Leigh Day highlights the SRA's inconsistent approach to enforcement
Martina Hogg argues that the soon-to-be-launched enforcement consultation must take into account concerns about how the regulator handles SDT cases
The Leigh Day case captivated the legal sector like few others have. The subjects of cost (rumoured to be in the seven- or even eight-figure bracket) and the burden of proof have dominated the conversation about the case, and while these are compelling factors, there are more fundamental issues to be considered.
Attending SDT is very much the final act in what can often be a long-running drama. You cannot have a debate about what takes place at SDT without first taking a long hard look at how the case got there. Unfortunately, it’s here that the SRA has long demonstrated a very inconsistent approach.
Weightmans recently dealt with a case where the SRA commenced an investigation based upon information that was in the public domain. The SRA contacted the COLP at our client’s firm but did not contact our client themselves. The first direct contact our client had from the SRA was a letter containing a list of allegations of professional misconduct. Our client was then in the position of having to respond to those allegations in a limited period of time.
Once the SRA had all the information – which it could have obtained prior to making any allegations of misconduct – the case was discontinued. It was commendable that in this instance the caseworker made the decision to discontinue quite quickly, but it is a real concern that serious allegations of professional misconduct were made without the SRA even talking to our client.
In another case, we pointed out to the SRA at the outset that some of the evidence it was relying on post-dated our client’s leaving the firm under investigation. There were factual errors in the report and the SRA had made an allegation of dishonesty without first checking that it had evidence to support that allegation. We were so concerned by the conduct of this matter that we raised it with the head of supervision and investigation, who refused to carry out a review.
The matter progressed as far as a report being prepared for adjudication recommending our client be rebuked and/or fined; the report referred, among other things, to “the spirit of the SRA Accounts Rules”, whatever that is. It took over six months for the SRA to accept there was no case to answer. Our client will not be reimbursed for the costs of responding to the SRA or compensated in any way for the months of stress they suffered.
There are, of course, other examples of cases where the SRA does a much better job. Unfortunately, the inconsistency of its handling of cases remains a concern. Unless the SRA decision-making process improves, and it can demonstrate that all of the decisions it makes prior to referring a case to the SDT are of a requisitely high standard, then the debate about burden of proof is pointless.
We cannot evaluate what impact the burden of proof might have on outcomes until we can be sure that in every case the right people and the right evidence are put before the SDT. We can only hope that the soon-to-be-launched consultation on SRA enforcement will address these concerns.
This is not only a debate about the cases that go to SDT but about the investigation and prosecution process in its entirety. The flip side of the SRA pursuing cases that lack merit is the risk that cases with merit are not pursued.
It is important for the profession, and in the public interest, that the SRA is able to pursue conduct such as we saw in the Wolstenholmes case. It is the profession that pays for the misconduct of a few, not only by funding the SRA and the compensation fund, but in insurance premium rises. And there are other intangible costs: how do you calculate the damage to the profession of another headline about ‘crooked lawyers’?
Martyn Day has said that without the benefit of D&O cover to fund the SDT defence his firm “would have been knackered”. A frank and informative statement, particularly given the SRA’s intention to seek greater internal sanctioning powers. If you are unsure as to whether or not you do have this cover, I urge you to go and talk to your broker immediately. Even if you do not end up making an appearance at SDT, a visit from the SRA can prove to be expensive.
Martina Hogg is a compliance consultant at Weightmans