Dishonesty

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.

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 dishoinest

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.

So far as serious and organised acts of dishonesty are concerned, the SRA produces a number of warning cards. You should ensure that you are aware of the content of the warning cards as you will be assumed to have read them should you become involved in any investigations into dishonesty. The current warning cards deal with:

• Fraudulent financial arrangements
• Money laundering, and
• Property fraud

These topics are dealt with elsewhere on this web site in more detail.

Aside from these more obvious examples of fraud, however, 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 – this is dealt with in more detail in relation to Solicitors Accounts Rules, and
• unauthorised or fraudulent withdrawals from client account

Duty to report dishonest behaviour

If you suspect that another solicitor, even one in your own firm, has been guilty of dishonest behaviour, then you must report that behaviour to the SRA. Rule 20.06 of the Solicitors’ Code of Conduct 2009 requires that any person regulated by the SRA must (subject, where necessary, to the client’s consent) report to the Solicitors Regulation Authority if:

(a) you become aware of serious misconduct by a solicitor, an REL, an RFL, a recognised body, a manager of a recognised body, or an employee of a recognised body or recognised sole practitioner;
(b) you have reason to doubt the integrity of a solicitor, an REL or an RFL, a manager of a recognised body or an employee of a recognised body or recognised sole practitioner; or
(c) you have reason to believe that a solicitor, an REL, an RFL, a recognised body, a manager of a recognised body, or a firm is in serious financial difficulty which could put the public at risk.

If you know, or suspect, that another regulated person, or their employee, is involved in dishonest or serious misconduct, then you should contact Fraud and Confidential Intelligence Bureau at the Solicitors Regualtion Authority using their Red Alert line on 0845 850 0999 or 01926 439673 or email redalert@sra.org.uk. Red Alert is available to all members of the profession and their staff who want to report concerns and any report which you make will be treated with strict confidentiality.

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@lawyersdefencegroup.org.uk
• 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 Solicitors, 8 The Courtyard, 707 Warwick Road, Solihull, West Midlands, B91 1TT