The Solicitors' Defence Agency is a group of solicitors, mainly members of the British Legal Association, who have advised and helped solicitors with ethical, professional and disciplinary problems over many years. The initial move was the formation of the B.L.A. Defence Fund Ltd. in 1968, but that particular body was wound up in 2001.The successors are the individuals who run the S.D.A. The change came about because of the impracticability of operating a professional indemnity insurance scheme in England and Wales to cover this kind of risk. Another aspect of the S.D.A.'s work has been to comment from time to time on issues concerning legal practice, including ethics, standards of conduct, regulation and discipline, and, if necessary, to campaign for reforms to the current system. Naturally members cooperate with other bodies across the legal profession on matters of common interest and concern, and also with a wider public.
Presently there are a number of issues which are worrying practitioners, but one in particular is to try and ensure fairness and justice for solicitors facing an extremely harsh prospect, the forced closure of their practices for conduct which does not merit such drastic measures. This was a a recurring theme, raised at the recent annual conference of one of the leading groups of lawyers involved in helping solicitors in such difficulties. At present
a solicitor who makes mistakes in keeping his or her accounts is in danger of disciplinary action, which could prove draconian and end in, not merely losing the practice, but also the right to continue working as a self-employed solicitor. No one is disputing the need for regulators to possess drastic powers and the authority to use them justly and fairly, for members of the public have to be protected against abuses, frauds and criminal acts. However, the record shows instances of excessive use of certain powers, not least that of intervention ex parte, to close down a firm without even the opportunity for a hearing at which the practitioner concerned could at least be heard and have the opportunity to show cause why he or she should not be put out of business. Of course the regulators need to have the power to intervene with minimal notice or none at all, in order to safeguard clients' funds and property from theft or destruction, but in practice such predicaments are few and far between. Firms where there is no such threat have been closed peremptorily and destroyed for no good reason, and several judges have been moved to comment on the extreme harshnes of the current system as it is now exercised .
The records show that in recent years interventions have totalled between 60 and 100 annually, figures which contrast with the statement of a senior regulator in the Financial Services Authority that in his experince of regulatory work he had encountered one ex parte intervention, to close down one errant firm, in twelve years. It is no wonder that the solicitors' profession are deeply disturbed about the present system and seek reforms to ensure fair and just treatment.
One issue of the SDA Newsletter, dated september, 2000, has been extracted from the archives and appears below; the articles written by David Keating and Peter Ross, both senior and experienced lawyers, commenting on this problem are well worth reading.
M.B.B.
B94_30 13 / 09 / 2000.
AN ITEM FROM THE ARCVHIVES OF
THE S.D.A. NEWSLETTER, SEPTEMBER, 2000.
( An Occasional Bulletin, Issued by The Solicitors' Defence Agency, [ The B.L.A. Defence Fund Ltd., Part of The British Legal Association] ).
THE PROFESSIONAL INDEMNITY CRISIS.
In 1999 the postal ballot of solicitors produced a majority of c.70%: 30% in favour of abolishing S.I.F. and allowing solicitors to make their own arrangements in a market of insurance companies. Since then the new system, enabling this change to be made, has been put in place, and there are a number of approved insurers for practitioners to approach. Inevitably some firms of solicitors have better records than others, and, for their part, the insurers wish to deal with the first group, rather than the second. The terms and conditions of the policies can, subject to meeting certain minimum standards of cover, which have been prescribed, vary greatly, and no insurers are bound to issue any particular policy. Thus it is likely that a number of practitioners will be able to find cover only on terms that seem extremely burdensome, while some other solicitors may be unable to secure cover from any company at all.
There is a last resort, entry into "the Pool," which allows solicitors' practices with poor claims records to continue in practice with a policy costing by way of premium up to 30% of the previous accounting year's gross costs. Strict conditions are imposed, with a view to improving the performance of the firm concerned, notably in avoiding further claims. However, after two years, the Practice will cease to be in the Pool, and will have to make other arrangements. If no insurers will then take on the firm, then that is the end of the line, and closure becomes inevitable. It is expected that a fair number of practitioners will retire now, rather than face the trauma of entering the Pool.
THE S.A.S.'S MEASURES TO COPE WITH THIS CRISIS.
Following Mr.Peter Williamson's address to members of the Solicitors' Assistance Scheme on 26 / 06 / 2000 on this issue, it was decided to hold an Executive Committee Meeting on 12 / 09, to consider training and guidance for the Scheme's advisers. Copies of a working paper have been made available to members of the S.A.S.'s Executive Committee and the S.D.A.'s Management Committee. More copies can be obtained from Miss Susannah Lewis, the S.A.S.'s Administrator at Ipsley Court, Redditch, Worcestershire,(phone: 0207-242-1222; Fax: 0207-320-5897 and Email: http://www.lawsociety.org.uk).
ANOTHER THREAT.
Those who have read the Annual Report from Mrs.Ann Abraham, the Legal Services Ombudsman, will not have been comforted. Despite all the labours and strivings to strengthen and improve the O.S.S., her comments on that body and its performance were highly critical. The instances of inept handling of complaints were featured, and both the O.S.S. and the profession were vigorously attacked for an alleged failure to take complaints handling seriously enough. The inference is that solicitors as a whole either ignore complaints or attempt to brush them off as being of little account.
THE O.S.S.'S DECEMBER 2000 DEADLINE.
By December, 2000, the number of complaints being handled by the Office has to be reduced to 6000, so the Lord Chancellor and the Government have demanded, and the O.S.S. are making strenuous efforts to reach that target. By mid-September, the number was reported to be 9548. However, the issue of quality is equally difficult; Mrs.Abraham has noted with regret that the number of complaints handled satisfactorily declined from 64% in 1998 to 59% in 1999, and remarked that currently the O.S.S. seem to be concentrating on reducing numbers, rather than maintaining standards and quality. Whether or not the Government will decide in December to remove regulatory affairs from the Law Society and the O.S.S., bestowing them instead on an independent statutory board, remains to be seen.
A RAY OF LIGHT.
Moves are now afoot to try and create a liaison group between the different bodies of advisers (the Solicitors' Assistance Scheme, Sol-Care, the Young Members' and Associate Members' Groups, ourselves in the S.D.A., the Surrey Defence Fund Scheme, the Sole Practitioners' and Legal Aid Practitioners' Groups, the Scottish Legal Defence Union, etc.). In the next month or so the first meeting should be held. Mr.Robert Venables, the Chairman of Sol-Care, and Mr.Barry Pritchard, its Co-ordinator, are leading these moves, which both the S.A.S. and we in the S.D.A. are supporting. The result should mean the regular exchange of information and guidance, and the holding of, perhaps, two meetings per annum, so that representatives of all the groups may come together, to discuss current problems and issues of common concern.
THE COMING INTO FORCE OF THE HUMAN RIGHTS ACT ON 02 / 10 /2000.
There have been many articles, speculating on the likely effects of incorporating this Act into English law, and a great variety of views and theories. At the S.A.S.'s training course on 26 / 06 / 2000 one of the speakers was John Wadham, the Director of Liberty. He took a cautious and surprisingly conservative view of the impact of this legislation on the workings of this O.S.S. He did not appear to think that Article 6, (the right to a fair trial), would be interpreted so as to equate disciplinary proceedings with criminal prosecutions.
The significance of that equation, if it were established, would be to require the provision of funds with which to pay for the defence of accused solicitors. Whether or not this will be borne out in the event remains unclear. A different aspect is the almost inevitable advent of oral hearings on issues of conduct and discipline within the Office on and after 02 / 10 / 2000. This will require a heavy programme of training for the O.S.S.'s adjudicators and members of the Compliance and Supervision Committee, so that they may adapt to the new and more exacting regime of contested hearings, for which they have hitherto had little or no preparation.
REGULATION REVIEW - THE SECOND CONSULTATION PAPER.
Mr.Edward Nally's Working Party on this subject have published this paper on the issues involved in Practice Rule 11, (Names Used by A Firm). Once again, the deadline for the period of consultation is now lamentably close, 30 / 09 / 2000. Thus members of the S.D.A.'s Working Party, which remained in existence after the previous consultation paper's deadline on 03 / 03 / 2000, will need to brace themselves to tackle this latest paper. Copies are now being circulated.
SOME GOOD NEWS FOR THE B.L.A.
A recent letter and questionnaire, sent to all B.L.A. members, has generated some helpful replies, including roughly a dozen offers to serve on the B.L.A.'s Executive Committee. This is heartening, particularly at a time when solicitors feel under great pressure and unable, for the most part, to take on voluntary work of this kind.
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TWO PRESSING PROBLEMS.
This issue is longer than usual, because of the importance of the following two articles, which address sensitive questions affecting professional conduct. It is to be hoped that readers will take these matters to heart, for they are central to the disputes over self-regulation.
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THE NEED FOR AN OFFICIAL DEFENDER OF SOLICITORS, BY DAVID KEATING,
(a Member of the Law Society's Council and Formerly Chairman of the International Law Committee).
When I started practising many years ago, I believed that, so long as I abided by the rules of conduct, there was no likelihood of coming under the scrutiny of what is now the O.S.S. Indeed, there are many practitioners now who happily believe that, only if a solicitor commits some dastardly deed, will the O.S.S. take action, and, if they do, then the solicitor has only him or herself to blame.
It is much the same as those members of the public, who, having no other experience, believe that
the police would never mistakenly or wrongly pursue some individual.
Human nature, however, is complex. At the moment, we have a system in our profession, where a client can refer a grievance against a solicitor to the O.S.S. If the O.S.S. fails to deal with it to that client's satisfaction, then that client can refer the matter on to the Legal Services Ombudsman. She and her predecessor have on many occasions come to the conclusion that the O.S.S. have erred, and have required them to review what they have done and investigate further the solicitor's conduct. She has sometimes even imposed a financial penalty on the O.S.S. Wherever the O.S.S. enquire into a solicitor's conduct, that solicitor has much at stake, and usually the consequences for the solicitor, if there is any inadequacy or error on the part of the O.S.S., are far more catastrophic than it would be for the client. At stake for the solicitor are his or her reputation, livelihood and the financial security of that solicitor's family and dependants.
Whilst the client has the safeguard of the Legal Services Ombudsman, the solicitor has no such final arbiter, yet the principles of natural justice shout loudly for one. After all, if the O.S.S. are found by the Legal Services Ombudsman to err at times against clients, that implies that they must also on occasion err against solicitors.
At various times it has been proposed that there should be a final arbiter, to whom a solicitor could refer, but sadly such proposals so far have never been taken up. I say sadly, because there have been a number of cases, where much grief could well have been spared, if such an arbiter had existed and been able to intervene. Instead, as some have done, the aggrieved solicitor has had to go to court to seek redress. In the overall scheme of things, the cost of appointing an arbiter, or, for want of a better word, a "visitor," would be minimal.
Any one of us can lose at times our objectivity, fail to see what is obvious or jump to the wrong conclusion. The staff at the O.S.S. are no different from the rest of us.
When my Gazette arrives, I look with morbid curiosity at the disciplinary page. What dreadful goings on have happened? For the most part the images that percolate through these dry reports are of broken, dispirited people, and only very rarely does one encounter a red-blooded villain.
Here are the sad tales of depressed and overworked solicitors, who, at the end of their tether, do something daft and stupid, often because their problems have got out of proportion. Here are the tales of ruined careers, and, in the process, damaged clients and the unspoken consequences of bankruptcy
Much has been done recently to provide support for the profession, in the hope that help can be given to prevent a solicitor from descending into folly. Not only does such effort help the solicitor, but it also saves the clients from the consequences of being caught up in a professional disaster. Such excellent work is very much in the public interest as well as the profession's.
But would the appointment of a "visitor" to act as a solicitors' watchdog over the activities of the O.S.S. also be in the public interest? Surely it must be.
For the O.S.S. to succeed in their difficult task, they must enjoy the confidence of, not just the public, but also of the profession. Sadly such confidence has been all but forfeited of late, and we can only hope that the considerable resources now being invested on behalf of the profession in the O.S.S. will ensure that the interests of the public at large and of the profession are effectively met. Any further fiascos can only have dire consequences for us all.
It is in our own interests as a profession that an effective O.S.S. can resolve complaints speedily and properly pursue disciplinary breaches.
What, however, should a solicitor do, if he believes that he is being zealously pursued for the wrong reason?
There are sufficient cases to show that this does happen. Yes, the solicitor can present his own arguments, and, when the process taken against him has finally ground to an end, pursue whatever remedy the courts can offer. By then, of course, much harm may well have been done.
In such a situation not every solicitor has the financial, physical or mental resources to claim redress through the courts.
We have recognized that clients should be spared from having that recourse as their only option, and they have the safeguard of the Legal Services Ombudsman. We should recognize that solicitors should have a similar option.
The O.S.S. have nothing to fear, and the creation of a "visitor" or "arbiter" for solicitors should do much to restore the profession's confidence in the O.S.S.
The appointment of such a safeguard should do much to prevent those sad, and at times appalling, cases, where the O.S.S. have been found to have acted wrongly or mistakenly against a solicitor, and in turn to prevent the anguish and bitterness that result.
The appointment of the "visitor" should play an active role in achieving a positive and balanced approach to the implementation of our professional standards. Such implementation can only be effective, if it has the confidence of the public and the profession.
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INTERVENTIONS - PRACTICAL ADVICE, BY PETER ROSS, (Barrister and Crown
Court Recorder, formerly Director of the Office for The Supervision of Solicitors).
Intervention into a solicitor's practice is, without doubt, the most draconian step which can be taken by the OSS. The ramifications are so extensive that in truth there is rarely the opportunity for any reconstruction of a practice even in the event of a successful appeal. As a result, the writer, when Director of OSS, worried more about intervention decisions (often exercised by the Chairman of Compliance & Supervision Committee alone) than any other. And yet the powers of intervention are regulatory, rather than disciplinary, despite the huge punitive impact which they have.
The powers of intervention are set out in Schedule to the Solicitors Act 1974 and added to by virtue of the Access to Justice Act 1999, so that, in addition, breach of the Practice Rules becomes a ground for intervention (Section 31 of the Solicitors Act 1974 being inserted into 1.(1)(c) of Schedule 1).
The "traditional" reasons for intervention are: suspected dishonesty on the part of a solicitor or a member of staff, failure to comply with the Solicitors Accounts Rules, practising uncertificated and abandonment or incapacity by or of a sole practitioner. The powers in these circumstances have been and are at present exercisable without notice. Other circumstances set out in Schedule 1 require notice, but normally relate to what at OSS is referred to as "limited intervention",
namely, the seizure of specified papers or files.
It was only shortly before the writer left OSS that the Government, at OSS' request, included in the Access to Justice Act 1999 the additional provisions as to intervention. These provisions were designed to modernise and make relevant to clients the powers of intervention. The writer's understanding is that, at present, the OSS has not decided upon the circumstances in which use of the new intervention powers is contemplated. It was intended that they should only be used where there were persistent and repeated breaches of the Practice Rules (including IPS). In the event that a solicitor seeks advice in such a situation where intervention, relying on the new powers, is contemplated, the OSS should be encouraged to hold an oral hearing even before the coming into force of the Human Rights Act 1998.
ACTION TO BE TAKEN IN THE EVENT OF INTERVENTIONS ORDERED BEFORE 2 OCTOBER 2000
The circumstances where intervention can be ordered are so wide, that it is rare for any appeal to succeed. The most common use of the power is "where there is reason to suspect dishonesty on the part of a solicitor". It is noteworthy that the test seems to be less onerous than that used in PACE - where the words "reasonable cause to suspect" are used. Simply reason to suspect is sufficient. The second most commonly used circumstance is failure to comply with the Accounts Rules. As can be imagined,
it is difficult at present to appeal the basis of the order for intervention since the most used circumstances are so widely drawn. In any event, even a successful appeal (and none occurred in the writer's time as Director) is a pyrrhic victory since disposal of the practice is likely to have taken place, clients notified and local publicity given. In effect, the practice will have been destroyed. This, all in addition to the suspension of the Practising Certificate which is automatic on an intervention being ordered.
What practical advice can be given in these circumstances? If the solicitor is aware that intervention is likely and takes advice, then disposal of the practice should be attempted. The cost of a full blown intervention is high and can be recovered from the solicitor. A disposal avoids this cost and means that the Practising Certificate is not suspended. The solicitor might find it easier in the future to obtain alternative employment, although it is almost certain that S.12 of the Solicitors Act 1974 will be applied to him/her. But an important warning: no attempt should be made to dispose of the practice to a firm which is likely to continue the practice in such a way as to generate the suspicions leading to the original intention to intervene. Discussions with OSS should always take place to any agreement between the firms being reached.
Should an agreed disposal not prove possible, then, as already indicated, intervention is a costly business and the principal(s) can be pursued for its costs. The key to keeping down the costs is co-operation. From a human perspective, it is hard to expect willing co-operation in such circumstances, but the impact this can have on minimising cost is enormous. OSS intervention archive staff support the intervention agent and will remove all files which do not require examination by the agent, i.e., the files which are not "live". Simply identifying these at the earliest opportunity, thus avoiding the role of the agent, does much to reduce costs. Disorganisation is all too often a feature of firms which are "intervened in" and assisting in producing order out of chaos leads to significant savings in intervention costs.
It is thought by some that the only means of restoring the Practising Certificate of the "intervened in" solicitor is to contest the intervention. The writer has seen a number of instances where contests to the intervention were begun (although not pursued) solely as a means of restoring the Practising Certificate. The simplest and most effective step to take is to apply to the OSS for the Practising Certificate to be restored. In cases of outright, blatant and serious dishonesty, such an application is unlikely to be successful. In other cases, however, generally speaking, the Practising Certificate will be restored on application although it will almost inevitably have conditions attached. These tend to relate to employment and client money. If an application for restoration of the Practising Certificate is accompanied by details of proposed employment, then that will be likely to assist in the framing of the Practising Certificate conditions and speed consideration of the application.
INTERVENTIONS POST 2 OCTOBER 2000
It is accepted that the Law Society (and thus the OSS) is a "public authority" for the purposes of the Human Rights Act 1998. Therefore the actions of the OSS and the Compliance and Supervision Committee, scrutinised by the Courts after 2 October 2000 will be considered in the context of the Act. This does not mean, however, that it applies only to actions of the OSS carried out after 2 October 2000. In R -v- DPP ex parte Kebilene and Others, The Times, March 31, 1999, DC, it was made clear that the application of the Act will be the point at which the matter is considered by the Courts and not the time at which the action was decided upon.
For the purposes of considering interventions, practitioners will need to take into account two particular aspects: the contents of Article 6 (the right to a fair trial) and the principles of Proport-
ionality. These two aspects and their interaction will enable members of the Scheme to provide important legal advice, in addition to the practical matters set out above.
The right to practise is covered by Article 6(1) as a civil right and therefore a solicitor "is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law". It is likely to be argued by the OSS that since the appeal (in the High Court) is held in public the intervention process complies with the act. The writer
disagrees. The key here is "reasonable time". "Reasonable time" will vary between different types of case, but in intervention cases no period of time which, in effect, permits the destruction of the practice
and prevents the solicitor working through suspension of the Practising Certificate, could be regarded as reasonable.
Proportionality is one of the tests used to assess whether or not any breach of the Convention is permissible, i.e., is an apparent breach of a right justified in the sense of being "proportionate to the legitimate aim pursued" (Handyside -v- United Kingdom (1976) 1 EHRR737)? The breach
of a right (for these purposes Article 6) can only be justified by having a legitimate aim and being proportionate to the situation faced, i.e.,"is it necessary in a democratic society?".
The issue for the Courts should the current procedures on interventions be continued will not be "was the intervention justified?", but " (a) was the process used in breach of Article 6, and (b) was any breach of Article 6 in relation to the process necessary?". The writer believes that, other than in extreme cases, the current procedures involving ex parte decisions to intervene will fall foul of Article 6.
So what should be done by those advising solicitors facing intervention or its possibil-
ity? Where there is an indication that an intervention is contemplated, the OSS should be informed that the solicitor has a right to be represented, cross-examine witnesses and call evidence and thus receive notice of the hearing. Where intervention has been ordered, the first step should be to seek its suspension pending reconsideration at which the right to an oral hearing, with its attendant rights, can be required under the Act.In the event that suspension of the order is refused and an appeal is advised, then (as long as the appeal is lodged in the shortest reasonable time) the appeal should be accompanied by an application for an injunction staying the intervention. Any appeals lodged (or indeed heard) shortly after 2 October 2000 should include an invitation to the Court to consider the issues of proportionality and Article 6(1) and their interaction.
Despite eighteen months of warning, the legal profession is only now beginning to awake to the consequences of the Human Rights Act 1998. Thus far, its attention has been directed towards its use on behalf of clients. The profession now needs to turn its attention very urgently to the impact upon itself.
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Published by the Solicitors' Defence Agency, Metropole Chambers, Salubrious Passage,
Swansea, SA1 3RT, (Phone and Fax: 01792-648096)
