Provision of information and documents by solicitors

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)