1. Introduction
1.1 Who should read this practice note?
This practice note should be read by all solicitors.
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1.2 What is the issue?
1.2.1 Outcomes-focused regulation
The Solicitors Regulation Authority (SRA) implemented outcomes-focused regulation (OFR) in October 2011. OFR is a move away from a rules-based approach to one that focuses on high-level outcomes governing practice and the quality of outcomes for clients.
The SRA has published a handbook, which sets out all the SRA's regulatory requirements. It outlines the ethical standards that the SRA expects of practices and practitioners and the outcomes that the SRA expects them to achieve for their clients.
The SRA Handbook includes a Code of Conduct (SRA Code), which replaced the Solicitors' Code of Conduct 2007 (the 2007 Code). The SRA Code establishes outcomes-focused conduct requirements and each chapter outlines outcomes and indicative behaviours (IBs).
The SRA Handbook and Code has been in force since 6 October 2011. Accordingly, the 2007 Code and all of its rules and guidance, no longer apply to solicitors' conduct, save in respect of any review by the SRA of conduct taken prior to 6 October 2011 to which the 2007 Code will still be applied.
An overview of OFR can be found on the Law Society's website. This provides information on what the SRA Handbook contains, including a summary of the chapters in the Code of Conduct and a summary of the reporting requirements included throughout the handbook
1.2.2 This practice note
The SRA has powers to investigate misconduct, including the power to require solicitors to explain their conduct and to produce documents. If you fail to comply with these requirements, this may constitute misconduct on the basis that it would constitute a failure to cooperate with the SRA contrary to Outcome 10.6 and/or a failure to produce documents, information and explanations contrary to Outcome 10.9. The SRA can also apply to the High Court for an order to require anyone else to provide information, and may use criminal sanctions in certain circumstances.
The Solicitors Act 1974 (SA) as amended sets out the investigatory powers of the SRA. This practice note seeks to clarify the position relating to the circumstances in which you must provide documents or attend an interview, and your rights therein.
1.3 Professional conduct
The following sections of the SRA Code of Conduct 2011 are relevant to this issue:
1.4 Status
Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.
Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.
For queries or comments on this practice note, contact the Law Society's Practice Advice Service.
1.5 Terminology
Must
A specific requirement in legislation or of a principle, rule, outcome or other mandatory provision in the SRA Handbook. You must comply, unless there are specific exemptions or defences provided for in relevant legislation or the SRA Handbook.
Should
- Outside of a regulatory context, good practice for most situations in the Law Society's view.
- In the case of the SRA Handbook, an indicative behaviour or other non-mandatory provision (such as may be set out in notes or guidance).
These may not be the only means of complying with legislative or regulatory requirements and there may be situations where the suggested route is not the best possible route to meet the needs of your client. However, if you do not follow the suggested route, you should be able to justify to oversight bodies why the alternative approach you have taken is appropriate, either for your practice, or in the particular retainer.
May
A non-exhaustive list of options for meeting your obligations or running your practice. Which option you choose is determined by the profile of the individual practice, client or retainer. You may be required to justify why this was an appropriate option to oversight bodies.
SRA Code - SRA Code of Conduct 2011
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2. SRA Principles
There are ten mandatory principles which apply to all those the SRA regulates and to all aspects of practice. The principles can be found in the SRA Handbook.
When thinking about how to meet the outcomes in the handbook, you must consider the principles which apply across the handbook, including the SRA Code. You should always bear in mind what the ten principles are and use them as your starting point when implementing the outcomes.
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3. Production of documents, information and explanations
In accordance with Outcome 10.9 of the SRA Code you must comply with a notice given by the SRA as per section 44B or 44BA of the SA for the provision of documents, information or explanations. Outcome 10.9 (a)-(c) refers to the SRA's powers of inspection contained within rule 31 of the SRA Accounts Rules 2011 (SAR). The SRA will give notice if it is satisfied that this action is necessary to investigate whether professional misconduct or regulatory non-compliance has taken place.
A requirement for the provision of documents or information as above must be in writing, and left at or sent by post or document exchange to the most recent address held by the SRA's Information Directorate, or sent electronically to the fim's email od fax address, or delivered by the SRA's appointee (SAR 31.1). Where necessary, you must provide written permission of clients, staff, banks, and other financial institutions for the information to be given (SAR 31.4).
The SRA may use or disclose any information obtained in the following circumstances (SAR 31.7):
- in proceedings before the Solicitors Disciplinary Tribunal (SDT)
- to the police, the Crown Prosecution Service or the Serious Fraud Office for use in investigating the matter and in any subsequent prosecution, if it appears that you or any manager, employee, member or owner of your firm may have committed a serious criminal offence
- to the regulatory body with which you are registered, if you are a lawyer registered under the Establishment Directive; and/or
- to the professional body of which the accountant who has signed the firm's accountant's report is a member, or by which the accountant is regulated
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3.1 Section 44B - provision of information and documents
The power in section 44B SA to require the production of documents for investigatory purposes is long-standing. However, it was amended by the Legal Services Act with effect from 31 March 2009 so that it may apply to any available document and information. Whereas the section was previously limited to the provision documents, it is now only restricted by the purpose for which the inquiry is made, and the SRA can require that any information is produced.
A notice under this section may be authorised by senior technical and legal SRA staff. Further, as paragraph 9(3) of Schedule 1 is imported into the section, any failure to comply may be a criminal offence.
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3.2 Section 44BA - power to require explanation of documents or information
The power may be expected to be used only when it is proportionate to the seriousness of the suspected misconduct under investigation and the potential usefulness of the information sought. Under section 44BB SA the High Court may also order other persons - that is, individuals or bodies that are not regulated by the SRA - to provide information and documents.
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4. Circumstances in which you may be interviewed compulsorily - section 44BA
A notice under section 44BA SA may be authorised by the SRA chief executive, legal director or head of legal. It is not to be confused with more routine forensic investigatory questioning, which may be recorded.
It is a serious matter to require you as a regulated person to attend at a specified time and place to provide an explanation. This is referred to as an investigation meeting. It is intended that this power is exercised proportionately.
The SRA's powers to investigate are for the protection of the public. It has been held by the SDT that you have a duty to provide an explanation of actions which in the regulator's reasonable opinion give rise to any question related to the proper performance of your professional duties. Further, under section 44BC, if you know or suspect that an investigation into alleged misconduct or regulatory non-compliance is likely to be undertaken, it is an offence to falsify, conceal, or destroy a document which you know or suspect would be relevant to the investigation. It is also an offence to provide information which you know to be false or misleading, or where you are reckless in this regard. Conviction for such offences can amount to imprisonment for up to two years, or a fine up to the statutory limit, or indeed both.
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4.1 Investigation meetings
Section 44BA(1) of the SA states:
'The Society may, by notice, require a person to whom a notice is given under section 44B (or a representative of the person) to attend at a time and place specified in the notice to provide an explanation of any information provided or document produced pursuant to the notice.'
The purpose of investigation meetings is to establish facts and obtain your explanation for an alleged misconduct or regulatory non-compliance. However, the SRA may invoke section 44BA wherever it has a desire to investigate. The investigation meeting may be conducted in any reasonable location, including SRA premises and your address.
A representative of the SRA's Legal Directorate may attend to observe the meeting. If necessary they may state the SRA's position on any properly raised procedural or legal issue.
4.1.1 Recording meetings
During the meeting, one or more members of the SRA's staff, or its agent, will ask questions in order to obtain explanations in relation to the matter in question. The meeting will be digitally recorded and you will be provided with a CD copy of the recording.
Recording meetings may be viewed as beneficial in that it provides some level of certainty when reviewing proceedings and minimises the scope for dispute by either party. However, you should be mindful that technology can be limited, and where there are multiple speakers, words can be lost.
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5. Your rights
The SRA operates in accordance with the better regulation principles, which hold that its powers are to be exercised proportionately. Section 44B SA is therefore used frequently, since it enables evidence to be obtained without significant cost or inconvenience. Accordingly, section 44BA SA is used less often and primarily for allegations of serious misconduct. However, failure to cooperate during the meeting may be a criminal offence.
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5.1 Rights to information
You will usually be informed in general terms of the suspected professional misconduct, or alleged non-compliance that is under investigation. However, if a Head of Unit or more senior person believes this may prejudice the SRA investigation or any other investigation, you will not be informed and you will not be provided with questions in advance of the meeting.
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5.2 Your rights at investigation meetings
You may be able to enter discussion with the SRA representative to vary the terms of the meeting in relation to how it is conducted.
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5.2.1 Notice
You will be given reasonable notice of the investigation meeting, usually not less than seven days, unless it is deemed in the public interest for the meeting to take place urgently and a Head of Unit or more senior member of SRA staff has agreed that there is a serious risk of:
- immediate harm to the interests of clients or others; or
- financial default; or
- frustration or prejudice to the SRA investigation or any other investigation such as by another regulator or law enforcement agency.
5.2.2 During the meeting
During the meeting, you should be given appropriate breaks, particularly if the meeting is extended. You may be accompanied by another person; however, any explanations must be provided by you, unless the SRA agrees otherwise. If, in the opinion of the SRA representative, the person accompanying you obstructs the process, you will be warned that continuation of the obstruction may be considered to constitute failure to cooperate with the investigation. If obstruction continues, the accompanying person may be excluded from the investigation meeting and /or the meeting may be terminated.
5.2.3 Costs
Your costs will not be paid other than in exceptional circumstances. For example, if the requirement for you to attend is 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. Any costs payable are usually limited to travelling and do not include legal costs or consequential losses incurred, but under paragraph 13 of Schedule 1, you are likely to be liable for the SRA's costs, including legal fees.
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6. Professional indemnity insurance
You should note that the minimum terms and conditions of the Solicitors' Indemnity Insurance Rules 2011 have been revised, thereby removing the obligation on insurers to provide cover for defence costs for disciplinary matters (clause 1.2(c)). This is by virtue of the fact that there are no issues of public protection related to this cover. The amendment came into effect on 1 October 2010.
Insurers can continue to offer defence costs cover for disciplinary matters at their discretion by way of an endorsement to your firm's policy. You should therefore make enquiries about this when seeking to obtain professional indemnity insurance.
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7. More information
7.1 Legal and other requirements
Solicitors Act 1974 as amended
SRA Code of Conduct 2011
Solicitors' Indemnity Insurance Rules 2011
Solicitors' Account Rules 2011
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7.2 Further products and support
7.2.1 Practice Advice Line
The Law Society provides support for solicitors on a wide range of areas of practice. Practice Advice can be contacted on 0870 606 2522 from 09:00 to 17:00 on weekdays.
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7.2.2 Law Society publication
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7.2.3 Training and events
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