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.