Ethics - Duties to SRA and Compliance (10) Flashcards
What duties does a solicitor have to the SRA and Compliance?
(1) Keeping Up to Date: A solicitor must keep up to date with and follow the law and regulation governing the way the solicitor works. Solicitors must also have and maintain knowledge and understanding of the SRA Standards and Regulations (in particular the Principles, Codes of Conduct and the Accounts Rules) and the Guidance issued by the SRA designed to help solicitors understand the obligations placed upon them.
(2) Cooperation: A solicitor must cooperate with the SRA as well as other regulators, ombudsmen, and those bodies with a role overseeing and supervising the delivery of, or investigating concerns in relation to, legal services. A solicitor must also respond promptly to the SRA and provide full and accurate explanations, information and documents in response to any request or requirement and ensure that relevant information is available for inspection by the SRA. Such information may be required where the SRA is investigating whether the solicitor is complying with the requirements of professional conduct. Any remedial action requested by the SRA must be acted upon promptly.
(3) Investigating Claims for Redress: A solicitor must be ‘honest and open’ with clients if things go wrong and, if a client suffers loss or harm as a result, put matters right (if possible) and explain fully and promptly to the client what has happened and the likely impact. If required to do so by the SRA, the solicitor must investigate whether anyone may have a claim against them, provide the SRA with a report on the outcome of the investigation and notify relevant persons that they may have such a claim accordingly.
Under what circumstances is a solicitor required to notify the SRA should a particular event occur?
The notification requirement arises if:
(a) the solicitor is subject to a criminal charge, conviction or caution;
(b) the solicitor is made bankrupt, enters an individual voluntary arrangement with their creditors or is subject to a debt relief order;
(c) the solicitor becomes aware of material change in information about them or their practice previously provided to the SRA;
(d) the solicitor becomes aware that information previously provided to the SRA about them or their practice is false, misleading, incomplete or inaccurate.
What reporting requirements does a solicitor have?
(1) Client Misconduct: There is an obligation placed on solicitors to report client misconduct. The SRA considers that by reporting behaviour which puts the client, the public or the public interest at risk, a solicitor is fulfilling the duty to act with integrity.
(2) Prompt Report: A solicitor is obliged to ensure that a prompt report is made to the SRA of any serious breach of its regulatory arrangements by any person regulated by it (including the solicitor themselves) of which the solicitor is aware. The obligation to report may also be satisfied by reporting to the firm’s compliance officers, where appropriate.
Unlike the notification requirements which arise automatically on the happening of a given event, the reporting obligation will require the solicitor to exercise their own judgment in deciding whether the particular facts require a report to be made.
A report is required in respect of ‘a serious breach’. It is clear, therefore, that the SRA will not be concerned with trivial matters or technical breaches. The SRA Enforcement Strategy gives guidance on what types of behaviour the SRA considers to be ‘serious’.
Factors which the SRA takes into account in assessing seriousness include:
The nature of the allegation - Allegations involving sexual or violent misconduct, dishonesty, criminal behaviour, abuse of trust, taking unfair advantage of clients or others and the misuse of client money are serious in themselves.
(b) Intent/ motivation - Conduct which is deliberate, premeditated, dishonest, repeated or displays a reckless disregard of professional obligations is considered to be more serious.
(c) Harm and impact - The greater the harm caused and the more foreseeable the impact, the more likely the behaviour is to be considered serious.
(d) Vulnerability - The SRA understandably takes a particularly poor view of conduct where the ‘victim’ is vulnerable.
In addition to the obligation to report in Paragraph 7.7, a solicitor must inform the SRA promptly of any matters which the solicitor reasonably believes should be brought to the SRA’s attention in order that the SRA can investigate whether a serious breach of its regulatory
arrangements has occurred or otherwise exercise its regulatory powers (Paragraph 7.8).
It may be that in making a report or providing information to the SRA a solicitor will be required to disclose matters which would otherwise be regarded as confidential. Here, a solicitor will be required to carry out a careful balancing exercise between the duty of confidentiality on the one hand and the public interest on the other. The SRA’s view is that the public interest in reporting misconduct, to enable the SRA to discharge its regulatory function, creates a situation in which the disclosure of confidential information is likely to be justified.
In order to ensure that information is passed to the SRA, Paragraph 7.5 provides that a solicitor must not attempt to prevent anyone from providing information to the SRA or any other body exercising regulatory, supervisory, investigatory or prosecutory functions in the public interest.
If a solicitor has a reporting or notification obligation, who should this notification be made to?
(1) Firm’s Compliance Officer: Will be satisfied if the solicitor provides the information to their firm’s compliance officers. This will usually be the best option for an individual solicitor. The compliance officers have the ability to investigate the circumstances fully before concluding that the SRA must become involved.
(2) Personal Responsibilty: This does not absolve the solicitor of all responsibility. The solicitor should still make a report themselves if they are convinced that a report is required and are not satisfied that the compliance officers will do so.
What business requirements does a solicitor have?
(1) Annual Return: A solicitor who holds a practising certificate must complete and deliver an annual return to the SRA.
(2) Indemnity Insurance: Requires a solicitor carrying on reserved legal activities in a non- commercial body to ensure that the body takes out and maintains adequate and appropriate indemnity insurance in compliance with the SRA Indemnity Insurance Rules.
Who has the responsibility in a law firm to ensure a firm complies with the SRA Code of Conduct for Firms?
(1) Managers: The responsibility for ensuring the firm’s compliance with the Code lies with its managers. Who is a manager will depend on the structure of the business: a sole practitioner, a partner in a partnership, a member of LLP, a director of a company or a member of a governing body. Managers therefore have the ultimate responsibility for how the firm is run and the legal services delivered. Managers must ensure that the firm complies with all legislative and regulatory requirements.
(2) Misconduct in a Firm: A finding of misconduct against a firm by the SRA is not a finding against an individual manager. A manager will generally only be considered to be responsible for their personal actions or if they should have known about or intervened to prevent the wrongdoing.
What compliance officers will a firm have?
Compliance Officers: Every firm must have a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA). For sole practitioners and small firms these roles may be fulfilled by the same person. Otherwise, the compliance officers will be senior individuals within the firm approved by the SRA for carrying out this role.
(1) COLP: A COLP must take all reasonable steps to:
(a) ensure compliance with the terms and conditions of the firm’s authorisation;
(b) ensure compliance by the firm and its managers, employees or interest holders with the SRA’s regulatory arrangements which apply to them;
(c) ensure that the firm’s managers and interest holders and those they employ or contract with do not cause or substantially contribute to a breach of the SRA’s regulatory arrangements;
(d) ensure that a prompt report is made to the SRA of any facts or matters that the COLP reasonably believes are capable of amounting to a serious breach of the terms and conditions of the firm’s authorisation, or the SRA’s regulatory arrangements which apply to the firm, managers or employees;
(e) ensure that the SRA is informed promptly of any facts or matters that the COLP reasonably believes should be brought to its attention in order that it may investigate whether a serious breach of its regulatory arrangements has occurred or otherwise exercise its regulatory powers.
SRA Reporting: The requirements in (d) and (e) replicate requirements of the SRA Code of Conduct for Solicitors, RELs and RFLs. So, where an individual solicitor reports their concerns about misconduct to the COLP, it is for the COLP to pass these on, if appropriate, to the SRA.
Responsibilty for Compliance: Whilst the responsibilities placed on the COLP are wide, the SRA have repeatedly said that the COLP will not be used as a scapegoat for wrongdoing by the firm. The responsibility for compliance ultimately rests with the managers of the practice. However, the COLP may be liable if they fail to meet their own responsibilities.
(2) COFA: Essentially, the firm’s COFA fulfils the same role as the COLP but in relation to compliance with the SRA Accounts Rules.
A COFA must take all reasonable steps to:
(a) ensure that the firm and its managers and employees comply with any obligations imposed upon them under the SRA Accounts Rules;
(b) ensure that a prompt report is made to the SRA of any facts or matters that the COFA reasonably believes are capable of amounting to a serious breach of the SRA Accounts Rules which apply to them;
(c) ensure that the SRA is informed promptly of any facts or matters that the COFA reasonably believes should be brought to its attention in order that it may investigate whether a serious breach of its regulatory arrangements has occurred or otherwise exercise its regulatory powers.
Responsibility for Compliance: The responsibility for compliance ultimately rests with the managers of the practice.However, the COFA may be liable if they fail to meet their own responsibilities.
