chapter of the SRA Code of Conduct (New Code) should deal with the issue of client care.

The chapter deals with the issues previously dealt with mainly in the Solicitors’ Code of Conduct 2007 in Rule 2 (Client relations) and Rule 5 (Business management in England and Wales).

The chapter begins by emphasising that it is about “providing a proper standard of service” and ensuring that if a client is not happy with the service they have received, that they know how to complain and that their complaints will be “dealt with promptly and fairly.”

Much of that which is contained in Chapter 1 is a reworking of the provisions to be found in Rule 2 (Client Relations) of the Solicitors Code of Conduct 2007 (2007 Code). There are, however, some differences in the requirements of the two sets of rules. Those differences include:

• the new rule is much shorter and less detailed than Rule 2 in the 2007 Code (especially when one takes account of the comprehensive guidance notes which accompanied Rule 2);
• the new rule contains specific outcomes to treat clients fairly and protect their interests which only really compare with duties in the principles to the 2007 Code;
• the new rule contains a requirement that clients be informed of when they have statutory protections. This provision undoubtedly looks forward to the introduction of alternative business structures where some of the work undertaken by an ABS – for example financial services or property selling work, may not be covered by the SRA protections;
• Outcome 10 places a duty on the solicitor to ensure that the client is aware of their rights to complain to the Legal Ombudsman. Although the guidance notes to Rule 2 of the 2007 Code do refer to the LCS this is effectively a new requirement and reflects the Legal Services Board’s desire to see a strengthening in the complaints procedures;
• Outcome 14 places a duty upon the firm to tell the client that they can challenge a bill
• Outcome 16 requires that client’s be informed should there arise a circumstance whereby they could make a claim against the firm. This is a controversial provision in that it is a duty upon the firm to draw to the client’s attention the firm’s own shortcomings and could, theoretically, lead to a PI insurer avoiding cover;
• detailed guidance as to the information to be provided in relation to conditional fee agreements and publicly funded work no longer a part of the Code; and
• Rule 2.04 (Contingency Fees) in the 2007 Code is no longer dealt with.

The chapter sets out 16 outcomes which firms must achieve. They are to:

1. treat clients fairly,
2. protect a client’s interests whilst observing proper administration of justice,
3. comply with the law and the code when accepting, declining or terminating instructions,
4. ensure adequate resources, skills and procedures to do the work,
5. provide services which are competent, delivered in a timely manner and which take account of the client’s needs and circumstances,
6. only enter into fee agreements that are legal, address the client’s needs and are in best interests of the client,
7. tell the client about any relevant statutory and regulatory protections and how these protect the client’s best interests,
8. ensure clients have the benefit of compulsory professional indemnity insurance and that nothing is done to exclude cover below the minimum level,
9. tell clients at the outset of their right to complain and how to do so,
10. tell clients at the outset and conclusion of a matter of their right to complain to the Legal Ombudsman and how to do so,
11. deal with complaints promptly, fairly, openly and effectively,
12. ensure that clients can make informed decisions about the services they need, how a matter will be handled and the options available to them,
13. ensure clients get best possible information both at the outset and during the matter as to costs,
14. ensure that clients are told of their right to challenge or complain about a bill and the circumstances in which they may be required to pay interest on an unpaid bill,
15. properly account to clients for any financial benefit received,
16. inform clients if an act or omission which could give rise to a claim by them against the firm is discovered.

The correlation between these Outcomes and the requirements of the 2007 Code is as follows:

Indicative behaviours

In addition to the Outcomes (i.e. those things which a firm must achieve if it is to comply with the Code) there are also a number of indicative behaviours which set out the kind of observable actions that the SRA would expect to see (or not see, as appropriate) in a firm that was achieving the outcomes.

Chapter 1 contains some 28 indicative behaviours – some of them quite complex in themselves. To an extent they act as explanatory notes to the outcomes in so far that they set out in more detail what would be expected from those complying with an outcome. The following table sets out what those indicative behaviours are and how they relate to 2007 Code.

Introduction

The Solicitors Regulation Authority (SRA) has long had the power to require, operating in the place of the Law Society, to require a solicitor to produce documents in connection with an investigation. This power has been contained in section 44B of the Solicitors Act 1974. However, the Legal Services Act 2007 has extended the powers available so that, as of 31 March 2009 they may require any available document and information, thus removing the previous limitation of documents only and extending it to any purpose for which the inquiry is made.

Additionally, three further subsections have been added – 44BA, 44BB & 44BC which, respectively, deal with:

• the power to require explanation of document or information,
• the provision of information and documents by other persons, and
• information offences.

This item on our web site looks at those four subsections and at the additional powers which they give to the SRA.

Section 44B – Provision of information and documents by solicitors etc

Section 44B was the original information provision section. It gives the Law Society (operating through the auspices of the SRA) power to give notice requiring that information and documents be made available to them by:

• a solicitor;
• an employee of a solicitor;
• a recognised body; or
• an employee or manager of, or a person with an interest in, a recognised body.

on the grounds that it is satisfied that it is necessary to do so for the purpose of investigating:

1. whether there has been professional misconduct by a solicitor;
2. whether a solicitor, or an employee of a solicitor, has failed to comply with any requirements imposed by or by virtue of this Act or any rules made by the Society;
3. whether a recognised body, or any of its managers or employees has failed to comply with any requirement imposed by or by virtue of the Administration of Justice Act 1985 or any rules made by the Society and applicable to the body, manager or employee by virtue of section 9 of that Act; or
4. whether there are grounds for making, or making an application to the Tribunal for it to make, an order under section 43(2) with respect to a person who is or was involved in a legal practice.

It is worth noting that in addition to these powers, there are powers under section 68 of the Solicitors Act 1974 for:

• the High Court to make an order requiring a solicitor to deliver a bill of costs and any documents in his or her possession, custody or power even in those cases where the High Court has not been involved in a matter, or
• a county court to exercise the same jurisdiction as the High Court in cases where the bill of costs or the documents relate wholly or partly to contentious business done by the solicitor in that county court.

However, it is not intended to deal with orders of the courts under 68 in this item.

It is fair to say that the SRA’s powers under S44B have been exercised to date with restraint – there being a right of appeal to the courts in the event that those powers be used unfairly. Generally the powers have only been used in those circumstances where a solicitor has declined to give up the papers voluntarily and have only been in relation to an investigation.

Thus, the power is not used where, for example, the papers are required by a client of the solicitor and the solicitor refuses to release them.

Whether the power will be used more in the future remains to be seen. Applying the SRA’s own better regulation principles, the use of the power would need to be proportionate. However, the SRA have themselves indicated that section 44B is likely to be used more frequently than, for example, section 44BA (which will be used where there are allegations of serious misconduct or a failure to deal openly with the SRA) because it enables “evidence to be obtained without major cost or inconvenience (such as in having to attend to provide an explanation)”.

Whilst it is not necessary that the SRA gives notice to the solicitor of the exercise of Section 44B powers, it is usual for them to do so and the powers are then only used in default of the solicitor voluntarily giving up the papers.

Where a notice under section 44B is issued it:

• will state a time and place for the document or information to be produced and the manner and form which the information is to be provided or the document produced;
• must specify the period within which the information is to be provided or the document produced;
• may require the information to be provided or document to be produced to the Society or to a person specified in the notice.

In other words, the SRA may simply require to see a copy of a letter or email and it may be adequate if this is provided electronically.

A number of additional matters should be borne in mind in relation to a section 44B power:

• failure by the person who possesses or has control of a document to comply with a section 44B order is an offence under paragraph 9(3) of Schedule 1 of the Solicitors Act 1974 unless there is an ongoing application to the High Court;
• the SRA can apply to the High Court for an order requiring documents to be delivered or produced to any person appointed by them and at such time and place as may be specified in the order;
• that the powers are exercisable notwithstanding any lien on them or right to their possession;
• any costs incurred by the SRA including the costs of any person exercising the powers shall be paid by the Solicitor or his personal representatives and shall be recoverable from him or them as a debt owing to the SRA;
• the High Court may order a former partner of the solicitor to pay a specified proportion of the costs if the former partner consented to, connived in or was negligent in respect of, the conduct of the solicitor subject to the order;
• a notice under section 44B may be authorised by the senior technical and legal SRA staff.

Section 44BA – Power to require explanation of document or information

Sections 44BA and 44BB have provided the SRA with enhanced powers over and above the power to require solicitors to provide documents set out in section 44B of the 1974 Act. Section 44BA adds the power to require a person to whom section 44B applied (or their representative) to attend, at a time and place specified by the SRA, to provide an explanation of any information provided or document produced, provided that a section 44B notice requiring documents to be produced has been served.

Such a meeting, referred to as an “investigation meeting”, will be regarded as a serious matter and may only be authorised by The SRA Chief Executive, Legal Director or Head of Legal.

Normally the person required to attend the investigation meeting will be given at least seven days notice of the meeting. That will not, however, apply if the SRA perceive that it is in the public interest for the meeting to take place urgently because:

• there is a danger of immediate harm to the interests of clients or others,
• there is a risk of financial default, or
• there is a risk of frustration or prejudice to the SRA investigation or any other investigation.

Although there is a provision in 44BA for the costs of the person attending to be borne by the SRA it is not yet clear whether this will extend to the costs of that person’s legal representative.

As in section 44B, failure by the person who possesses or has control of a document to comply with a section 44BA order is an offence under paragraph 9(3) of Schedule 1 of the Solicitors Act 1974 unless there is an ongoing application to the High Court.

As was indicated in the previous section, it is likely that this power will only be used only when there is a reason which is not only proportionate to the seriousness of the misconduct being investigated but also proportionate to the potential usefulness of the information which is being sought. The aim is to establish facts and obtain an explanation for an alleged misconduct or regulatory non-compliance and the meeting may be conducted in any reasonable location, including the SRA’s premises and the premises of the person upon whom the order is served.

It should be noted, however, that the process described here is unlikely to affect the kind of routine interview or discussions which has been previously been taking place between the SRA and the regulated person in the normal course of investigations. It has been confirmed by the Solicitors Disciplinary Tribunal (in Baxendale-Walker) that “As a matter of professional conduct, it is the Tribunal’s view, that every solicitor has a duty to give an explanation of actions which in the Law Society’s reasonable opinion give rise to any question related to the proper performance of professional duties.”

The meeting may be attended by a representative of the SRA’s Legal Directorate who may, where necessary, give the SRA’s position on procedural or legal issue. At the meeting, which will be digitally recorded, one or more members of the SRA’s staff, or its agent, will ask questions relating to the matter in question. The SRA state (Draft policy statement: Use of enhanced investigatory powers) that the normal conduct of the meeting will be as follows:

1. The regulated person will be informed in general terms of the suspected professional misconduct, failure to comply, or grounds for a section 43 order which the SRA is investigating. However, if this may prejudice the SRA investigation or any other investigation, they will not be informed.
2. The investigation meeting may be conducted in any reasonable location, including SRA premises and the regulated person’s address.
3. Questions will not be provided in advance of the meeting.
4. A representative of the SRA’s Legal Directorate (the “SRA lawyer”) will attend to observe the meeting. If necessary, and within reason, they may state the SRA’s position on any properly raised legal issue.
5. The regulated person may be accompanied by another person. However, only the regulated person may provide explanations, unless the SRA agrees otherwise.
6. One or more members of the SRA’s staff, or its agent, will ask questions in order to obtain explanations from the regulated person.
7. If, in the opinion of the SRA lawyer, the person accompanying the regulated person obstructs the process, the regulated person will be warned that continuation of the obstruction may be considered to constitute failure to cooperate with the investigation. If the obstruction continues, the accompanying person may be excluded from the investigation meeting and/or the meeting may be terminated.
8. The investigation meeting will be digitally recorded and a CD copy of the recording provided to the regulated person.
9. Appropriate breaks will be provided, particularly if the meeting is extended.
10. Costs will not be paid other than in exceptional circumstances. For example, if the requirement for the regulated person to attend was subsequently determined by an adjudicator as unreasonable, costs might then be paid. However, a final decision that no regulatory action is necessary would not mean that requiring attendance at an investigation meeting was unreasonable. In any event, any costs payable will usually be limited to travelling and will not include legal costs incurred by the regulated person or consequential losses.

Section 44BB – Provision of information and documents by other persons

Section 44BB takes the provisions of 44BA further still in that it allows the SRA to require information and documents from someone who is not regulated by them – but only if there is an order of the High Court enabling them to do so. Such an order will not be granted unless the SRA can show that the non-solicitor possesses the documents in question and that they are material to an investigation.

Given the increasingly complex nature of many investigations by the SRA, the ability to require others, for example financial advisers, surveyors, estate agents and so forth, to provide documents and explanations which could, in some cases, demonstrate a solicitor’s innocence, is an extremely valuable one.

Section 44BC – Information Offences

The last of the subsections dealt with here is that of section 44BC which deals with information offences.

The subsection provides that it is a criminal offence (carrying a maximum sentence of 2 years imprisonment, a fine or both) for a person who knows or suspects that an investigation into any of the matters mentioned in section 44B(3)(a) to (d) is being or is likely to be conducted to either:

1. falsify, conceal, destroy or otherwise dispose of a document which the person knows or suspects is or would be relevant to the investigation, or
2. cause or permit the falsification, concealment, destruction or disposal of such a document.

unless he or she can show that they had no intention of concealing facts disclosed by the documents from the person conducting the investigation.

It is also an offence in relation to any of the duties imposed by sections 44B, 44BA or 44BB for a person to:

1. provide information which they know to be false or misleading in a material particular, or
2. recklessly provide information which is false or misleading in a material particular.

(revised December 2011)

In order for any solicitor to be able to practice, or to be held out as a solicitor, in England & Wales then he or she must be admitted as a solicitor, be on the roll of solicitors and, except in very limited circumstances, hold a current practising certificate issued by the Solicitors Regulation Authority. These are issued by the SRA following the appropriate application. Any person who does not hold a certificate may not practice, whether that be as a principal, employed solicitor, in-house solicitor, consultant in a solicitors practice or locum.

The need for a practising certificate

Section 1 of the Solicitors Act 1974 states that:

No person shall be qualified to act as a solicitor unless-

1. he has been admitted as a solicitor, and
2. his name is on the roll, and
3. he has in force a certificate issued by the Society in accordance with the provisions of this Part authorising him to practise as a solicitor (in this Act referred to as a “practising certificate”).

whilst the SRA’s own SRA Practice Framework Rules 2011 provide at rule 9 that:

9.1 If you are practising as a solicitor (including in-house), whether in England and Wales or overseas, you must:

1. have in force a practising certificate issued by the SRA; or
2. be exempt under section 88 of the SA from holding a practising certificate.

9.2 You will be practising as a solicitor if you are involved in legal practice and:

1. your involvement in the firm or the work depends on your being a solicitor;
2. you are held out explicitly or implicitly as a practising solicitor;
3. you are employed explicitly or implicitly as a solicitor; or
4. you are deemed by section 1A of the SA to be acting as a solicitor.

In particular you should note that under 9.2 the term “legal practice” is deemed to include not only the provision of the usual functions performed by a solicitor such as giving legal advice or representing someone in court, but includes the provision of other services such as are provided by solicitors.

Thus, if you practise as a solicitor, whether in a firm or in-house, without having a practising certificate, you will commit a criminal offence, as well as a breach of the rules, unless you are entitled to rely on the exemption in section 88 of the Solicitors Act 1974.

Employees and practising certificates

You may also need a practising certificate even if you are not actually practising as a solicitor but you are on the roll. The reason for this is that you will be deemed to be practising as a solicitor.

The authority for this comes from Section 1A of the Solicitors Act 1974 which states:

A person who has been admitted as a solicitor and whose name is on the roll shall, if he would not otherwise be taken to be acting as a solicitor, be taken for the purposes of this Act to be so acting if he is employed in connection with the provision of any legal services-

1. by any person who is qualified to act as a solicitor;
2. by any partnership at least one member of which is so qualified;
3. by a body recognised under section 9 of the Administration of Justice Act 1985 (incorporated practices); or
4. by any other person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which is a reserved legal activity (within the meaning of that Act).

This is interpreted by the SRA in Rule 11 (Participation in legal practice) of the SRA Practice Framework Rules 2011 as:

11.1 If you are a solicitor, REL or RFL and you are:

1. a manager, member or interest holder of:
   1. a recognised body; or
   2. a body corporate which is a manager of a recognised body; or
2. a manager, member or owner of:
   1. a licensed body; or
   2. a body corporate which is a manager of a licensed body;

   it must be in your capacity as a solicitor, REL or RFL (whether or not you are held out as such);

3. employed in connection with the provision of legal services in England and Wales, by:
   1. a recognised sole practitioner;
   2. an authorised body; or
   3. a body corporate which is a manager of an authorised body;

   it must be in your capacity as a solicitor, in accordance with section 1A of the SA, an REL or an RFL (whether or not you are held out as such);

4. Practising in accordance with (a), (b) or (c) above does not prevent you from practising also as an individual authorised by an approved regulator other than the SRA or providing services as a member of a non-lawyer profession.

11.2 Subject to 11.3 below, if you are a solicitor, REL or RFL and you are:

1. a manager, member or interest holder of:
   1. an authorised non-SRA firm of which all the managers and interest holders are lawyers; or
   2. a body corporate which is a manager of such an authorised non-SRA firm;
2. a manager, member or owner of:
   1. an authorised non-SRA firm which is a licensable body; or
   2. a body corporate which is a manager of such an authorised non-SRA firm; or
3. an employee who is employed in connection with the provision of legal services in England and Wales, by:
   1. an authorised non-SRA firm; or
   2. a body corporate which is a manager of an authorised non-SRA firm;

   it must be in your capacity as a solicitor, REL or RFL or as an individual authorised by an approved regulator other than the SRA (whether or not you are held out as such) but this does not prevent you from practising in both capacities or providing services as a member of a non-lawyer profession in addition to practising as a lawyer.

11.3 If you are a solicitor who is employed by, or is a director of, an authorised non-SRA firm, section 1A of the SA will require you to practise through that firm in the capacity of solicitor, even if also practising in some other capacity.

11.4 No solicitor or REL, while a prisoner in any prison, may commence, prosecute or defend any action, suit or other contentious proceedings, or appear as an advocate in any such proceedings, unless he or she does so as a litigant in person and not as a solicitor or REL.

The practical effect of all of this is that if you are admitted as a solicitor and are on the role, then you are likely to need a practising certificate if you do any work in which you are held out as a solicitor, it could be inferred that you are a solicitor or you do any work with a legal connection for a solicitor whilst employed by that solicitor.

Thus, as is stated in the SRA’s own guidance (currently archived as it has not been updated to reflect the new Handbook) on the matter (Do I Need a Practising Certificate) you will need practising certificate if you are on the roll and you work:

1. as a secretary doing work for fee-earners, although not if you undertook secretarial work for a non-legal department within the firm such as human resources;
2. as the firm’s practice manager and your responsibilities include any supervision of fee-earners or dealing with complaints relating to the handling of client matters;
3. providing practice support and you carry out research in connection with client matters or draft and update precedents;
4. as a bookkeeper in the firm’s accounts department and your responsibilities include entering information on to the accounts system in compliance with the Solicitors’ Accounts Rules;
5. carry out conflict checks.

A couple of additional points are worth mentioning:

• even if you are only providing temporary cover to a firm, for example as a locum, you will still need a practising certificate if you are on the roll. The only way around this would be to come off the roll, although do bear in mind that if you do so there may be limitations as to the tasks you are permitted to undertake. Thus, you would not be permitted to swear oaths or do reserved work in your own right. However, you would be able to undertake conveyancing or probate if the work was done under the supervision of a solicitor or other authorised individual authorised and you would be able to appear in chambers in the county court or the high court provided you did so under instructions given by a qualified litigator.
• the fact that you would not be paid for the work you did, for example because you were doing voluntary work for a local law firm, would not be relevant as the SRA does not regard employment as meaning only paid employment.

Retired Solicitors or those taking a break from employment

It follows from the above that solicitors who retire from daily practice but who remain on the roll may need to retain a practising certificate, depending upon what they plan to do in their retirement.

Solicitors who want to remain as a consultant with their firm will normally need to maintain a practising certificate, even if their continuing involvement in the firm is negligible. This will especially be the case if they remain on the notepaper as “consultant”. They could avoid the need for a practising certificate if they have on the notepaper words such as “retired” or “non-practising”, however, they would be permitted to undertake absolutely no legal work whatsoever.

Retired solicitors who still want to describe themselves as “solicitor”, but who do not want to retain a practising certificate, can do so provided that it cannot be inferred that they are entitled to practice. Thus, if a solicitor wishes to do some lecturing, for example, then that would be perfectly acceptable, but if they were to work with a charity which gives legal advice to the public, then you would need to make sure that you were described as a “non-practising” solicitor, even if they are not the one giving the legal advice.

A retired solicitor can do legal work for friends and relatives without a practising certificate, but not in the capacity as a solicitor and any reference to solicitor in, for example, correspondence, must make it clear that they are not practising by adding words such as “non-practising”, “uncertificated” or “retired”. They should in addition ensure that the friends or relatives are aware that they are retired, as a result will not have the benefit of any professional indemnity insurance and are limited in the work which they can undertake.

If a retired solicitor wishes to set up a business providing services of a legal nature then, if they remain on the roll, they may need to obtain a practising certificate – even if the work they are doing is non-reserved work. Factors to be considered would be whether the name of the firm implied that it was a solicitor’s practice or whether the retired solicitor was, either expressly or impliedly, being held out as a solicitor. Words such as “legal expert”, “legal consultant” or “legal adviser” could imply that the firm in question was a solicitor’s practice, whilst use of the words “lawyer”, “attorney” and “solicitor” could lead to the inference that the retired solicitor was still in practice.

Whether a retired solicitor who is an executor or trustee is to be regarded as being in practice (and thus needing a practising certificate) will depend principally upon the capacity in which they were appointed. Thus, a retired solicitor who was appointed executor because he was a partner in the firm at the time of the appointment will be a professional executor and will thus require a practising certificate. On the other hand, if the appointment was as a friend or relative then the retired solicitor can continue as executor or trustee without needing to obtain a practising certificate.

If the appointment was in a professional capacity, then the solicitor can either renounce the appointment or, if he or she wants to continue as executor anyway without needing a practising certificate then he or she will need to ensure:

• that no charge is made for the work done after the date they retired (a charge can still be made for all work done up to the date of retirement, although the firm will need to make sure that it is clearly understood that all further work is not carried through the firm);
• he or she is not referred to as a solicitor in connection with the matter;
• all parties (i.e. co-trustees, beneficiaries, accountants, banks, building societies and stock brokers) are aware that the solicitor is no longer acting in a professional capacity and of the implications, such as professional indemnity, which results from this.

The retired solicitor should bear in mind, however, that he or she must still undertake their role to the same standard of conduct as a practising solicitor and that the Solicitors Disciplinary Tribunal retains jurisdiction over solicitors on the roll who are without practising certificates (and even former solicitors who have had their names removed from the roll, in relation to things done while on the roll).

There is one final point to be borne in mind. Whilst a retired solicitor can no longer administer an oath or statutory declaration, there is nothing to prevent them from witnessing a document unless that document is one which needs to be witnessed by a practising solicitor. However, for the avoidance of misunderstandings it is advisable that the retired solicitor describes himself or herself as such.

Solicitors working for non-solicitor organisations

If a solicitor works in-house – that is to say for a non-solicitor organisation (whether in or outside England and Wales) – then they will be obliged to comply with Rule 9 (Practising certificates) of the SRA Practice Framework Rules 2011 unless they are one of those solicitors exempted from the need to hold a practising certificate by virtue of section 88 of the Solicitors Act 1974.

Examples of situations where a person will be practising as a solicitor, and will therefore need a practising certificate, are given in Rule 4.26 of the SRA Practice Framework Rules 2011 and include:

• employment as a solicitor;
• being held out, on stationery or otherwise, as a solicitor for that employer;
• administering oaths;
• appearing before a court or tribunal in reliance upon a qualification as a solicitor;
• instructing counsel;
• undertaking work which is prohibited to unqualified persons under the provisions of Part 3 of the LSA, unless you are supervised by, and acting in the name of, a solicitor with a practising certificate or another qualified person;
• your the solicitor’s only qualification as a lawyer is as a solicitor, and:
  • they are employed or held out as a lawyer;
  • they undertake work in another jurisdiction which is reserved to lawyers;
  • they are registered in a state other than the UK under the Establishment Directive; or
  • they are a registered foreign legal consultant in another jurisdiction.

However, a solicitor acting only as a justices’ clerk in England and Wales is not practising as a solicitor and can instruct counsel without a practising certificate.

It should be noted that an in-house solicitor will be explicitly employed as a practising solicitor if any of the following terms appear in their job title, or if they use a title which includes terms such as solicitor, lawyer, counsel, attorney or legal practitioner. Their use cannot be negated by adding words such as ‘non-practising solicitor’. Unless, therefore, the solicitor has another legal title which would entitled him or her to describe themselves as lawyer, counsel, attorney or legal practitioner (and they are only practising in that capacity) it is essential that they have a practising certificate and if they a solicitor of another jurisdiction, and therefore entitled to describe themselves as solicitor, they must make clear the jurisdiction of their qualification.

Even if none of the those terms appear in the solicitor’s job title, they will still need to give thought as whether the nature of the job itself requires them to be a qualified lawyer, and if so, that they have a practising certificate. This would be the case, where for example they were required to undertake reserved work or to undertake the supervision of others who are unqualified in the carrying out of reserved work.

Reserved Work

It should in particular be noted that certain work may only be carried out by a solicitor holding a current practising certificate. Thus, even if a solicitor were to come off the roll they would still not be able to carry out this sort of work.

Reserved work is work that which is set out in Section 12 of the Legal Services 2007 as:

• the exercise of a right of audience;
• the conduct of litigation;
• reserved instrument activities;
• probate activities;
• notarial activities; and
• the administration of oaths.

and further defined is defined in Schedule 2 to the LSA.

Note, however, that certain categories of reserved work (rights of audience in chambers, reserved instrument activities and probate activities) can be done by an unqualified person under the supervision of a manager or fellow employee qualified to do that work.

Practising Certificate Conditions

In certain circumstances the SRA has the power to place conditions upon the practising certificate of a solicitor, registered European lawyer or registered foreign lawyer (RFL) and thus effectively regulate the way those solicitors are able to work. Some of these conditions restrict the ability to practise whilst others outline steps that must be followed.

A practising certificate condition is a step which the SRA can take in order to protect the public or the interests of the profession rather than a sanction and will usually be published on the SRA web site.

Once a condition has been imposed on a practising certificate it cannot be removed until the next renewal – at the earliest – and may be imposed for two, three or even more consecutive years – depending upon the circumstances leading to its imposition and whether the public interest is served by it remaining in place.

If a condition is imposed then the solicitor is under a duty to comply with it or face regulatory action as a consequence. Failure to do so is breach of principle 7 of the SRA Code of Conduct.

There are a range of conditions which it is open to the SRA to impose, including:

• requiring a solicitor, REL or RFL to work only in employment approved by the SRA;
• requiring a solicitor, REL or RFL to work only in employment or as a partner, director, manager or member of a recognised body approved by the SRA;
• requiring that a solicitor, REL or RFL obtain SRA approval to be able to work at a particular firm;
• restricting a solicitor, REL or RFL from working as a recognised sole practitioner;
• requiring a solicitor, REL or RFL to deliver more frequent accountant’s reports;
• requiring a solicitor, REL or RFL to undertake professional training;
• restricting a solicitor, REL or RFL from being responsible for the training of trainee solicitors;
• restricting a solicitor, REL or RFL’s ability to deal with clients money;
• restricting a solicitor, REL or RFL from undertaking certain types of work.

Each of these conditions is normally predicated by a different set of circumstances. Thus, for example, a condition to work only in approved employment may arise as a result of:

• convictions,
• bankruptcy,
• other serious financial issues;
• post-intervention,
• pre-SDT hearing,
• post-SDT hearing,
• following suspension from practice,
• multiple breaches of the regulatory requirements (when a principal),
• following a prolonged absence from practice,
• serious misconduct, or
• failure to comply with other previously imposed conditions.

whereas conditions restricting a solicitor, REL or RFL from being responsible for the training of trainee solicitors may arise as a result of:

• there having been issues regarding supervision,
• there having been issues of poor service/conduct, or
• poor regulatory history.

Although the SRA will (in theory) review the conditions every time a practising certificate is renewed and consider relaxing or lifting the conditions, it is nevertheless possible for the decision to impose the conditions to be appealed to the High Court.

It is possible to invoke the SRA’s internal appeals procedure before exercising a right of appeal to the High Court. The appeal period is 21 days from the date of the decision or such other time as the decision may specify and the appeal must state clearly the reasons for the disagreement with the SRA’s decision. An appeal will normally result in the varying of the original decision but it is worth noting that the varying can both improve and worsen the outcome from the solicitor’s perspective.

Suspension of practising certificate or registration

A solicitor’s practising certificate or the registration of a registered European lawyer (REL) will be suspended automatically if:

• they are adjudged bankrupt;
• the Solicitors Disciplinary Tribunal (SDT) suspends them; or
• they have been intervened in and the reason for the intervention is:
  • a suspicion of dishonesty,
  • breaches of the accounts rules,
  • breaches of the SRA Code of Conduct or investment business rules, or
  • they have been committed to prison.

A registered foreign lawyer (RFL) will have their registration suspended in the event of:

• bankruptcy,
• striking-off in their home jurisdiction, or
• suspension from practice in their home jurisdiction.

The effect of the suspension of the practising certificate of a solicitor, or registration of a REL, is that they are prohibited from practising. Unless the SRA gives written to do so, no other recognised sole practitioner or recognised body can employ or remunerate the solicitor or REL if they have been either suspended by the SDT or their practising certificate or registration has been suspended because they are an undischarged bankrupt.

Where the suspension is as a result of bankruptcy of intervention, a solicitor or REL can apply to have the suspension lifted (see below) or they can let the SRA know in advance that they are likely to be made bankrupt, in which case the suspension can be lifted almost as soon as the bankruptcy occurs.

The effect of the suspension of the registration of a RFL is that they are prohibited from practising. If this results from bankruptcy it will terminate only if the bankruptcy is annulled. If it results from suspension or strike-off in the RFL’s home jurisdiction then it will only terminate if the right to practice is restored or an application is made and granted.

If you apply to have a suspension lifted and this is refused, you can appeal that decision – initially by invoking the SRA’s internal appeals procedure, but failing that by applying to the High Court within 28 days of receipt of the notification.

The SRA may revoke a PC or registration (see regulation 9.2 of the SRA Practising Regulations 2011) if, for example, they are satisfied that it was granted as a result of error or fraud.

Contact the Lawyers Defence Group

If you or your firm is experiencing any difficulties arising as a result of practising certificate problems, you should contact the Lawyers Defence Group who will be able to assist you in dealing with those problems.

Whether the problem is in relation to:

• practising without a certificate,
• refusal of certificate,
• practising certificate conditions,
• the need for a practising certificate,
• responsibility for obtaining a practising certificate, or
• applying for a practising certificate or the appropriate application to make,

the Lawyers Defence Group can help you.

For further information, or to contact the Lawyers Defence Group about a problem which you have:

• phone on 0333 888 4070;
• email on help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ];
• request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time; or
• write to Lawyers Defence Group, Richard Nelson LLP, Priory Court, 1 Derby Road, Nottibgham, NG9 2TA.

(revised December 2011)

Introduction

An intervention is one of the most drastic steps which the Solicitors Regulation Authority (SRA) can take and has the effect of freezing the firm’s bank accounts, and of dealing with client files in such a way that they are either returned to the clients or forwarded to another firm to be dealt with. Although the SRA are always keen to stress that an intervention is not a take-over or a closing down of a firm, to all practical intents and purposes that is what it amounts to.

The SRA perceive an intervention to be a very distinct action – it is a step which is taken to protect the interests of clients and to ensure that client moneys are not misapplied. A good description of the purpose of an intervention was given by Mr Justice Neuberger in the case of Kevin Dooley -v- The Law Society (Unreported, 15 September 2000)

“The purpose of intervention is to allow the Law Society to protect the public interest against the activities of dishonest or incompetent solicitors and to avoid possible financial defaults by solicitors.”

Protection of the public is achieved initially by the vesting practice monies in the SRA and by the SRA taking possession of the practice documents (which includes client files and documents) prior to distribution. This is done through the auspices of an intervention agent who will normally be a solicitors practice in the locality of the firm being intervened in.

The SRA stress that an intervention is not a disciplinary outcome but a protective response to perceived circumstances which could be potentially detrimental to clients.

Forms of intervention

There are effectively two forms of intervention:

• A full intervention – which has the consequence of closing down the firm intervened in, and
• A limited intervention – often referred to as a section 44B inspection – which empowers the SRA to inspect documents as part of the disciplinary process.

We will deal only with the full intervention in this item.

Power to intervene

The power to intervene is recognised by the courts as being a drastic one and a step which should not be undertaken lightly by the regulator. Quoting again from the case of Kevin Dooley v The Law Society, there is a need to:

“carry out a balancing exercise between the need in the public interest to protect the public from dishonest solicitors and the inevitably very serious consequences if the intervention continues.”

A full and clear discussion of the issues involved in determining whether an intervention is appropriate can be found in Holder v The Law Society [2003] EWCA Civ 39 (24 January 2003).

The power to intervene arises under a number of statutory provisions, depending upon the nature of the practice being intervened in. These are:

• Solicitors’ practices – section 35 and Schedule 1 of the Solicitors Act 1974 (as amended);
• Registered European lawyers – section 35 and Schedule 1 of the Solicitors Act 1974 as applied by the European Communities (Lawyers Practice) Regulations 2000 (ECR 2000);
• Registered foreign lawyers – Schedule 1 of the Solicitors Act 1974 as applied by paragraph 5 of Part II of Schedule 14 of the Courts and Legal Services Act 1990);
• Recognised bodies – Schedule 1 of the Solicitors Act 1974 as applied by paragraphs 32-35 of Schedule 2 of the Administration of Justice Act 1985).

Before the SRA can intervene it must apply a two stage test:

1. are there grounds for an intervention?
2. if there are, is it necessary to intervene to protect the public?

Both parts of the test must be capable of being satisfied before the intervention can proceed.

An intervention can normally only take place following the decision of the intervention panel – of which more later.

The grounds for an intervention – solicitor or REL

The grounds upon which an intervention can take place in the practice of a solicitor or REL are set out in Part 1 of Schedule I of the Solicitors Act 1974 and are:

• suspicion of dishonesty on the part either of the solicitor or of an employee of the solicitor or of a PR of a deceased solicitor in connection with the solicitor’s practice;
• undue delay by PRs of a deceased solicitor;
• the solicitor has failed to comply with the Solicitors’ Accounts Rules, the Solicitors’ Code of Conduct or the Solicitors’ Indemnity Insurance Rules;
• the solicitor has been adjudged bankrupt or made an arrangement with creditors;
• the solicitor has been committed to prison;
• being a sole solicitor he is incapacitated by illness or accident to such an extent that he cannot attend his practice;
• the solicitor lacks the capacity (within the meaning of the Mental Health Act 2005) to act as a solicitor and powers under that Act have been exercised against him;
• the solicitor has been struck off or suspended from practice;
• a sole solicitor has abandoned his practice;
• a sole solicitor is incapacitated by age to such an extent as to be unable to attend to his practice;
• a sole solicitor is acting as such within 18 months of an intervention on the grounds of dishonesty;
• a person has acted as a solicitor at a time when he did not have a practising certificate which was in force;
• a solicitor has failed to comply with a condition on his practising certificate to the effect that:
  • he may only work in approved employment,
  • he may only work as a member of an approved partnership,
  • he may only work as as an officer of a body recognised by the Council of the Law Society under section 9 of the M1 Administration of Justice Act 1985,
  • he may only work in any specified combination of those ways.

If the power of intervention arises from more than one of these grounds then all of the grounds must be included in the reasons given for the intervention. Note, however, that the existence of one or more of the grounds listed above exists does not automatically result in an intervention – the second part of the test must still be satisfied, namely that it is necessary to intervene to protect the public. It should also be noted that the intervention takes place into the practice of a solicitor – not necessarily in a solicitors’ practice. Thus, for example, where it is possible to distinguish, an intervention may take place only into the practice of two out of three partners. This is fairly rare however and in most cases the intervention will lead to the closure of the whole practice.

The grounds for an intervention – RFL

So far as an intervention into a multi-national law firm is concerned (i.e. one in which there are registered foreign lawyers (RFLs)), you should note that the grounds for the intervention are slightly different from those set out above. The grounds in relation to a multi-national law firm are set out in para 5 of Schedule 14 to the Courts and Legal Services Act 1990. This provides that the grounds for the intervention are:

• there is a suspicion of dishonesty on the part of the RFL, or on the part of an employee of the multi-national partnership;
• in the case of a RFL who has died, there is a suspicion of dishonesty on the part of his personal representative;
• the RFL has failed to comply with rules made under section 32 or 37(2)(c) of the Solicitors Act 1974 – i.e. in relation to the Solicitors’ Accounts Rules and Solicitors’ Indemnity Insurance Rules;
• a bankruptcy order has been made against the RFL or he has made a composition or arrangement with his creditors;
• the RFL has been committed to prison in any civil or criminal proceedings;
• powers under the Mental Health Act have been exercised in respect of the RFL;
• the name of the RFL has been struck from the register or his registration has been suspended or cancelled;
• the RFL has purported to act as a member of a multi-national partnership at a time when he was not registered;
• the RFL has failed to comply with any condition, subject to which he is registered.

Note that, where notices are served (see below) the notices served on an RFL will be different from those served upon a solicitor or REL and the notices served on a RFL who is a director, member or shareowner in a recognised body will need to be different.

The grounds for an intervention – incorporated practices

The grounds for intervening in an incorporated practice are set out in para 32 of Schedule 2 to the Administration of Justice Act 1985. Those grounds are:

• the recognised body has failed to comply with any rules applicable to it by virtue of section 9 of this Act – Solicitors Code of Conduct, Solicitors Accounts Rules etc.;
• a person has been appointed receiver or manager of property of a recognised body;
• a winding-up order or an administration order has been made or a resolution for voluntary winding-up has been passed; or
• there is a suspicion of dishonesty on the part of any officer or employee of a recognised body in connection with that body’s business or in connection with any trust of which that body is or formerly was a trustee.

Again be aware of the need for the SRA to have served the appropriate notices upon the appropriate people.

Notice of an intervention

If a power to intervene has arisen as a result of a suspicion of dishonesty the reason for that suspicion is often not provided to the solicitor and he or she may not be given an opportunity to provide an explanation concerning those suspicions before the intervention takes place. The solicitor’s only remedy is to apply to the High Court to have the intervention decision overturned.

However, where the intervention is in respect of a breach of the SRA Accounts Rules, SRA Indemnity Insurance Rules or the SRA Code of Conduct then an advance notice must be served by the SRA stating that intervention powers have arisen. The notice period need not be long and no minimum period is set out in the legislation. The SRA may, if the solicitor responds to the notice, agree to enter into a regulatory settlement whereby the practice is closed and other steps are taken.

The Lawyers Defence Group has substantial experience of closures in these circumstances and may be able to assist you in avoiding a costly intervention. However, bear in mind that a voluntary closure is going to give rise to the need for professional indemnity run-off cover which is a cost which may be avoided if the firm were to be intervened in.

Note that different notices need to be served according to whether it is a solicitor, REL, RFL or recognised body. Note also that notice will be served upon the solicitors’ bank, where known, requesting that cheques drawn on any affected account not be honoured and simply returned marked to the effect that the firm is subject to an intervention.

The decision to intervene

Decisions to intervene in a firm are normally taken by a panel at the SRA. Usually the whole panel will be involved in reaching that decision other than in emergency situations.

Once the decision to intervene has been made, the bank accounts will be frozen and, if a notice is to be given, the notice sent out. If there is a concern that vital information may be destroyed the SRA will undertake a “walk-in” intervention – usually on the day the decision is made. If the intervention is not a “walk-in” then a date for the intervention will be set, usually in conjunction with the practice who is acting as the intervention agent for that area and who will normally be appointed to deal with the practical aspects of the intervention. The intervention officer will also inform the Compensation Fund (in case there is a shortage on the client account at the intervened in firm) and will let other relevant parts of the SRA know that the firm has closed.

What happens during an intervention?

On the day of the intervention, the intervention agent will go to the offices of the intervened in solicitor and take over the accounts and papers. The agent will explain to the solicitor that the files, documents and monies of the firm have vested in the SRA and will ensure that the solicitor is aware that there is a right to contest the intervention (this will be covered shortly) and, if the solicitors practising certificate is to be suspended, the effect of this.

The agent will then arrange for the firm’s papers and files to be scheduled prior to taking clients instructions as to how they are to be dealt with and transfer the bank account to the control of the SRA. Note that whilst neither the agent nor the SRA will take on the running of any of the client matters they will attempt to identify those matters which are urgent and which are likely to require immediate attention and will focus their activities on these.

Documents and money taken from the firm will be kept safe until they can be returned to their owners, which may not be straightaway if:

• the accounts have not been kept properly;
• money has gone missing, or
• the SRA have not been able to contact the clients.

Consequences of intervention

Aside from the obvious consequences of an intervention such as closure of the practice and the distribution of files, a number of other consequences arise.

The first is that the solicitor’s practising certificate may be suspended. Section 15(1A) of the Solicitors Act 1974 provides:

(1A) Where the power conferred by paragraph 6(1) or 9(1) of Schedule 1 has been exercised in relation to a solicitor by virtue of paragraph 1(1)(a)(i), (c)(so far as it applies to rules made by virtue of section 32) or (e) of that Schedule, the exercise of that power shall operate immediately to suspend any practising certificate of that solicitor for the time being in force.

in other words the practising certificate will be suspended if the SRA has reason to suspect dishonesty, there have been accounts rule breaches or the solicitor has been committed to prison, unless the SRA take the view that under section 15(1B) the certificate is not to be suspended.

A further consequence of intervention is that the solicitor intervened in becomes liable for the costs of the intervention. These can be considerable and most solicitors who are in a position to avoid an intervention should think seriously about doing so. A solicitor who has been intervened in may continue to raise bills and pursue costs, but any sums recovered will vest in the SRA and be used to offset the intervention costs incurred. Any costs incurred are recoverable from the solicitor as a debt.

That debt can be settled either in one lump sum, if the SRA agree, by instalments and you can pay by credit card (where a charge of 1.75 per cent is made) or if paying instalments, by standing order.

Note however that if the SRA do not receive satisfactory proposals from you as to payment, they will take enforcement action to recover the costs.
If one of the reasons for the firm having been intervened in was dishonesty or that clients money was not being correctly applied, then a further consequence of an intervention could be that claims will be made against the compensation fund.

Finally there may a need for the solicitor intervened in to be referred to the Solicitors Disciplinary Tribunal.

Challenging an intervention

Whilst a solicitor cannot make an internal appeal to the SRA against a decision to intervene, once the intervention decision has been made the solicitor can appeal to the High Court for the decision to be withdrawn.

This application must be made within 8 days of the service of the intervention notice or of the walk-in where notice is served. This 8 day limit is a statutory time limit and cannot be extended by the court or waived by the SRA.

This is the only remedy open to the solicitor (other than judicial review of some of the decisions taken in connection with the intervention) – even if the intervention arose as the result of negligence on the part of the SRA.

Provided that time permits, it is also possible to apply for an injunction to prevent the intervention from taking place prior to the challenge being heard – but clearly the court will be reluctant to grant this where it feels that there is a serious public interest argument in favour of intervention.

It is probably worth mentioning that successful intervention challenges are not a common occurrence!

More information about interventions

If you have received a notice that your practice is to be intervened in, or if you are aware of circumstances which might lead to an intervention being imminent, then you should contact the Lawyers Defence Group as a matter of urgency.

Not only can we put you in contact with someone who will be able to guide you through the process and ensure that the intervention itself is as untraumatic as it is possible for it to be, but if we are involved at an early enough stage we may be able to assist you in agreeing with SRA that there should be voluntary closure of your practice – thus avoiding the potentially excessive intervention agents charges which you would otherwise have to bear.

To contact us, either:

• phone on 0333 888 4070;
• email on help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ]
• request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time, or
• write to Lawyers Defence Group, Richard Nelson LLP, Priory Court, 1 Derby Road, Nottingham, NG9 2TA

Introduction

The Solicitors Disciplinary Tribunal (SDT) was established under section 46 of the Solicitors Act 1974 to adjudicate upon allegations of professional misconduct by solicitors, registered foreign lawyers and those who are employees of solicitors and to hear applications for restoration to the roll. Its primary remit is to “protect the public and to maintain the reputation of the solicitors’ profession for honesty, probity, trustworthiness, independence and integrity.”

Although it is open to anyone to make a direct application to the SDT, most are made on behalf of the Solicitors Regulation Authority (SRA). The Tribunal does not investigate cases or collect evidence in support of these applications but simply reaches a decision based on the evidence put before it by the parties to the matter. Whilst the SRA is always legally represented before the SDT, respondents can choose whether to be legally represented or not.

Since the enactment of the Legal Services Act 2007 the Tribunal’s administration and financial arrangements have been managed wholly independently from the Law Society. The Tribunal’s administration is run by company limited by guarantee – Solicitors Disciplinary Tribunal Administration Limited. It has been held to be an impartial tribunal for the purposes of Article 6 of the European Convention on Human Rights.

The SDT has the power to strike off a solicitor from the roll, suspend a solicitor from practice or fine or reprimand a solicitor, and whilst it cannot make an award of compensation it can make an award of costs. Whilst over 90% of all cases brought before the SDT are brought by the SRA, it is open to anyone to bring a matter before it.

The SDT has jurisdiction over solicitors, former solicitors, registered foreign lawyers, registered European lawyers, recognised bodies and their members, managers of a recognised body who are not solicitors and those who are employed or remunerated by recognised bodies or recognised sole practitioners.

The SDT currently consists of just over 50 members, approximately two-thirds of whom are solicitors, and each individual tribunal will be made up of two solicitors and one lay member.

The SDT is permitted to take evidence on oath and can, operating through the High Court, issue witness summonses to compel the attendance of witnesses. Orders of the SDT, when files with the SRA, may be enforced as if they were orders of the High Court.

Thus, a matter will be likely to be referred to the SDT if, for example:

• there is evidence that the conduct was pre-meditated, repeated, systematic or otherwise dishonest,
• the solicitor abused a position of authority or trust,
• a client’s or other person’s interests have been seriously compromised, or
• any victim of the misconduct was vulnerable,

whilst it is less likely that the matter will be pursued if:

• the SDT is likely to impose a nominal penalty,
• the misconduct resulted from a genuine mistake,
• the solicitor is elderly and no longer practising, or
• the solicitor was suffering from significant mental or physical ill health at the time of the misconduct – unless the misconduct was serious or may be repeated.

Referrals to the SDT

Most referrals to the Solicitors Disciplinary Tribunal (SDT) come from the Solicitors Regulation Authority, although this is by no means the only route by which a matter may be referred and it is open to anyone to make an application. For example, for the year ended 30th April 2011, of the 227 applications made to the SDT, 4 of were made directly from members of the public.

Referral by the SRA

The SRA will only refer a matter to the SDT if it passes two tests:

1. the evidential test – i.e. there must enough evidence to provide a “realistic prospect” that a solicitor will be found guilty of misconduct – in other words that the SDT is more likely than not to make a finding of misconduct; and
2. the public interest test – i.e. a finding of misconduct is likely to lead to a fine, suspension, striking off or other power vested in the SDT and their are no pubic interest factors which would weigh against that course of action.

Thus, a matter will be likely to be referred to the SDT if, for example:

• there is evidence that the conduct was pre-meditated, repeated, systematic or otherwise dishonest,
• the solicitor abused a position of authority or trust,
• a client’s or other person’s interests have been seriously compromised, or
• any victim of the misconduct was vulnerable,

whilst it is less likely that the matter will be pursued if:

• the SDT is likely to impose a nominal penalty,
• the misconduct resulted from a genuine mistake,
• the solicitor is elderly and no longer practising, or
• the solicitor was suffering from significant mental or physical ill health at the time of the misconduct – unless the misconduct was serious or may be repeated.

Full details of the basis and criteria for referral to the SDT will be found in the Code for Referral to the Solicitors Disciplinary Tribunal on the SRA website.

It should be noted that a decision by the SRA to refer a matter to the SDT is not in itself a finding of misconduct – the finding, if any, will come from the SDT itself. For this reason it is not possible for someone who has been referred to appeal against that referral.

Application to the SDT

An application to the SDT will be made in the form specified by the rules and must be supported by a statement which sets out any allegations together with the facts supporting the application and each allegation contained in it. Any document which is referred to in the statement needs to be exhibited to it. In the case of an application by the SRA, they will compile a Statement of Allegations and send this to the SDT.

The application should be lodged with the Clerk to the SDT, who will then determine whether or not there is a prima facie case to answer.

The procedure at the SDT is governed by the Solicitors (Disciplinary Proceedings) Rules 2007.

If there a case to answer then a “pre-listing day” date will be set and the respondent will be informed of that date and served with copies of the application and supporting papers. The respondent is also provided with a questionnaire to be completed and returned to the SDT’s Listing Officer in advance of the pre-listing day. The pre-listing day is when the respondent will enter a plea, dates agreed and the estimated length of the hearing determined.

The respondent will not normally be required to attend the pre-listing day provided they have fully completed and returned the questionnaire to the SDT in advance. It is vital in the interests of the respondent that they return the questionnaire – especially if they do not plan to attend the pre-listing day, so that sufficient time can be allowed for the substantive hearing and so that the hearing is not arranged on a date when the respondent cannot attend.

An application can also be made in respect of a person who is employed or remunerated by a solicitor. Section 43 of the Solicitors Act 1974 allows the SRA (as the delegated body of the Law Society) to make an application to the SDT for an order controlling the employment of such a person and the SDT can make an order which gives the SRA control of the future employment of an individual clerk in a solicitor’s practice. Whilst the Order remains in force any solicitor wishing to employ the clerk must first obtain the written consent of the SRA before they can do so. Note however that it is only the SRA who can bring an application in respect of persons employed or remunerated by a solicitor.

The SDT also has the power to restore to the Roll the name of a former solicitor whose name has been struck off. In such a case the application must be supported by an affidavit setting out details of the original Order, give the full employment history of the applicant since the Order was made and should set out the applicant’s intentions as to future employment within the profession.

It should be noted that an application to restore is not an appeal against the original decision to strike off – merely an opportunity for the applicant to show that they are now a fit and proper person to have their name restored to the Roll.

When reaching a decision as to restoration the SDT will take account of various issues including:

• the time that has passed since the original striking off occurred – it is unlikely that an applicant will be restored to the Roll within six years of the original Order;
• whether the applicant can show they have been rehabilitated and that they have been employed in the intervening period (preferably in a legal environment);
• the future intentions of the applicant and whether another solicitor would be willing to employ them were they to be restored to the Roll;
• whether the applicant can demonstrate that they have made a sustained effort to meet any liability to the Compensation Fund and, where appropriate, that the effort will continue in the event of restoration;
• whether there has been a criminal conviction recorded against the applicant involving dishonesty (or whether there was a finding of dishonesty by the SDT) – this can constitute an all but insurmountable obstacle to a successful application for restoration.

Thus a solicitor seeking restoration must prove both his or her fitness to be a solicitor and that restoration would not adversely affect the good name and reputation of the solicitors’ profession nor be contrary to the interests of the public.

The Hearing

Normally a hearing before the SDT will held in public although the SDT does have the power to consent to all or part of the case being heard in private.
In order to ensure that the actual hearings are as short as possible, often Tribunal members will read the allegations in advance of the hearing and the parties to the hearing will be encouraged to agree as much as possible before the hearing takes place. In order to help expedite matters further, the SDT rules provide that the applicant can require the respondent to indicate which matters of fact are disputed. All applicants are encouraged to give this indication so as to avoid increased costs.

Either party may appear before the tribunal or may appoint a person to represent them. The SRA will normally use solicitors in private practice selected from a panel to make the applications for them and to appear on their behalf at the hearing. In appropriate cases Counsel may be instructed to appear for either party.

It is open to either party to call witnesses and evidential procedures are similar to those to be fund in the High Court. Strict rules of evidence do not, however, apply.

The respondent need give no formal answer to any allegations that are made, although it is usually advisable for at least a written statement to be submitted so that if the Tribunal is reading through the papers prior to the hearing then they will have an idea about the respondents case. Indeed, in a complex case the Tribunal may even order that a detailed answer be provided so that the issues may be identified. Parties are also expected to disclose in good time all documents upon which they intend to rely and to co-operate with each other in relation to evidence and statements.

If the respondent fails to appear at the hearing the SDT may deal with the matter in his or her absence, although a re-hearing may be possible if there was a good reason for the non-attendance.

Hearings may be adjourned or postponed provided that a valid reason exists. The SDT has issued guidelines as to when such a request for an adjournment would usually not be accepted and these include:

• the existence or possibility of other proceedings arising from the same facts unless there is a genuine chance that those other proceedings would be prejudiced,
• conflicting appointments,
• lack of readiness,
• illness evidenced by a doctor’s sick note, and
• financial difficulties

Normally the SDT will announce its findings at the end of the hearing and, if there is a finding against the respondent, will usually give details of the sanction it intends to impose. Detailed findings and reasons may be provided at a later date – although usually within 8 weeks. Any order which is made takes effect as soon as it is filed with the Law Society – thus if there is a finding leading to a suspension or striking off there may need to be a stay pending an appeal.

Details of any findings and orders will be published on the SRA website.

Powers and costs in the SDT

The powers of the SDT are set out in section 47 of the Solicitors Act 1974 (as amended). This provides that, except in the case of applications under sections 42 and 43 of the Act, the Tribunal:

“shall have power to make such order as it may think fit, and any such order may in particular include provision for any of the following matters:

(a) the striking off the roll of the name of the solicitor to whom the application or complaint relates;
(b) the suspension of that solicitor from practice indefinitely or for a specified period;
(ba) the revocation of that solicitor’s sole solicitor endorsement (if any);
(bb) the suspension of that solicitor from practice as a sole solicitor indefinitely or for a specified period;
(c) the payment by that solicitor or former solicitor of a penalty, which shall be forfeit to Her Majesty;
(d) in the circumstances referred to in subsection (2A), the exclusion of that solicitor from providing representation funded by the Legal Services Commission as part of the Criminal Defence Service (either permanently or for a specified period);
(e) the termination of that solicitor’s unspecified period of suspension from practice;
(ea) the termination of that solicitor’s unspecified period of suspension from practice as a sole solicitor;
(f) the restoration to the roll of the name of a former solicitor whose name has been struck off the roll and to whom the application relates;
(g) in the case of a former solicitor whose name has been removed from the roll, a direction prohibiting the restoration of his name to the roll except by order of the Tribunal;
(h) in the case of an application under subsection (1)(f), the restoration of the applicant’s name to the roll;
(i) the payment by any party of costs or a contribution towards costs of such amount as the Tribunal may consider reasonable.

It should be remembered, however, that the SDT may make such order “as it may think fit”. Therefore, although not specifically referred to in the list above, the SDT may also reprimand the solicitor or order that the solicitor be censured.

So far as section 43, this applies to a person who is or was employed or remunerated by a solicitor in connection with his practice but is not himself a solicitor. Here, the only order which may be made is an order that:

“as from such date as may be specified in the order no solicitor shall, except in accordance with permission in writing granted by the Society for such period and subject to such conditions as the Society may think fit to specify in the permission, employ or remunerate, in connection with his practice as a solicitor, the person with respect to whom the order is made.”

Section 42, meanwhile, which relates to failure to disclose the fact of having been struck off or suspended, carries with it a mandatory sanction, and thus there is no discretion which the SDT may exercise.

Where the SDT orders a fine, that fine is paid to the Treasury.

Costs

The SDT is able to make such order as to costs as it thinks fit and can order such payment of costs or a contribution towards costs as it considers reasonable. This can even include the costs of the Law Society’s Investigation Accountant. In some cases it may order costs not to be enforced without leave of the Tribunal. Each case is different and will be decided on its own facts.

The Tribunal does not award compensation. However, if following a Finding by the Law Society of inadequate professional services on the part of a solicitor, the Law Society makes a Direction that compensation be paid, the Tribunal may order that such Direction be treated for the purpose of enforcement as if it were contained in an Order of the High Court.

Contact us

If you have a query concerning powers and costs in the SDT and wish to contact us, you can:

• phone on 0333 888 4070;
• email on help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ];
• request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time; or
• write to Lawyers Defence Group, Richard Nelson LLP, Priory Court, 1 Derby Road, Nottingham, NG9 2TA;

Introduction

The dishonesty of a solicitor, registered foreign lawyer, registered European lawyer, or the manager or employee of recognised bodies or recognised sole practitioner is regarded as an extremely serious matter and will almost certainly result in a referral to the Solicitors Disciplinary Tribunal and will, if it is proven, almost invariably result in a striking off. That was a principle set out in the case of Solicitors Regulation Authority v Sharma [2010] EWHC 2022 (Admin), where Mr Justice Coulson stated that where a solicitor was found to have been dishonest, unless exceptional circumstances could be shown, the normal consequences should be for a solicitor to be struck off the Roll of Solicitors.

For behaviour to be dishonest it does not necessarily have to involve acts which would amount to dishonesty for criminal law purposes – although any act of dishonesty by a solicitor or his or her employee could be sufficient to see that person referred to the Solicitors Disciplinary Tribunal, whether or not that dishonesty took place as part of a legal practice.

What constitutes dishonesty?

Dishonesty can take many forms – not all will be equally as obvious. Some are obvious, such as mortgage fraud, property fraud, tax evasion, involvement in scams and other overt criminal activity. Other acts of dishonesty may not be so apparent, or may be of the nature that a solicitor tries to justify in his or her own mind the committing of the act. These may include matters such as taking advantage of a client, lying to a client (possibly to cover up acts of negligence), overcharging a client, making a false expenses claim, avoiding a fare on a bus or train or even giving misleading costs information.

The test for dishonesty in the courts has undergone recent clarification. For many years the definition of dishonesty was that which was given in the case of Royal Brunei Airlines v Phillip Tan Kok Ming [1995] 2 AC 378. This was then clarified by the case of Twinsectra Limited v Yardley and Others [2002] UKHL 12 which took the view that ‘for the most part dishonesty is to be equated with conscious impropriety’.

The test for dishonesty in the Courts and Tribunals varies according to the nature of the court and the consequences of a finding. In regulatory matters, tribunals have tended to adopt an objective-subjective approach – a topic which was addressed in the recent case of Bryant and Bench v The Law Society [2007] EWHC 3043. The court decided that, notwithstanding the use of a purely objective test in some previous cases, (such as Barlow Clowes International Limited v Eurotrust International Limited [2005] UKPC 37) the test for dishonesty should be the one set out in the decision of the Court of Appeal in Bultitude (Bultitude v Law Society [2004] EWCA Civ 1853) which stated that the test to be applied in solicitors’ disciplinary proceedings is the Twinsectra test that is to say a test which takes account of a separate subjective element. The fact that the Barlow Clowes case subsequently placed a different interpretation on Twinsectra was not relevant in such cases because that related to the accessory liability principle and did not alter the substance of the test accepted in Bultitude.

Thus the correct test for dishonesty should be:

• would the conduct be deemed to be dishonest by the ordinary standards of honest people, and
• if so, did the person committing the dishonest act know that by those standards his or her conduct would be regarded as dishonest

The Court in Bryant and Bench stated:

“In our judgement, the decision of the Court of Appeal in Bultitude stands as binding authority that the test to be applied in the context of solicitors’ disciplinary proceedings is the Twinsectra test as it was widely understood before Barlow Clowes…. As we have observed earlier, the test corresponds closely to that laid down in the criminal context by R v Ghosh…. It is true …. that disciplinary proceedings are not themselves criminal in character and that they may involve issues of dishonesty that could not give rise to any criminal liability (e.g. lying to a client as to whether a step had been taken on his behalf). But the tribunal’s finding of dishonesty against a solicitor is likely to have extremely serious consequences for him both professionally (it will normally lead to an order striking him off) and personally. It is just as appropriate to require a finding that the defendant had a subjectively dishonest state of mind in this context as the court in R v Ghosh considered it to be in the criminal context.”

What can constitute dishonest behaviour

Dishonesty can take many forms and, although often it does involve criminal actions or intent, need not always be dishonesty as in the criminal sense.

The SRA defines dishonesty as ” Someone acting in a way that they know to be deceitful or saying things that they know to be untrue” – although this is probably too simplistic a definition to be of any value.

So far as serious and organised acts of dishonesty are concerned, the SRA used to produce a number of warning cards that the profession and others could use to help them recognise and deal with dishonesty in the profession. As at the time of writing these have been withdrawn, apparently because they contained guidance which was at odds with the concepts of principle-based regulation!
In their place, the SRA have produced some limited guidance on their web site dealing with recognising fraud and dishonesty and which looks in particular at what should be reported to them.

Aside from the more obvious examples of fraud, that were dealt with in the warning cards namely fraudulent financial arrangements, money laundering, and property fraud, a number of other actions by a solicitor will be regarded as being dishonest. These include:

• taking advantage of a client – for example purchasing a client’s property at an under-value or persuading a client to take steps which are not in the client’s interests but are in the interests of the solicitor or someone associated with the solicitor,
• intentionally overcharging a client for work carried out,
• providing misleading costs information,
• lying to a client or hiding the truth from a client – whether for reasons of personal gain or to hide negligence or incompetence,
• making a secret profit – that is to say benefiting financially from the client even where the client has not themselves suffered a loss, and
• unauthorised or fraudulent withdrawals from client account.

It is also worth bearing in mind that it is irrelevant whether or not any client or other person is harmed by an act in determining whether the act is to be regarded as dishonest. In the case of Sharma referred to earlier, it was stated that:

Their [the tribunal] first finding was that “there was no harm to the public”. I assume that by this that the tribunal meant that no client suffered financial loss. It seems to me that that is a very narrow way of looking at dishonesty, and wholly fails to recognise the wider issues involved. In my judgment there is harm to the public every time a solicitor behaves dishonestly. It is in the public interest to ensure that, as it was put in Bolton, a solicitor can be “trusted to the ends of the earth.”

Duty to Report

If you suspect that another solicitor, even one in your own firm, has been guilty of dishonest behaviour, then you must report that behaviour. Outcome O(10.4) requires specifically, that
” you report to the SRA promptly, serious misconduct by any person or firm authorised by the SRA, or any employee, manager or owner of any such firm (taking into account, where necessary, your duty of confidentiality to your client);”.

To self-report or report another lawyer or firm regulated by the SRA you can either complete the report form to be found on the SRA web site and return it to them or you can email them at report [Email address: report #AT# sra.org.uk - replace #AT# with @ ], or telephone them on 0870 606 2555.

Contact LDG

If you are facing possible sanctions as a result of dishonesty or if you have been, or believe that you will be, charged with an offence of dishonesty and want to take steps to help preserve your practising certificate or minimise any sanction which might be imposed upon you then you should contact the Lawyers Defence Group for professional and effective advice and assistance.

Similarly, if you believe that someone in your practice is committing acts of fraud or dishonesty and you want to ensure that you safeguard your own position as far as possible before reporting them to the SRA, then please contact the Lawyers Defence Group and we will be pleased to assist you in making a report to the SRA in the appropriate terms.

To contact us, you can:

• phone on 0333 888 4070;
• email on help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ];
• request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time; or
• write to Lawyers Defence Group at Richard Nelson LLP, Priory Court, 1 Derby Road, Nottingham, NG9 2TA.

Introduction

Misconduct is a fundamental concept in the regulation of all professionals and will usually result in a some form of regulatory sanction, the exact nature of which will be determined by the severity of the misconduct, being imposed upon that professional. Misconduct is a widely drawn concept, and can arise from a number of different circumstances; moreover, a finding of misconduct may not even arise from conduct which would, in the normal sense, be regarded as either wrong or dishonest.

In this section we shall look at misconduct in general rather than at the specific rules which could or would give rise to a finding of misconduct. Specific issues such as those actions (or failures to act) which could give rise to a specific finding of misconduct – under, for example, the SRA Disciplinary Procedure Rules 2011 – together with the manner in which misconduct is dealt with by the Solicitors Regulation Authority, are dealt with elsewhere on this web site.

What is Misconduct?

The duties which are placed upon solicitors, registered foreign lawyers, registered European lawyers, recognised bodies, managers and employees of recognised bodies and recognised sole practitioners (for the sake of brevity referred to as “solicitors and their staff”) are wide and derive from a number of different sources including statutory, regulatory and common law. Before we proceed to look at these duties in more detail, however, it is worth looking at briefly at how misconduct has been defined.

In his book Professional Ethics: The Consultant Professions and Their Code, F.A.R. Bennion states:

“Integrity, probity or uprightness is a prized quality in almost every sphere of life….. The best assurance the client can have … is the basic integrity of the professional consultant….. A reputation for integrity is an indivisible whole…. [and] has many aspects and may be displayed (or not) in a wide variety of situations … the preservation of confidences, the display of impartiality, the taking of full responsibility are all aspects of integrity. …. Integrity is the fundamental quality, whose absence vitiates all others.”

This need for integrity was echoed by Sir Thomas Bingham MR in Bolton v Law Society [1994] 1 WLR 512 at 518A-519B when he said:

“It is required of lawyers practising in this country that they should discharge their professional duties with integrity, probity and complete trustworthiness.

Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal. Lapses from the required high standard may, of course, take different forms and be of varying degrees. The most serious involves proven dishonesty. In such cases the tribunal has almost invariably, no matter how strong the mitigation advanced for the solicitor, ordered that he be struck off the Roll of Solicitors. If a solicitor is not shown to have acted dishonestly, but is shown to have fallen below the required standards of integrity, probity and trustworthiness, his lapse is less serious but it remains very serious indeed in a member of a profession whose reputation depends upon trust. A striking off order will not necessarily follow in such a case, but it may well. Only in a very unusual and venial case of this kind would the tribunal be likely to regard as appropriate any order less severe than one of suspension.”

The practical application of the term conduct, therefore, goes further than merely something which contravenes specific laws or rules; it can be something which simply brings the profession into disrepute or has some inference of conduct which is unbefitting. In other words, conduct “which would be regarded as improper according to the consensus of professional (including judicial) opinion” (Ridehalgh v Horsefield [1994] Ch 205).

Statutory Duties

The Solicitors Act 1974 at section 31, for example, provides to the Law Society (now operating through the Solicitors Regulation Authority) the powers to make rules relating to conduct and to enforce those rules:

(1) Without prejudice to any other provision of this Part the Council may, if they think fit, make rules, with the concurrence of the Master of the Rolls, for regulating in respect of any matter the professional practice, conduct and discipline of solicitors and for empowering the Society to take such action as may be appropriate to enable the Society to ascertain whether or not the provisions of rules made, or of any code or guidance issued, by the Council are being complied with.

(2) If any solicitor fails to comply with rules made under this section, any person may make a complaint in respect of that failure to the Tribunal.

whilst other powers derive from other statutory sources, for example the Courts and Legal Services Act 1990 which requires, at sections 27 & 28, certain standards of conduct from those exercising a right of audience before the courts which override other legal duties. In relation to statutory sources you need to be aware also of provisions in the Administration of Justice Act 1985, the Access to Justice Act 1999, the Financial Services Act 1986 and of course the Legal Services Act 2007.

Regulatory Duties

Despite the fact that it uses the term “misconduct” on a regular basis (as for example in Outcome O(10.4) in Chapter 10 of the SRA Code of Conduct which states that solicitors must “report to the SRA promptly, serious misconduct by any person or firm authorised by the SRA, or any employee, manager or owner of any such firm (taking into account, where necessary, your duty of confidentiality to your client);”), it is surprisingly difficult to pin down precisely what the SRA means by the term. The SRA Disciplinary Procedure Rules 2011 somewhat unhelpfully states that “the term “misconduct” shall mean conduct or behaviour resulting in an SRA finding.” The Code itself contain no definition of misconduct in Chapter 14 (interpretation) despite using the term in various places.

By implication, it is clear that the SRA Code of Conduct (from now on referred to as “the Code”) and indeed the handbook in general regards misconduct as the failure to act in accordance with the Code and other rules or to act in such a way that the interests of clients, the reputation of the profession or the interests of the public as a whole are put at risk. These requirements can encompass almost all forms of unprofessional behaviour.

The core duties to which a solicitor is subject, and the ones which can have the widest general application, are to be found in the mandatory Principles set out in the SRA Handbook and which require that solicitors:

1. uphold the rule of law and the proper administration of justice;
2. act with integrity;
3. not allow their independence to be compromised;
4. act in the best interests of each client;
5. provide a proper standard of service to their clients;
6. behave in a way that maintains the trust the public places in them and in the provision of legal services;
7. comply with their legal and regulatory obligations and deal with their regulators and ombudsmen in an open, timely and co-operative manner;
8. run their business or carry out their role in the business effectively and in accordance with proper governance and sound financial and risk management principles;
9. run their business or carry out their role in the business in a way that encourages equality of opportunity and respect for diversity; and
10. protect client money and assets.

Whilst these duties are less vague than the principles that were to be found in the 2007 Solicitors Code of Conduct, nevertheless they are still worded very generally and, the cynical might say could be used by the Solicitors Regulation Authority as the basis for actions against solicitors and their staff in circumstances where there has not been a breach of any of the other, more specific rules in the Code. The notes to rule 1 do provide some additional, if slight, guidance as to what is expected from solicitors, however, they also make it very clear that the SRA is not willing to be tied down in terms of their application when they state at paragraph 2.15:

” Our approach to enforcement is proportionate, outcomes-focused and risk-based. Therefore, how we deal with failure to comply with the Principles will depend on all the particular circumstances of each case. Our primary aim is to achieve the right outcomes for clients.”

We will look in more detail at the principles in a separate section on this web site.

So far as the rules of the SRA are concerned, and indeed so far as any other rules imposed by other bodies are concerned (because the principles and certain elements of the Code make it abundantly clear that misconduct can arise from the breach of other non-SRA rules), misconduct can arise from any failure to observe the rules, regulations and other professional duties to which solicitors are whether or not that failure in itself amounts to anything which could be regarded as a lack of integrity. Thus, for example, accounting breaches which are not brought about by a desire to defraud, and which may not in any way be likely to bring the profession into disrepute, may nevertheless amount to misconduct.

The difficulties which this could potentially cause to firms is enhanced by the fact that we are now talking about a system of regulation which does not deal in specifics but only in general statements or outcomes. Thus a solicitor may now genuinely believe that he has complied with the requirements of the code yet still have committed an act of misconduct.

Wider Duties

Similarly, consideration must be given not only as to how a solicitor conducts himself in practice but also as to how he or she behaves in private life.

Any conviction for dishonesty, or in relation to indictable offence could result in a solicitor being disciplined. Dishonesty itself will be considered in more detail in the separate section dealing with it. However, it should be borne in mind that so far as conduct is concerned dishonesty is not limited to matters such as fraud or theft and need not in itself lead to a conviction. Thus a dishonest attempt to mislead someone which falls short of criminal dishonesty could still be viewed as being something sufficiently serious to form the basis for a finding of misconduct.

Principles 2 and 6 in particular place “out-of-work” requirements upon solicitors. Indeed paragraph 2.10 (which aims to explain principle 6) states:

“Members of the public should be able to place their trust in you. Any behaviour either within or outside your professional practice which undermines this trust damages not only you, but also the ability of the legal profession as a whole to serve society.”

How far this extends is open to some conjecture and puts the solicitor in the position of being a hostage to the “morality” of the SRA. So, beware student pranks, drunken nights out or participating in protests – peaceful or otherwise!

Duties to Report Misconduct

The SRA now places a duty upon all those who are regulated by them to report promptly, serious misconduct by any person or firm authorised by the SRA, or any employee, manager or owner of any such firm. That means that anyone employed within a solicitors’ practice is under a duty – whether they are a solicitor or a member of the support staff, and failure to do so is, of itself, misconduct.

To self-report or report another lawyer or firm regulated by the SRA you can either complete the report form to be found on the SRA web site and return it to them or you can email them at report [Email address: report #AT# sra.org.uk - replace #AT# with @ ], or telephone them on 0870 606 2555.

Contact LDG

If you are facing possible sanctions as a result of misconduct or if you have been, or believe that you will be, charged with an offence of dishonesty and want to take steps to help preserve your practising certificate or minimise any sanction which might be imposed upon you then contact the Lawyers Defence Group for professional and effective advice and assistance. To contact us, either:

• phone on 0333 888 4070;
• email on help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ];
• request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time; or
• write to Lawyers Defence Group at Richard Nelson LLP, Priory Court, 1 Derby Road, Nottingham, NG9 2TA.

Wherever there has been a change to the existing rules and/or practices and procedures of the SRA, these will be reflected in items in the main part of the navigation of this site.