Hoping for a fairer approach to costs in SDT proceedings

The difficulties faced by those entering into the legal profession as solicitors, both in terms of the mounting financial costs and then the shortage of the training places available, are formidable. Many thousands pursue law as a course of study every year, only ?a very select few will ever have the privilege of then going on to practice in ?the learned profession.

The prospects for aspiring barristers are also often dire, although the popularity of law as a course of study remains strong. Several City firms were not able to offer training contracts following the economic downturn and the gloomy tales of high street practices facing extinction have failed to subside. A flawless academic record is often promoted as an essential prerequisite for would be lawyers, and even with that, the tenacity to endure rejection after rejection from potential employers is just ?as important.

Nevertheless, the constant spate of judgments from the Solicitors Disciplinary Tribunal (SDT) and a digest of recent cases involving solicitors that are appealed to the High Court, makes depressing reading and paints a familiar picture, in that after all the trials and tribulations of qualification, many solicitors are not aware of the implications of '“ and rarely ever prepared for another stumbling block '“ the statutory regulation of their profession.

Cases and costs

As a result of the Legal Services Act 2007, the SDT now has full operational independence. While a statutory right of appeal against its decisions lies open to the administrative division of the High Court, the attitude of the High Court towards issues decided by the tribunal can be found in its frequent references to Bolton v Law Society [1994] 1 W.L.R. 512. A quote from Lord Bingham sitting in the House of Lords, famously dictates that the sanctions imposed by the tribunal are partly for the purposes of punishment and deterrence, but their most fundamental purpose is 'to maintain the reputation of the solicitors' profession as one in which every member, of whatever standing, may be trusted to the ends of the earth'. As a consequence, any sentence meted out by the tribunal will often be upheld, being imposed by an expert and specialised tribunal seized of the facts and best placed to determine the appropriate sanction, so that striking off will inevitably follow as a consequence of dishonest behaviour: Salsbury v Law Society [2008] EWCA Civ 1285. Furthermore, the essential issue in legal disciplinary proceedings is often 'the need to maintain among members of the public a well-founded confidence that any solicitor whom they instruct will be a person of unquestionable integrity, probity and trustworthniess'.

Thus, inherent in the ethical standards envisioned by the common law, it is established that if a solicitor is shown to have fallen below what is required in terms of integrity, probity and trustworthiness, an order for striking off may well be appropriate, even in the absence of proven dishonesty, and thus so held the High Court in the recent decision of Afolabi v Solicitors Regulation Authority [2012] EWHC 3502 (Admin).
This principle has often been thought to be the case, although perhaps more worryingly, the High Court has also recently held that the requirements of the Solicitors' Account Rules 1998, in that the principals of a practice are to ensure compliance with the rules (by themselves and by everyone employed in the practice) imported strict liability: R (on the application of Holden) v Solicitors Regulation Authority [2012] EWHC 2067 (Admin).

Therefore, of more general application, is a situation where a solicitor, or another with whom he is in partnership, or an unadmitted person who is under his supervision, is found to be in breach of the account rules (or the money laundering regulations), whereby again, without any finding of dishonesty, nor with any intentional wrongdoing and with substantial mitigation, severe sanctions will inevitably follow. For the purposes of regulation, all partners are to be regarded as principals and an order of indefinite suspension from the Roll will not be excessive: Agyeman v Solicitors Regulation Authority [2012] EWHC 3472 (Admin).

The costs of the SDT proceedings are unavoidable, although will often also be sought by the SRA. However in Agyeman, Mr. Justice Singh did offer solicitors with the misfortune of being hauled before the SDT some relief, in part allowing an appeal and holding that the costs incurred by the SRA from such proceedings were not the same as those incurred in private litigation, and are not meant as a separate punishment, so ought to take account of a solicitors' ability to pay, and present them with an opportunity to put forward evidence of their means, applying Solicitors Regulation Authority v Davis & McGlinchey [2011] EWHC 232 (Admin) and considering De Souza v Law Society [2009] EWHC 2193 (Admin); (2009) 153(30) S.J.L.B. 30.

Charging too much

The legal profession has been an attractive and noble calling to many for centuries, and has existed without the need for statutory regulation. However, an inevitable consequence of the passing of the Legal Services Act 2007, and the emerging new regulatory regime, is that an SRA intervention can occur and quickly bring to a crashing halt all that a solicitor has strived and laboured for (when an intervention occurs, a solicitor is automatically suspended from the Roll).

While the Clementi review was prompted a full decade ago in 2003, over fears that restrictive practices impaired efficiency, and a better regulatory framework was therefore needed in order to promote competition, innovation and the public and consumers' interest in the legal profession; the fact is that the SRA is often criticised for focusing a heavy-handed and interventionist style of regulation, on small high street firms, where minor and technical breaches are only bound to occur, and moreover, disproportionately against BME firms.

No-one could earnestly disagree that there are dishonest solicitors. Ethical standards must be of concern to others, and effectively enforced by the regulator. However, in proceedings before the SDT, solicitors are often charged with breaches of the Solicitors' Account Rules, offences which carry strict liability and are ?virtually impossible to defend. And guilt ?is potentially incurred by all partners for the misdeeds of their counterparts in ?a practice.

In view of this, we may welcome the High Court decision as per Agyeman, which in recognising and applying the principles laid out in Davis & McGlinchey, that the SDT's considerable powers must yet take account of a solicitor's potential impecuniosity and, therefore preserve him the opportunity to put forward evidence of his means. So it goes, this is to be done either at the SDT hearing itself, if he is to admit the charges, or subsequently, if charges are denied but later found proven.
The principle is especially pertinent to solicitors when struck off, or suspended, and may be applicable for all professions in all regulatory proceedings. Furthermore, a solicitor's parlous financial circumstances will give rise to a strong basis to argue that the costs award ought not to be enforceable 'without further leave of the tribunal', thus affording a solicitor opportunity to repay the sum at a future time, if they can ever recover their practice.

If procedures which accommodate ?this approach are adopted as a matter ?of course by the SDT, the issue of costs ?will be dealt with more fairly, as the ?High Court Justices (but not the regulators) have noted 'although solicitors must ?accept the potential burden of ?disciplinary proceedings upon joining the Roll of Solicitors, it does not follow that they necessarily accepted that if the outcome of such proceedings is unfavourable, that they should have orders for costs made against them which disregard [their] means'.