Standards and Regulations 2019 – The Maintenance of Trust and Proceedings before Courts
Aside from its relative brevity, one of the aspects about the new Standards and Regulations 2019 (referred to here as “the New Regulations”) that is most apparent is the way in which previously separate sections have been combined into new “thematic headings”. This is apparent from the outset in that the new first part of both the Code of Conduct for Firms (referred to here as “the Code for Firms”) and the Code of Conduct for Solicitors, RELs and RFLs (referred to here as the Code for Individuals), “Maintaining Trust and Acting Fairly”, brings together provisions previously to be found in Chapter 1 (Client care), Chapter 2 (Equality and diversity), Chapter 5 (Your client and the court) and Chapter 11 (Relations with third parties).
Following our last article where we looked at how the New Regulations were increasing flexibility and the ways in which solicitors could practise, here we are looking at the four topics addressed in the first part of both of the Codes, namely:
- Taking unfair advantage
- Misleading the court
and, since it follows on from the last of these, looking also at the second section of the Code for Individuals entitled “Dispute resolution and proceedings before courts, tribunals and inquiries” which also contains provisions previously to be found in Chapter 5 (Your client and the court).
The shorter rule book
Before we do, just a quick word about the brevity of the New Regulations.
Whilst the Solicitors Regulation Authority (SRA) has heralded the reduced length of the new rules and the fact that firms are encouraged to interpret them appropriately in an effort to give firms greater freedom in how they practise, nevertheless there is already a large, and still growing, body of interpretative articles by the SRA clarifying what they mean by, and require of solicitors in relation to, the New Regulations.
Thus, for example, whilst the provisions in Chapter 2 of the SRA Code of Conduct 2011 dealing with discrimination contain nearly 700 words, the provision in the Code for Individuals contains just 24. Even doubling this for the repeat in the Code for Firms and adding in the provision for monitoring workforce diversity data, it is still less than 60.
However, to provide guidance on what the SRA expects of firms in relation to equality, diversity and inclusion there is a 1,400 word guidance note which itself contains links to an article on reasonable adjustment, several screens worth of information on publishing diversity data, a whole subsection of the website on equality and diversity generally and case studies on unfair discrimination and sexual harassment.
Thus, the 24 words of Paragraph 1.1 “You do not unfairly discriminate by allowing your personal views to affect your professional relationships and the way in which you provide your services” carry with them a body of obligation which stretches far beyond that simple statement.
The first of the provisions in paragraph 1 of both of the Codes looks at the avoidance of discrimination – a somewhat narrower concept than that which features at Principle 6 (which goes further by requiring those who are subject to the Principles to encourage “equality, diversity and inclusion”). Moreover, the more specific requirement of the provision in the Codes is merely to ensure that you do not “unfairly discriminate by allowing your personal views to affect your professional relationships and the way in which you provide your services”. In other words, there seems to be a tacit admission that discriminatory views may be held provided that they do not affect professional relationships, or the services provided. Whether this is what is intended is not clear, although from a practical point of view the outcome might be the same and at least means that, if there are, for example, those whose religion prevents them from holding a particular view this need not prove to be an issue provided that professionally they do not discriminate.
Where this argument falls down, however, is when looked at through the eyes of Principle 2 – that you act “in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons”. This is a duty that would appear to extend beyond the solicitor’s professional life into his private and public life. Thus, no matter how a solicitor behaves in their professional relationships and the provision of services, if they behave in a discriminatory manner beyond the confines of their practice then there may nevertheless be a principle breach. That this is the case is borne out by the SRA’s equality guidance note “Guidance on the SRA’s approach to equality, diversity and inclusion” (https://www.sra.org.uk/solicitors/guidance/ethics-guidance/guidance-on-the-sra-s-approach-to-equality-diversity-and-inclusion/) which states, for example that you are expected “to be inclusive in your approach to everything you do” and:
“You are responsible for upholding the reputation of the profession in your professional and personal life and for treating people fairly and with dignity and respect. You are responsible for making sure your personal views are not imposed on and do not have a negative impact on others. This includes expressing extreme personal, moral or political opinions on social media platforms.”
This, to a degree, highlights the problem of shorter rules books – that often the duties to which solicitor are subject extend beyond the mere words and the fact that the SRA expects firms to take account of views expressed by them in how they act and behave means that to an extent they are in a more perilous position in terms of compliance.
So, what is the duty to which solicitors are subject?
Neither the principles nor the rule provides a great deal of guidance. The preamble to the old Chapter 2 at least gave a steer in the form of “As a matter of general law you must comply with requirements set out in legislation – including the Equality Act 2010 – as well as the conduct duties contained in this chapter” and then went on to address discrimination, respecting diversity, reasonable adjustment., equality in employment and dealing with complaints in the Outcomes that followed. Not so paragraph 1.1.
However, the Ethics Guidance which accompanies the Codes does provide clarity. It also carries more weight than simply being an informative piece of guidance to be observed or ignored as the reader chooses. It makes clear at the outset that it is something that the SRA will expect firms to follow with the words “This guidance is to help you understand your obligations and how to comply with them. We may have regard to it when exercising our regulatory functions.” In other words, if the SRA feel that you have not taken account of the guidance this could be deemed to be a regulatory failing on your part – and given the lowering of the standard of proof in the SDT (see our article from earlier in the year “Lowering the Standard on the SDT Flag Pole”) this is something which should most certainly be borne in mind.
The SRA guidance note makes it clear that the “protected characteristics” to be found in the Equality Act 2010, are still a fundamental part of the protections that clients, staff and third parties are entitled to. These are:
- Gender reassignment;
- Marriage and civil partnership;
- Pregnancy and maternity;
- Religion or belief;
- Sex; and
- Sexual orientation.
It also makes it clear that solicitors have a “legal obligation to provide reasonable adjustments to disabled clients and employees to make sure they are not at a substantial disadvantage compared to those who are not disabled” and that the costs of providing these are not passed on in any way. All of these are concrete and identifiable duties.
Where things become less certain, however, but no less important, is in relation to the more ephemeral duties such as “treating people fairly and with dignity and respect”, being “fair and inclusive in your interactions with people you meet and deal with” and acting in a way which is “fair, inclusive and transparent”. That these are important is made clear by the Guidance which states:
“While legislation sets minimum legal obligations – that your firm takes steps to remove potential discrimination, harassment and victimisation – your regulatory obligations extend beyond strict compliance with the law.”
This seems to require that firms implement what the SRA describe as EDI Policies (Equality, Diversity and Inclusion) which, it states, should “include everyone, including those who may face disadvantage because of their socio-economic background or their caring responsibilities”. An example of this would be the provision of:
“positive steps for disabled employees and clients, so they have fair and equitable access to opportunities and can participate in services provided by the firm. It is important to provide information, guidance and support on disability, mental health and wellbeing to address issues or concerns in this area. You can set out expectations about client care in the information you provide.”
In other words, what the Guidance is seeking to do is to open up the ways in which firms should be seen to be inclusive by going beyond the Equality Act provisions set out above and encouraging an awareness of issues such as class, school attended, ability and placing a duty on firms, for example, to have regard to the impact that the methods and practices might have upon those working for or with them including issues related to stress. This is very topical, admirable and something which other organisations such as LawCare are keen to see addressed within the profession (see “A Lawyers Guide to Wellbeing and Managing Stress”). This does beg the question as to whether something so important should perhaps have been covered more comprehensively in the Code itself?
A more in-depth consideration of this provisions and the guidance which accompanies it is probably beyond the remit of this article. Firms should, however, give thought to the provision of training for all personnel in this topic and in fact this is a mandatory requirement under the Law Society’s Lexcel scheme (Version 6.1: section 4.2.d). In addition to covering the professional and legal obligations, all such training should also address the more behavioural aspects of avoiding discrimination and in particular the appropriate use of language so as not to cause offence.
So far as the enforcement of this area is concerned, it has so far been rare for such issues to be referred to the Solicitors Disciplinary Tribunal. In one respect, Regulation 1.1 goes further than before, in that whereas Chapter 2 of the Handbook merely required solicitors not to “discriminate unlawfully” the new rule talks instead about not discriminating “unfairly”, which perhaps suggests a greater prospect of regulatory action under the new regime as opposed merely to responding to a prior finding of discrimination elsewhere.
Finally, there is a provision which appears only in the Code for Firms and that is the requirement to “monitor, report and publish workforce diversity data, as prescribed”. The SRA provide guidance from time to time on the provision of diversity data to which you should refer at the appropriate time.
Abuse of position
Paragraph 1.2 of the new Standards and Regulations requires that “you do not abuse your position by taking unfair advantage of clients or others.” This is very similar to the requirement at Outcome 11.1 of the Code of Conduct 2011 which required that “you do not take unfair advantage of third parties in either your professional or personal capacity”.
Although it does not expressly say so, the extension of this obligation beyond work done in the firm to one’s private life seems still to form part of the SRA’s thinking, as it is stated to extend to “others” – a term not defined in the Glossary. Whilst “others” could simply mean employees and third parties dealt with through practise as a solicitor it is more likely, given the interpretation applied to elements of the Codes, to refer to anyone, anywhere and at any time.
So, what kind of situations does the provision envisage? Whilst one should not (apparently) continue to look at the previous Code for guidance, nevertheless the indicative behaviours contained in Chapter 11 do provide some help, as does the SRA guidance note “Acting with Integrity”. The Indicative Behaviours, for example, require that solicitors:
- provide sufficient time and information to enable the costs in any matter to be agreed (IB (11.1));
- return documents or money sent subject to an express condition if they are unable to comply with that condition (IB (11.2));
- return documents or money on demand if they are sent on condition that they are held to the sender’s order (IB (11.3)); and
- subject to certain exceptions, ensure that they do not communicate with another party when they are aware that the other party has retained a lawyerin a matter (IB (11.4));
and require that solicitors do not:
- take unfair advantage of an opposing party’s lack of legal knowledge where they have not instructed a lawyer (IB (11.7));
- demand anything for themselves or on behalf of your client, that is not legally recoverable (IB (11.8));
- use their professional status or qualification to take unfair advantage of another personin order to advance their personal interests (IB (11.9)); and
- take unfair advantage of a public office held by them, or a member of their family, or a member of their firm or their family.
So far as the Acting with Integrity guidance is concerned, this highlights similar situations to the Indicative behaviours, namely:
- Where the regulated firm or individual has taken unfair advantage of clients or third parties or allowed others to do so.
- Where the regulated firm or individual has knowingly or recklessly caused harm or distress to another.
- Where clients or third parties have been misled or allowed to be misled (except where this is a result of simple error that the regulated firm or individual has corrected as soon as they became aware of it).
Undertakings continue to be a key compliance issue since being able to rely upon promises made by a solicitor being honoured forms an essential element to the effective functioning of the legal system. Paragraph 11.3 of both Codes provides:
“You perform all undertakings given by you, and do so within an agreed timescale or if no timescale has been agreed then within a reasonable amount of time”
with undertaking being described in the glossary as:
“a statement, given orally or in writing, whether or not it includes the word “undertake” or “undertaking”, to someone who reasonably places reliance on it, that you or a third party will do something or cause something to be done, or refrain from doing something”.
An undertaking, therefore, is seen as being integral to the basic duties to act with integrity and honesty in that there should be absolute confidence that a promise provided by a lawyer in the circumstances envisaged by the definition will be honoured. Any failure to meet the obligations arising from an undertaking is, therefore, likely to be regarded as a serious professional matter and so one that is likely to result in disciplinary action. It follows that great care should always be taken as to whether to issue an undertaking at all and, if so, its potential consequences and therefore its precise wording. Carelessness in this regard has resulted in bankruptcies in some very unfortunate cases.
It should be noted that the definition of an undertaking given above and that contained in the 2011 Handbook do contain some interesting differences (underlined below):
“a statement, given orally or in writing, whether or not it includes the word ‘undertake’ or ‘undertaking’, made by or on behalf of you or your firm, in the course of practice, or by you outside the course of practice but as a solicitor or REL to someone who reasonably places reliance on it, that you or your firm will do something or cause something to be done, or refrain from doing something”.
The dropping of the words “made by or on behalf of you or your firm” makes the duty wider in that arguably anyone giving an undertaking whether or not in the name of the firm could be caught by the provision, the change from the words “you or your firm” to “a third party” might be intended to refer to any employer of that individual even if in practice they are not subject to SRA authorisation or might also have the effect of leaving a firm liable if it states to another person that the client, rather than the firm, will do or refrain from doing something and they do not then do so.
A further consequence of the revised wording is that it could leave open the question as to whether a promise provided in the private life of a solicitor might still be pursued as if it were one arising from a breach of an undertaking in the course of the business of the solicitor. This would be in line with earlier authorities on the point such as Rule 10.05 in the 2007 Code of Conduct. Perhaps in a more principles-based regulatory regime this does not matter quite so much, however, since the improper actions of a solicitor in their private life will now be more likely to be construed as a breach of Principle 2 (the requirement to uphold the image of and confidence in the legal profession) and could conceivably be regarded as a breach of paragraph 1.2 on abuse of position – since someone might lend greater weight to a promise made by someone known to be a solicitor and the solicitor could be relying upon that perception when making a promise that he, she or they had no intention of honouring.
The duties in relation to undertakings appear in both versions of the Code. It is likely that in most cases of a failure to honour an undertaking the SRA would, where it had a choice, proceed against the firm rather than the individual solicitor. For this reason, firms should always make clear who within the firm can provide an undertaking and clarify the circumstances in which one can be given. Thus, a firm may wish to make a distinction between one-off undertakings, undertakings to carry out a particular task or an undertaking to hold or apply monies in a particular way and those undertakings routinely given so as to enable conveyancing transactions to proceed – for example an undertaking to discharge a mortgage following completion or to hold deeds to the order of a third party.
An issue which regularly crops up in relation to undertakings is whether a firm should maintain a register of undertakings. There is no general duty to maintain a register of undertakings – not even under the Lexcel standard which merely requires there to be “documented procedures for the giving, monitoring and discharge of undertakings” (Lexcel Version 6.1, section 7.2). The belief that such a register is necessary probably stems from the mandatory requirement to maintain a register to be found in the earliest legal aid “franchising” specification in the early 1990s. It has not, however, appeared in the more recent Specialist Quality Mark specification maintained by the Legal Aid Agency.
The 2011 Handbook did provide, at Indicative Behaviour (11.5), that the firm should maintain
“an effective system which records when undertakings have been given and when they have been discharged;”
That should not be read, however, as being the same as keeping a register of undertakings since it could be addressed equally as well through file maintenance procedures or computerised systems.
A couple of final points in this section.
- the 2011 Code provided at IB (11.6) that where an undertaking was given which was dependent upon the happening of a future event and it then becomes apparent that the future event will not occur, then the recipient of the undertaking must be informed – although have regard to issues of client confidentiality when doing so; and
- the obligations are to perform undertakings within any agreed timescale, or a reasonable timescale if this was not stated, which is in line with both Outcome 11.2 in the 2011 Code of Conduct and Rule 10.05 in the 2007 version.
Not misleading clients, the courts or others
Not a great deal can be added to the wording of Regulation 1.4 in both versions of the Codes. These provide:
“You do not mislead or attempt to mislead your clients, the court or others, either by your own acts or omissions or allowing or being complicit in the acts or omissions of others (including your client),
where court is defined as any “court, tribunal or inquiry of England and Wales, or a British court martial, or any court of another jurisdiction” and should be seen as extending to dealings with the “SRA, other regulators, ombudsmen and those bodies with a role overseeing and supervising the delivery of, or investigating concerns to, legal services” at r.7.3 in the Code for Individuals and 3.2 in the Code for Firms.
This provision contains elements of:
- Outcome O (1.1) – treat clients fairly;
- Outcome O (1.16) – inform clients if you discover any act or omission which could give rise to a claim by them against you;
- Outcome O (5.1) – do not attempt to deceive or knowingly or recklessly mislead the court; and
- Outcome O (5.2) – not to be complicit in another person deceiving or misleading the court.
in the 2011 Code
Dispute Resolution and Proceedings before Courts, Tribunals and Enquiries
Finally in this article, we look at the second part of the Code for Individuals entitled “Dispute resolution and proceedings before courts, tribunals and inquiries”. This does not appear in the Code for firms since it focuses on the personal responsibilities of those who appear in courts and tribunals as advocates.
There is little that is new here and there is a clear correlation with the provisions that appeared in Chapter 5 of the 2011 Code of Conduct. However, the emphasis of the issues dealt with here is slightly different from earlier Codes and whilst some elements are repeated others are omitted. Possibly the best route forward is to regard this as being a requirement to be ruthlessly honest and above board in all dealings with the court with the matters highlighted being examples rather than requirements. Thus, a reading of this and the previous Chapter 5 could provide a better basis. Specifically, this part of the Code for Individuals requires that solicitors:
- Do not misuse or tamper with evidence or attempt to do so – previously to be found at IB (5.11);
- Do not seek to influence the substance of evidence, including generating false evidence or persuading witnesses to change their evidence – previously at O (5.7), IB (5.7) and IB (5.10);
- Do not provide or offer to provide any benefit to witnesses dependent upon the nature of their evidence or the outcome of the case – previously O (5.8) and IB (5.10);
- You only make assertions or put forward statements, representations or submissions to the court or others which are properly arguable – not previously highlighted;
- You do not place yourself in contempt of court, and you comply with court orders which place obligations on you – previously O (5.3), O (5.4) and O (5.6);
- You do not waste the court’s time – not previously highlighted;
- You draw the court’s attention to relevant cases and statutory provisions, or procedural irregularities of which you are aware, and which are likely to have a material effect on the outcome of the proceedings – previously IB (5.12).
Those affected by this section might also wish to check the requirements for the training for higher rights audience which can be found at Part 3 of the SRA Education, Training and Assessment Provider Regulations.