SRA and SDT’s dispute over disciplinary powers

Contradictions abound in the regulator’s use of section 43 orders and its powers to impose fines and rebukes on solicitors’ employees, writes Susanna Heley for the Solicitor’s Journal.

The Solicitors Regulation Authority (SRA) has made relatively sparing use of its powers to impose financial penalties and rebukes on solicitors’ employees since those powers were introduced by the Legal Services Act 2007.

Until quite recently, the SRA continued to focus almost exclusively on its pre-existing powers to make orders under section 43 of the Solicitors Act 1974. A section 43 order is, essentially, a prohibition on the profession from employing a named individual without the consent of the SRA. That was, traditionally, the only way in which the SRA could regulate the conduct of unadmitted persons.

There have been occasions of late when the SRA has elected to use both its power to make a section 43 order and its (relatively) new powers to impose fines and disciplinary sanctions pursuant to section 44D of the Act. In relation to each type of decision, appeals lie to the Solicitors Disciplinary Tribunal (SDT).

Standard of proof

In February 2016, the tribunal considered the appeal of Mr Arslan, an unadmitted clerk who was alleged to have altered documents following allegations made by a client. The SRA had adopted the civil standard of proof and imposed a section 43 order, as well as a rebuke and a fine of £500.

The tribunal, allowing the appeal, elected to adopt the criminal standard of proof for both the appeal against the section 43 order and the appeal against the section 44D decisions, considering itself bound by authority to do so. This cannot really have been a surprise to the SRA, since the tribunal told the regulator that it would adopt such an approach in 2010 during consultations for the introduction of the SRA Handbook.

It is likely that the SRA will appeal these findings. The precedent set, particularly in relation to the standard of proof, is one which the SRA has long been anxious to debunk. Since the Master of the Rolls refused to sign off on the SRA’s proposed changes to the disciplinary rules in 2009 due to the adoption of the civil standard, this has been high on the SRA’s agenda, with the issue being argued at every opportunity.

The tribunal decided that it was obliged to proceed with the appeal by way of review rather than rehearing. It recognised that adopting a higher standard of proof on such a review was a contradiction, but this was an unavoidable consequence of the SRA’s proceeding with the civil standard in the first place, despite knowing that the tribunal would adopt the criminal standard.

The tribunal felt that this contradiction was a lesser evil than the alternative – an inconsistency in the tribunal’s own use of its section 43 powers depending on how individual respondents ended up before it.

‘Nonsensical’ approach

The tribunal also found that the SRA’s approach to its use of disciplinary powers was ‘nonsensical’, since the section 43 regime was designed for serious misconduct and the section 44D regime was to be used to ‘deal with less serious disciplinary offences’. There was, accordingly, a contradiction in the SRA’s use of both powers based on the same underlying facts.

This finding is also likely to be controversial, particularly as the practice of recommending a section 43 order coupled with another disciplinary sanction seems (anecdotally) to be on the increase.

There have now been two appeals to the tribunal against disciplinary decisions made by the SRA, one against solicitors and the other against a solicitor’s clerk. Both have been successful and resulted in resounding criticism of the SRA by the tribunal. It is, however, fair to point out that there have been an awful lot of decisions that have not been appealed.

If the SRA does appeal this decision, it will be interesting to see what the High Court makes of the long-running spat between the SRA and the SDT. The last time the High Court was asked to look specifically at this issue, it elected not to make a decision as, on the facts, the point was academic.

One does have to spare a thought for poor Arslan in all of this. Despite comprehensively winning his appeal, he was ordered to pay £20,000 in costs (albeit not to be enforced without leave) and now faces the possibility of an appeal on points of legal principle.

For more information or guidance, please contact:

Susanna Heley
Partner

T. 020 7227 7463
E. susanna.heley@rlb-law.com

This article was first published by Solicitors Journal on 13 April 2016, and is reproduced by kind permission. You can read the original article by clicking here.


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