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?
The Solicitors Regulation Authority (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 rule 20.05(1) and /or a failure to produce documents, information and explanations contrary to rule 20.08. 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.
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2. Production of documents, information and explanations
Under rule 20.08 of the Solicitors' Code of Conduct 2007 (the Code) you must comply with a notice given by the SRA in accordance with section 44B or 44BA of the SA for the provision of documents, information or explanations. Rule 20.08(i)(a) refers to the SRA's powers of inspection contained within rule 34 of the Solicitors' Accounts Rules. 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 the 'recorded signed for' or 'special delivery next day' service to the most recent address held by the SRA's Information Directorate, or delivered by an SRA appointee. Where necessary, you must provide written permission of clients, staff, banks, and other financial institutions for the information to be given. The SRA states that it will only exercise its powers under 20.08 in accordance with the law, in pursuit of a legitimate aim and proportionate to that aim.
The SRA may use or disclose any information obtained under rule 20.08 of the Code in the following circumstances:
- 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;
- to the regulatory body of any manager or employee of your firm; 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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2.1 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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2.2 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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3. 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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3.1 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.
3.1.1 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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4. 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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4.1 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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4.2 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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4.2.1 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.
4.2.2 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.
4.2.3 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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5. Professional indemnity insurance
You should note that the minimum terms and conditions of the Solicitors' Indemnity Insurance Rules 2010 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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6. More information
6.1 Legal and other requirements
Solicitors Act 1974 as amended
Solicitors' Code of Conduct 2007
Solicitors' Indemnity Insurance Rules 2010
Solicitors' Account Rules
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6.2 Further products and support
6.2.1 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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6.2.2 Law Society publications
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6.2.3 Training and events
- CPD course: Solicitors' Code of Conduct
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6.3 Status of this practice note
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.
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6.4 Terminology in this practice note
Must - a specific requirement in the Solicitor's Code of Conduct or legislation. You must comply, unless there specific exemptions or defences provided for in the code of conduct or relevant legislation.
Should - good practice for most situations in the Law Society's view. If you do not follow this, you must be able to justify to oversight bodies why this is appropriate, either for your practice, or in the particular retainer.
May - a non-exhaustive list of options for meeting your obligations. Which option you choose is determined by the risk profile of the individual practice, client or retainer. You must be able to justify why this was an appropriate option to oversight bodies.
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