To report a fault, please hold

There is no definition of ‘serious misconduct’ in the solicitors handbook; nor any indication of when the SRA may consider a failure to comply with or achieve a principle, outcome or rule to be ‘serious’. Since solicitors and firms are obliged to report all such serious failings promptly to the SRA pursuant to outcomes 10.3 and 10.4, this presents a number of problems. What is serious misconduct? Who should make the report? When?

Some misconduct is obviously serious: dishonesty; deliberate misuse of client funds; contempt of court; involvement in criminal activity – to name some obvious examples. By definition, there has got to be a failure to comply with a principle, outcome or rule for there to be misconduct. So, is serious misconduct the same as a serious failure to comply with a principle?

A fixed-penalty notice for speeding is a criminal offence. A solicitor with penalty points on their driving licence has broken the law and therefore the very first (and overriding) principle. Is this serious misconduct? A serious failure to comply with a principle? Historically, there has been no obligation to report such matters to the SRA and it is unlikely that a single speeding offence resulting in a fixed-penalty notice would engage any reporting obligations at this stage (although it is arguable as to whether a COLP might have to report such a matter if it occurred when a solicitor was driving on firm business).

Some misconduct is obviously serious: dishonesty; deliberate misuse of client funds; contempt of court; involvement in criminal activity – to name some obvious examples. By definition, there has got to be a failure to comply with a principle, outcome or rule for there to be misconduct. So, is serious misconduct the same as a serious failure to comply with a principle?

A fixed-penalty notice for speeding is a criminal offence. A solicitor with penalty points on their driving licence has broken the law and therefore the very first (and overriding) principle. Is this serious misconduct? A serious failure to comply with a principle? Historically, there has been no obligation to report such matters to the SRA and it is unlikely that a single speeding offence resulting in a fixed-penalty notice would engage any reporting obligations at this stage (although it is arguable as to whether a COLP might have to report such a matter if it occurred when a solicitor was driving on firm business).

What of suspicions of dishonesty? The SRA frequently argues that dishonesty is serious and had no place in the solicitor’s profession, no matter the justification for it. It is essential that solicitors maintain the highest standards of honesty and integrity and a finding of dishonesty is, almost without exception, the end of a solicitor’s career. Given that dishonesty, of itself, is a serious matter, should one report a solicitor who, for example, claims to be in a meeting when he does not wish to be disturbed?

Solicitors and firms (and, in future, COLPs and COFAs) have co-existent duties to report such matters to the SRA. I believe that firms should have a policy on reporting matters to the SRA to deal with the potential overlap of reporting requirements. Although in future it is likely that the COLP and the COFA will ultimately file reports concerning their own firms, the policy will need to deal with how staff bring such matters to the attention of the COLP and COFA. Firms may also wish to think about the firm’s approach to reporting serious misconduct by other firms or external solicitors.

Making the call

One key issue will be when the report should be made. There are several options: when suspicions are first raised; when the firm has concluded that there is a reasonable basis for investigation; or when the firm has concluded that the misconduct in question has, in fact, occurred. There is no guidance on the timing of the report in the handbook. The outcomes merely require that such reports be made “promptly”.

I do not believe that an obligation to report “promptly” requires a knee-jerk reporting of every complaint of misconduct that comes to the firm’s attention, regardless of the merit of the complaint. I expect that firms would be encouraged to undertake a reasonable investigation and report only once persuaded that the complaint is not wholly without foundation taking into account the risks of the alleged misconduct continuing. Firms will have to grapple with potential difficulties where, for example, a solicitor is under investigation by the firm/the police/another regulator but has not been charged.

Considering the impact

There are a number of issues to consider before making a report. Firms have a regulatory obligation to report; however, firms also have competing obligations as employers, data processors and holders of confidential information, which need to be considered carefully. Although such reports attract qualified privilege, if reports are made maliciously, the affected person could sue for libel.

In addition, reports of serious misconduct may result in a sanction being imposed on the firm or an employee and that sanction may be published. Such sanctions may also have a long-term impact on employees wishing to become partners or compliance officers. Firms therefore need to consider, from the outset, how to manage potential reputational damage and practical problems stemming from the report. If a compliance officer is the subject of the report, you may need to have his replacement ready to step in as soon as possible. In my experience, how a report is made can have an effect on the ultimate outcome for both firm and employee. Giving the right information to the SRA at the right time could avoid unfortunate and costly misunderstandings.

I understand that the SRA will be consulting on reporting requirements for COLPs and COFAs in the New Year. As for the rest of us, what to report and when remains a question of judgement.

What of suspicions of dishonesty? The SRA frequently argues that dishonesty is serious and had no place in the solicitor’s profession, no matter the justification for it. It is essential that solicitors maintain the highest standards of honesty and integrity and a finding of dishonesty is, almost without exception, the end of a solicitor’s career. Given that dishonesty, of itself, is a serious matter, should one report a solicitor who, for example, claims to be in a meeting when he does not wish to be disturbed?

Solicitors and firms (and, in future, COLPs and COFAs) have co-existent duties to report such matters to the SRA. I believe that firms should have a policy on reporting matters to the SRA to deal with the potential overlap of reporting requirements. Although in future it is likely that the COLP and the COFA will ultimately file reports concerning their own firms, the policy will need to deal with how staff bring such matters to the attention of the COLP and COFA. Firms may also wish to think about the firm’s approach to reporting serious misconduct by other firms or external solicitors.

Making the call

One key issue will be when the report should be made. There are several options: when suspicions are first raised; when the firm has concluded that there is a reasonable basis for investigation; or when the firm has concluded that the misconduct in question has, in fact, occurred. There is no guidance on the timing of the report in the handbook. The outcomes merely require that such reports be made “promptly”.

I do not believe that an obligation to report “promptly” requires a knee-jerk reporting of every complaint of misconduct that comes to the firm’s attention, regardless of the merit of the complaint. I expect that firms would be encouraged to undertake a reasonable investigation and report only once persuaded that the complaint is not wholly without foundation taking into account the risks of the alleged misconduct continuing. Firms will have to grapple with potential difficulties where, for example, a solicitor is under investigation by the firm/the police/another regulator but has not been charged.

Considering the impact

There are a number of issues to consider before making a report. Firms have a regulatory obligation to report; however, firms also have competing obligations as employers, data processors and holders of confidential information, which need to be considered carefully. Although such reports attract qualified privilege, if reports are made maliciously, the affected person could sue for libel.

In addition, reports of serious misconduct may result in a sanction being imposed on the firm or an employee and that sanction may be published. Such sanctions may also have a long-term impact on employees wishing to become partners or compliance officers. Firms therefore need to consider, from the outset, how to manage potential reputational damage and practical problems stemming from the report. If a compliance officer is the subject of the report, you may need to have his replacement ready to step in as soon as possible. In my experience, how a report is made can have an effect on the ultimate outcome for both firm and employee. Giving the right information to the SRA at the right time could avoid unfortunate and costly misunderstandings.

I understand that the SRA will be consulting on reporting requirements for COLPs and COFAs in the New Year. As for the rest of us, what to report and when remains a question of judgement.

Susanna Heley
RadcliffesLeBrasseur

This article was first published by Solicitors Journal and is reproduced by kind permission.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.