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  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  2 AC 378. This was then clarified by the case of Twinsectra Limited v Yardley and Others  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  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  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  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 firstname.lastname@example.org, or telephone them on 0870 606 2555.
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 email@example.com;
- 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.