Recovery of papers and money by SRA

Introduction

It is possible for both the Solicitors Regulation Authority (SRA) and the Legal Complaints Service (LCS) to require that documents and/or money be made available to them by a solicitor. This can be by the SRA when they need to inspect documents or specific files in connection with an investigation into professional misconduct, by the Legal Complaints Service when handling complaints or for recovering papers or money where a solicitor has delayed unduly in dealing with matters and has failed to provide an explanation as to why. These powers are generally exercisable under paragraph 3 of Schedule 1, and section 44B of the Solicitors Act 1974.

In addition, there are powers under section 68 of the Solicitors Act 1974 whereby the High Court can make orders for the delivery by a solicitor of a bill of costs and any documents in his/her possession, custody or power even in circumstances where no business has been done by the solicitor in the High Court. A county court also has 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.

It is not intended to deal with orders of the courts under 68 of the Solicitors Act 1974 in this item, but to concentrate instead, first on the powers under paragraph 3 and then second under s 44B.

Recovery of papers and money

Paragraph 3 of Schedule 1 of the Solicitors Act 1974 gives power to the Law Society (exercisable in the first instance by the LCS and then ultimately by the SRA) to obtain papers and money where there has been undue delay and the solicitor has failed to give an adequate explanation. It states:

” …. powers conferred by Part II of this Schedule shall also be exercisable, subject to paragraphs 5(4) and 10(3), where -

1. a complaint is made to the Society that there has been undue delay on the part of a solicitor in connection with any matter in which the solicitor or his firm was instructed on behalf of a client or with any controlled trust; and
2. the Society by notice in writing invites the solicitor to give an explanation within a period of not less than 8 days specified in the notice; and
3. the solicitor fails within that period to give an explanation which the Council regard as satisfactory; and
4. the Society gives notice of the failure to the solicitor and (at the same or any later time) notice that the powers conferred by Part II of this Schedule are accordingly exercisable.”

So far as documents are concerned, the powers in Part II which are referred in paragraph 3 are to be found in paragraph 9 of Part II and provide:

1. The Society may give notice to the solicitor or his firm requiring the production or delivery to any person appointed by the Society at a time and place to be fixed by the Society—
   1. where the powers conferred by this Part of this Schedule are exercisable by virtue of paragraph 1, of all documents in the possession of the solicitor or his firm in connection with his practice or with any controlled trust; and
   2. where they are exercisable by virtue of paragraph 3, of all documents in the possession of the solicitor or his firm in connection with the trust or other matters to which the complaint relates (whether or not they relate also to other matters).
2. The person appointed by the Society may take possession of any such documents on behalf of the Society.
3. Except in a case where an application has been made to the High Court under sub–paragraph (4), if any person having possession of any such documents refuses, neglects or otherwise fails to comply with a requirement under sub–paragraph (1), he shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.
4. The High Court, on the application of the Society, may order a person required to produce or deliver documents under sub–paragraph (1) to produce or deliver them to any person appointed by the Society at such time and place as may be specified in the order, and authorise him to take possession of them on behalf of the Society.
5. If on an application by the Society the High Court is satisfied that there is reason to suspect that documents in relation to which the powers conferred by sub–paragraph (1) are exercisable have come into the possession of some person other than the solicitor or his firm, the court may order that person to produce or deliver the documents to any person appointed by the Society at such time and place as may be specified in the order and authorise him to take possession of them on behalf of the Society.
6. On making an order under this paragraph, or at any later time, the court, on the application of the Society, may authorise a person appointed by the Society to enter any premises (using such force as is reasonably necessary) to search for and take possession of any documents to which the order relates.
7. The Society, on taking possession of any documents under this paragraph, shall serve upon the solicitor or personal representatives and upon any other person from whom they were received on the Society’s behalf or from whose premises they were taken a notice that possession has been taken on the date specified in the notice.
8. Subject to sub–paragraph (9) a person upon whom a notice under sub–paragraph (7) is served, on giving not less than 48 hours’ notice to the Society and (if the notice gives the name of the solicitor instructed by the Society) to that solicitor, may apply to the High Court for an order directing the Society to deliver the documents to such person as the applicant may require.
9. A notice under sub–paragraph (8) shall be given within 8 days of the service of the Society’s notice under sub–paragraph (7).
10. Without prejudice to the foregoing provisions of this Schedule, the Society may apply to the High Court for an order as to the disposal or destruction of any documents in its possession by virtue of this paragraph or paragraph 10.
11. On an application under sub–paragraph (8) or (10), the Court may make such order as it thinks fit.
12. Except so far as its right to do so may be restricted by an order on an application under sub–paragraph (8) or (10), the Society may take copies of or extracts from any documents in its possession by virtue of this paragraph or paragraph 10 and require any person to whom it is proposed that such documents shall be delivered, as a condition precedent to delivery, to give a reasonable undertaking to supply copies or extracts to the Society.

A number of key points should be noted in relation to this:

• this power only arises where the delay is in relation to when a client complains that:
  • there has been undue delay in sending out monies or documents, or
  • there has been undue delay in progressing a matter or a transaction.
• it may not be used when the complainant is not the client of the solicitor – e.g. complaint by a beneficiary
• it is not appropriate to use this power where the delay is in relation responding to or dealing with the SRA
• the power tends not to be used where the only reason for the non-receipt is because the solicitor is appropriately exercising a lien over the papers in relation to, for example, unpaid costs, and the provisions of rule 2.03 etc have been complied with,
• where there are joint clients, the consent of one must be obtained before papers can be released solely to the other

For the power to be exercised:

• the solicitor must be given at least 8 days notice of the intention to use the power, and
• the solicitor must have failed to give a satisfactory explanation.

If the solicitor fails to comply with an order under paragraph 3 then that solicitor will be guilty of misconduct and, if the matter has been dealt with by the LCS it will be referred to the SRA who may then take appropriate regulatory actions.

Delivery of documents and files in connection with an investigation

Section 44B(1) of the Solicitors Act 1974 provides:

Where the Council are 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 has failed to comply with any requirement imposed by or by virtue of this Act or any rules made by the Council;
3. whether any professional services provided by a solicitor were not of the quality which it is reasonable to expect of him as a solicitor; 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 employed or remunerated by a solicitor in connection with his practice,

the Society may give notice to the solicitor or his firm requiring the production or delivery to any person appointed by the Society, at a time and place to be fixed by the Society, of all relevant documents in the possession of the solicitor or his firm.

The powers contained in Section 44B are exercisable either by the LCS so as to allow them to ascertain, for example, whether the service provided by a solicitor was reasonable, or by the SRA in relation to an investigation into professional misconduct.

It should be noted that the powers contained in section 44B are only exercisable in relation to an investigation and the papers can only be used for appropriate regulatory purposes. Therefore if the papers are required by a client of the solicitor, then the paragraph 3 procedure should be used instead. Whilst it is not necessary that the SRA or LCS give 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.

There are a number of points in relation to section 44B that are worth noting:

• Normally section 44B is only used where the solicitor is not co-operating with an investigation.
• Occasionally section 44B will need to be used from the outset – for example where a complaint is made by a person who is not a client of the firm in question – e.g. a beneficiary under a will – and the solicitor would not be able voluntarily to send the papers because of client confidentiality
• Section 44B can only be used to obtain papers from a solicitor under investigation and not from a third party solicitor – even where that third party solicitor holds information that would be relevant to the investigation
• If papers have been passed to another solicitor, then section 44B cannot be used to obtain the papers, even if they were in the possession of the solicitor being investigated

In the event that a section 44B order is not complied with the matter can be passed to an intervention agent who is entitled to attend upon the premises of the solicitor and seize the papers in question.