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Susanna Heley

Partner, RadcliffesLeBrasseur

Insightful misconduct

Insightful misconduct


Learning lessons from previous mistakes is an important factor for the disciplinary tribunals when determining sanctions, says Susanna Heley

Insight is an important issue in the world of professional regulation. Regulation is not – in theory at least – about punishment.

Rather, it is one of the ways in which professional standards are maintained, so the ability to learn from past mistakes is a material factor in determining sanctions.

On one level, the relevance of insight as a mitigating factor is obvious. Part of the role of a regulator or disciplinary tribunal is to ensure professionals can be trusted not to repeat their errors.

A principal purpose of suspension and or strike off is to deprive transgressors of the opportunity to reoffend.

Recognising you have done wrong, admitting it and putting things right are often powerful factors in determining whether regulatory action and or sanction is necessary; and if so, to what extent.

But what happens when you don’t think you’ve done anything wrong? If you maintain a robust defence, are you deprived of the opportunity to say you have learned a lesson?

There are many straightforward cases in the Solicitors Disciplinary Tribunal (SDT). For example, if you face an allegation of not keeping proper records for client account, the question of whether or not you admit the allegation will be straightforward.

Once you’ve identified what are considered to be proper records – you either kept them or you didn’t; and if you didn’t, you admit the allegation and explain why.

Where the failure to keep proper records resulted from ignorance but you now recognise the importance of maintaining proper records and understand what that looks like, you have shown insight. That’s pretty straightforward.

Things become more complex in the grey areas – where solicitors are obliged to exercise professional judgement and weigh up the proper course of action; or in cases where the only allegation is a ‘catch-all’ such as a lack of integrity or bringing the profession into disrepute – because there is no rule against what you have done.

There isn’t a list of allegations which could fall into this category, but it is something solicitors need to be aware of. It will become even more relevant once the new SRA standards and regulations take effect on 25 November.

There are always those who will push the boundaries. The much-debated rule 14.5 (soon to be rule 3.3) of the SRA Accounts Rules had its origins in the 2004 decision of Wood & Burdett (SDT 8669/2002). In that case, the SDT found misconduct despite there being no rule against what both solicitors were up to (cashing third party cheques through the client account without the third party necessarily being a client).

Fifteen years and multiple money laundering directives later, and the concept of using the client account in such a way is, or should be inconceivable.

The case of Reed v Marriott [2009] EWHC 1183 was one of a number of cases where solicitors had set up complex organisational structures to get around the shifting goalposts on advertising and referrals during the noughties.

The court remarked that the Solicitors’ Introduction and Referral Code “has to be seen in its context and with reference objectively to its aim”, such that it was found to be misconduct to create a scheme which adhered to the letter rather than the spirit of the applicable rules at the time.

More recent cases include the controversial sanctioning of Mark Lewis for his responses to toxic and hateful social media posts. This gave rise to public outrage and widespread support for Lewis’ argument to the effect that one must be free to fight fire with fire.

In these examples, there was no rule against the specific misconduct; but it was nevertheless considered to be sanctionable misconduct.

Some of these practices caught the collective imagination of the profession and became quite widespread. Witness, for example, the number of firms sanctioned for promoting stamp duty land tax (SDLT) avoidance schemes or for being involved in referral arrangements later found to be unlawful.

Where there is no rule against what was done, it’s easy to see how one might argue that there is a valid defence to allegations of misconduct. In many cases, the practice or conduct was carefully considered and undertaken with the benefit of advice.

What is being tested is really a subjective question of morality and or professional judgement. Say what you will, morality is not a constant and eternally understood concept but a manifestation of social conscience driven by accepted social mores.

Consider the argument that the television series Friends could not be made today because our social conscience has moved on.

That applies to a great many films, TV series and icons of popular culture. Our understanding of what is acceptable has changed.

The question of insight must be seen and assessed with due recognition that the world is changing; that a decision made years ago could be entirely defensible then but not now.

Looking forward – and bearing in mind the climate change protests happening today – would an SDT in 20 years’ time consider it to be serious misconduct to maintain a paper file alongside an electronic one?

Given the number of historic allegations emerging in the wake of the #MeToo movement and the intense media interest that resulted, there is an obvious risk that sanctions may be imposed based on what we consider to be acceptable conduct today – and ‘insight’ judged by that standard.

Questions must be raised as to whether (and how far) sanction, liability and even jurisdiction should be influenced (whether aggravated or ameliorated) by the extent to which the conduct in question was socially acceptable at the time.

It isn’t true that the need to demonstrate insight is necessarily inimical to a robust defence. It is possible to recognise that actions which were once acceptable are no longer; but that doesn’t mean you can’t defend having done them when they were acceptable.

In Lorrell v SRA [2019] EWHC 981, Justice Martin Spencer allowed an appeal against a strike off holding that it had been unfair for the SDT to suggest, in consequence of the solicitor’s robust defence, a lack of insight on his part.

He found that the solicitor could not have been aware of the issues which the SDT suggested gave rise to a lack of insight the date of the misconduct which was alleged and found proven – because the events in question predated that SDT decision.

The sanction was eventually reduced from strike off to suspension. The SDT will undoubtedly need to grapple with the concept of insight in relation to issues of professional judgement on many occasions in future.

This is particularly so as it could be argued it would be dishonest and misleading for a solicitor to admit to misconduct involving an element of discretion or intention in circumstances where they believe they have genuinely done nothing wrong.

Susanna Heley is a partner at RadcliffesLeBrasseur