The role of a Financial Director – a life in the spotlight
On 12th March 2018 the SRA published a warning notice on the use of Non-Disclosure Agreements (“NDAs”). I have already blogged on the ethical issues that underpin the SRA’s notice here and I am currently working on a more detailed project with others around the use of NDAs that we hope will provide some more assistance to firms. The purpose of this blog is to deal with one aspect of the SRA’s warning notice which is the obligation on firms and solicitors to report “serious misconduct” to the SRA. This is primarily found in Outcome 10.4 of the SRA Code of Conduct although there are also obligations on the firm’s COLP in rule 8.5 of the SRA Authorisation Rules. The SRA deals with the issue in its warning notice in the following way:
“Where you find, or have grounds to believe, that a member of your firm has or may have committed a serious breach of our requirements, we expect you to report such findings or concerns to us. We may wish to investigate and we have statutory powers that are not available to you. Failure to report may be a failure to achieve Outcomes 10.3 or 10.4 and of one or more SRA Principles.”
The question of whether to report under Outcome 10.4 had vexed firms and solicitors (and those advising them) for years but sexual misconduct allegations do provide additional considerations which I will deal with below. For any firm considering reporting under Outcome 10.4 the following are worth bearing in mind:
“I should point out at once that standards of professional conduct change as time passes. What is entirely proper for one generation may be slightly irregular for the succeeding generation and highly improper for the next.”
Sir Thomas illustrated this point by reference to the fact that it was accepted in the 19th century for solicitors to hold client money in their own account. This generation’s equivalent may well be sexual misconduct. Whilst very serious cases of sexual misconduct were always required to be reported, society’s attitudes have shifted. Something that may not have seemed reportable a year or more ago will now be reportable. In addition, the boundary between conduct in practice and outside practice has become more blurred. Any proper consideration of whether to report has to take account of this shift.
The Outcome 10.4 obligations are not straightforward. In cases where a firm comes to the conclusion that it does not need to report it may be sensible to document that decision making process and, where appropriate, seek external advice on the issue.
 A Guide to the Professional Conduct and Etiquette of Solicitors, The Law Society, 1960.
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