Fair treatment of colleagues: what you need to know about the SRA’s updated Codes of Conduct

[A condensed version of this article first appeared in Law.com]

The Solicitors Regulation Authority (SRA) has been given the green light by the Legal Services Board (LSB) to amend the SRA Codes of Conduct in respect of treating colleagues fairly and with respect.

The LSB’s Decision Notice states the SRA’s intention to update the Codes immediately, “without further publicity or allowing [firms and individuals] time to prepare for the alterations”.

Indeed, these changes have already taken effect, introducing in the Codes explicit requirements for individuals to treat colleagues fairly and with respect, for managers to challenge behaviour that does not meet this standard, and for firms to treat those who work for and with them fairly and with respect, and to require their employees to meet that standard.

These new requirements have been inserted into the SRA Codes of Conduct as follows:

SRA Code of Conduct for Solicitors, RELs and RFLs

New standard in section 1 (maintaining trust and acting fairly):

“1.5       You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them. If you are a manager you challenge behaviour that does not meet this standard.”

SRA Code of Conduct for Firms

New standard in section 1 (maintaining trust and acting fairly):

“1.6       You treat those who work for and with you fairly and with respect, and do not bully or harass them or discriminate unfairly against them. You require your employees to meet this standard.”

The message is now clear – the SRA will take action where individuals and firms fall short of these new requirements, for example, where an individual intentionally undermines, bullies, harasses or victimises a colleague, or a firm does not deal with a complaint of such behaviour promptly and fairly. 

Reporting considerations and more reports

Firms will need to formulate a new set of considerations around what is reportable. While sexual misconduct has been an SRA priority for some time, other types of behaviour that were once considered purely employment matters, such as bullying, harassment and discriminatory behaviour, are now subject to SRA scrutiny and enforcement. 

Firms will need to look at broadening existing protocols to encourage and account for the internal reporting of all such counter-inclusive behaviours. Current firmwide policies and training will need to be reviewed and refreshed to ensure all managers and employees understand the new requirements and know what to do in the event that they encounter counter-inclusive behaviours at work.

There will also be lots of issues to unpick around perceptions of “fairness”, scoping of “colleagues”, and practicalities of when, where, and how managers should challenge behaviours they observe which do not meet the new standards. What exactly amounts to bullying, harassment, and discriminatory behaviour will need to be carefully considered, although the SRA’s forthcoming revised workplace environment guidance is expected to address some of the uncertainty in respect of these terms.

Indeed, clarity of definitions was a point the LSB took issue with before making its decision. The LSB asked the SRA to confirm whether it intends to provide definitions for these terms, stating that it was mindful of unintentional barriers to reporting.

As a consequence of these decision-making complexities, the new standards are bound to lead to a substantial increase in the number of reports internally within firms, which GCs and risk teams will need to filter and make decisions on. The SRA too will need to cope with a likely increase of concerns being reported to it. Indeed, the SRA acknowledged in its application to the LSB for approval of the new standards that it is “preparing to handle an increased level of reporting if needed.”

A new sexual misconduct hook for the SRA and a bigger regulatory net

Investigating and taking action in respect of allegations of sexual misconduct has been an SRA priority for a while. The new standards bring other types of counter-inclusive behaviours into scope as a regulatory issue. While these behaviours will no longer present just an employment matter for firms, the SRA states in its draft updated guidance:

“In a regulatory context, treating colleagues fairly and with respect is not the same as complying with employment law. Employment law – and ultimately the Employment Tribunal – is the primary route to decide whether treatment is unfair in the context of an individual’s work role and to award redress accordingly. And without more, we would not expect to get involved in routine employment law matters, or disagreements about role-related matters such as targets or the allocation of work.

From our point of view, however, we are concerned with managing the risks that unfair behaviour can pose for consumers and the wider public interest. Our expectation is that those we regulate will, for example:

• not create or sustain a working environment which is more likely to lead to mistakes and poor outcomes for clients, or to serious ethical concerns – for instance, when staff are placed under pressure to cover up problems
• maintain public confidence in the profession as a safe and inclusive environment.”

The new standards also give the SRA firmer ground upon which to position allegations of sexual misconduct. Recently, the SRA announced its intention to refer all allegations of sexual misconduct to the Solicitors Disciplinary Tribunal as the only justifiable course of action, save for in exceptional circumstances. However, the High Court judgment in the Beckwith appeal left the SRA in a difficult position. Absent a finding of abuse of position or imbalance of power, the SRA could not, according to the court, simply rely on a breach of its overarching Principles to sanction an individual.

While the SRA’s application to the LSB to introduce the new standards does not state this issue in direct terms, it is clear that it was a consideration the SRA had in mind:

“Our current regulatory arrangements, including our Principles and Codes of Conduct for Solicitors and Firms, provide us with powers to act where we see serious failings in the working environment. These rules give us clear grounds to act in cases involving behaviour that amounts to discrimination, victimisation or harassment, abuse of a position of authority, or failure by a firm to put effective systems and controls in place. However, our rules do not currently include an explicit requirement to treat people fairly at work. This risks failing to be clear about our regulatory expectations around relationships in the workplace, and requires us to rely on these wider Principles and Standards in our enforcement work.”

The updated Codes now crucially give the SRA the hook to investigate and plead sexual misconduct allegations. They have been broadly drafted to capture all types of counter-inclusive behaviours including sexual misconduct, no doubt intentionally to strengthen the SRA’s position in respect of future Beckwith-type matters. The fact the SRA is taking this area so seriously is demonstrated by its intention to recommend that in relation to allegations of sexual misconduct, a referral to the Solicitors Disciplinary Tribunal is the only justified course of action, save for in exceptional circumstances.

How the new standards will impact in-house solicitors

In considering the SRA’s application to introduce the new standards into its Codes of Conduct, the LSB queried with the SRA how it expects they will work in practice for in-house solicitors.

Specifically, it is noted that the SRA’s revised workplace environment guidance states that the requirement for managers to challenge unfair behaviour will not apply to in-house solicitors. Following the LSB’s direct query on this point, the SRA has stated it will use the guidance to encourage in-house solicitors to challenge unfair treatment where they are able to do so.

As it stands then, there is no explicit requirement for individuals who hold senior levels of positions within in-house teams of solicitors to challenge counter-inclusive behaviours when they see it. The LSB’s Decision Notice makes specific mention of its expectations for the SRA to consider on an ongoing basis how this will impact those working in-house. 

The future

We expect revised SRA guidance to follow very shortly to provide greater clarity around the meaning of counter-inclusive behaviours in scope and the terms used; clarification from the SRA in relation to the scope of challenge expected of managers who become aware of such behaviour; and a clearer acknowledgment that individuals with protected characteristics may experience higher levels of unfair treatment, a point which the LSB raised as a key issue for the SRA to address in its guidance and other published resources.

However, notwithstanding this guidance, the regulatory landscape in this area will still need to be carved into shape. How individuals and firms call out counter-inclusive behaviours and decide what to report and when are likely to remain grey areas to be tested.

What is pressing is that all those regulated by the SRA – solicitors, law firms and non-solicitor employees who work within them – understand their regulator’s unequivocal intention to initiate behavioural and cultural change in the legal sector. Arguably, the SRA is leading the regulatory front in this area by actively seeking to enforce instances of counter-inclusive behaviour. The new standards are effective immediately and their implications for firms and practitioners could not be more significant.

Further information

If you have any questions regarding the information above, please contact Jessica Clay in our Regulatory team. 

 

About the authors

Jessica Clay is a partner in the legal services regulatory team. Jessica has a substantial practice advising law firms, including magic circle, global and boutique law firms, as well as partners and others working within firms and lawyers working in-house. Jessica also advises alternative legal services providers. She advises on a range of SRA-related matters, including authorisation and changes to business structures, reporting obligations, compliance and ethical standards, with a focus on matters relating to counter-inclusive behaviours and how these impact law firm culture. Jessica has recently advised firms and individuals in respect of allegations relating to AML and counter-inclusive conduct, including sexual misconduct, which are being investigated by the SRA.