Charities and internal investigations
The decision of the Divisional Court in Beckwith v SRA  EWHC 3231 (Admin) has attracted extensive press attention as it is the first SRA case involving allegations of sexual misconduct that are not based on criminal conviction to reach the High Court. In high level terms the Court found that sexual misconduct cases should be confined to cases that clearly engage the SRA’s Code of Conduct and expressed the view that there were limits on how far a regulator should take action in relation to matters of private life.
Those findings were not based solely on the facts of the case but were also founded on an analysis that amounted to not much less than a re-formulation of the scheme for the regulation of solicitors. As such, the case impacts on other types of SDT cases beyond sexual misconduct cases. However, was the Court’s approach correct?
The Court’s Analysis
In Beckwith the Court was concerned with the interpretation of two of the Principles of the old 2011 Code of Conduct, lack of integrity (Principle 2) and upholding public confidence in the legal profession (Principle 6). Both are also in the current SRA Principles, although the latter is slightly re-worded.
Dealing with lack of integrity first, the Court found that it needed to be anchored in the statutory framework which it says derived from Section 31 of the Solicitors Act 1974. That is the discretionary power of the Law Society to make rules.
The Court put the principles relating to lack of integrity in these terms:
“We also consider it to be elementary that they must be applied within the context of the relevant statutory framework – i.e. the framework provided by rules made in exercise of the power at section 31 of the 1974 Act. Section 31 contains a power to make rules “for regulating in respect of any matter the professional practice, conduct, fitness to practise and discipline of solicitors”, and to the extent that there are applicable ethical standards they must be found in or derived from those rules. In this case, the relevant rules are those in the Handbook, and in particular the 2011 Principles and the 2011 Code of Conduct.”
“The standards that give substance to the obligation to act with integrity must themselves be drawn from some legitimate source – they must stem from legitimate construction of the rules made in exercise of the section 31 power….we accept and agree with the point made in Wingate that the Tribunal is a body well-equipped to act in the manner of a professional jury to identify want of integrity. Yet when performing this task, the Tribunal cannot have carte blanche to decide what, for the purposes of the Handbook, the requirement to act with integrity means. The requirement to act with integrity must comprise identifiable standards. There is no free-standing legal notion of integrity in the manner of the received standard of dishonesty; no off-the-shelf standard that can be readily known by the profession and predictably applied by the Tribunal. In these circumstances, the standard of conduct required by the obligation to act with integrity must be drawn from and informed by appropriate construction of the contents of the Handbook, because that is the legally recognised source for regulation of the profession.” At paragraphs 31-33.
A similar approach was taken by the Divisional Court to Principle 6:
“The content of Principle 6 must be closely informed by careful and realistic consideration of the standards set out in the 2011 Code of Conduct. Otherwise Principle 6 is apt to become unruly. There is a qualitative distinction between conduct that does or may tend to undermine public trust in the solicitor's profession and conduct that would be generally regarded as wrong, inappropriate or even for the person concerned, disgraceful. Whether that line between personal opprobrium on the one hand and harm to the standing of the person as a provider of legal services or harm to the profession per se on the other hand has been crossed, will be a matter of assessment for the Tribunal from case to case, but where that line lies must depend on a proper understanding of the standards contained in the Handbook.” At paragraph 43.
It follows from this that the Court’s analysis is that the Principles themselves are not overarching in the sense of having general application beyond the Code. Instead, “the requirements of each Principle are to be determined by reference to the contents of the Handbook (considered as a whole, and in particular the matters set out in the 2011 Code of Conduct)”. Whilst the Court made clear it was not dealing with the SRA Standards and Regulations as introduced in November 2019 it is difficult to see how the approach would not also apply to them.
The Court’s analysis would be appropriate for a regulatory scheme based entirely upon statute. Such schemes are widespread within professional regulation. However, it is difficult to reconcile the Court’s reasoning with the more complex regulatory framework in place for the regulation of solicitors.
The regulatory framework for solicitors
Solicitors are not only members of a profession but membership of that profession makes them officers of the Court. For much of the 19th century, solicitor regulation and discipline was reserved to the High Court. As the profession increased in size, the Court initially delegated fact finding and then ultimately largely divested itself of the day to day role.
The Solicitors Act 1919 granted the powers of the Court, to strike solicitors from the roll and to impose other penalties, to the Disciplinary Committee of the Law Society, but preserved the Court's inherent jurisdiction which still remains in Section 50 of the Solicitors Act 1974. The Disciplinary Committee was not a committee of the Council of the Law Society, but a separate statutory body whose members continued to be appointed by the Master of the Rolls. This regime continued through successive Solicitors Acts up to and including that of 1957. The Disciplinary Committee was replaced by the Solicitors Disciplinary Tribunal (SDT) in 1975. However, whilst the Solicitors Act 1974 created the Tribunal, it would be wrong to see it as a purely statutory body. There remain vestiges of its High Court origin. In contrast to other disciplinary tribunals anyone can issue proceedings in it and until relatively recently its listings appeared in the High Court list. In parallel the Court has continued to exercise supervisory jurisdiction over solicitors as officers of the Court and pursuant to its residual jurisdiction under Section 50. This has included striking them off the roll, enforcing undertakings against solicitors as officers of the Court and making orders regarding proceedings before it, including in relation to conflicts. At the same time, decisions of the SDT are appealable to the High Court and, on occasion, to the Court of Appeal. This has created a huge body of jurisprudence some directly arising from the SDT’s powers, others as a consequence of the Court’s jurisdiction.
In parallel to the evolution of the disciplinary jurisdiction, the Law Society, which is a body corporate established by Royal Charter (as opposed to a statutory body), was given, in successive Solicitors Acts, statutory powers to deal with solicitors. These relate to amongst other things, practising certificates, interventions, investigatory powers and the power to operate a compensation fund. Notably there is no statutory power to commence proceedings in the SDT; although this is a large part of the SRA’s work.
In addition to the powers described above, the Law Society was also given the power to make rules. This power existed at least by 1933 and possibly earlier. However there was no comprehensive Code of Conduct until 2007 at the earliest. For example, the Solicitors' Practice Rules 1936 (which remained in force until 1967) contained essentially four rules. These were:
Rule 1 – Solicitors could not do anything 'which can reasonably be regarded as touting or advertising or as calculated to attract business unfairly'.
Rule 2 – Not to charge less than scale fees.
Rule 3 – Not to share fees.
Rule 4 – Not to enter into arrangements with claims farmers.
The absence of a comprehensive set of rules meant that cases were based upon the common law relating to the conduct of solicitors or specific rules such as the Solicitors Accounts Rules. Certain obligations such as confidentiality and conflicts of interest sat entirely outside the Law Society's Practice Rules until 2005. When proceedings were brought in the SDT where there was no specific rule, the particulars of the allegation were framed as “conduct unbefitting a solicitor.”
The regulatory framework was entirely reshaped by the Legal Services Act 2007 (LSA). In particular this introduced broad professional principles which included the obligation to act “with independence and integrity” (see Section 1(3)(a) of the LSA). The LSA also introduced an oversight regulator, the Legal Services Board (LSB), which was responsible for approving the regulatory arrangements of front line regulatorswhich includes “conduct rules” (see Section 21 of the LSA). As such any power to make rules such as that contained in Section 31 of the Solicitors Act 1974 became subsidiary to the LSB’s approval process for any changes to the SRA’s regulatory arrangements. In any event with the enactment of the LSA there were in fact three relevant rule making powers: Section 31 of the Solicitors Act 1974, Section 9 of the Administration of Justice Act 1985 (which relates to corporate bodies) and Section 83 of the LSA which relates to alternative business structures (ABS). Each of these powers feeds into an overall and a consistent scheme for those whom the SRA regulates.
Issues relating to the Court’s decision
In the light of this background there are aspects of the Beckwith judgment that are difficult to reconcile with the regulatory scheme. The following are some of the issues that arise.
“Section 31 contains a power to make rules “for regulating in respect of any matter the professional practice, conduct, fitness to practise and discipline of solicitors”, and to the extent that there are applicable ethical standards they must be found in or derived from those rules” at paragraph 31.
The origin of the ethical standards for solicitors is not derived from the Code of Conduct. They are derived from the common law. The Code of Conduct is, in part, a codification of those rules at a relatively high level, mixed with freestanding rules on particular issues such as referral fees. It may be that the Court took issue with the fact that some aspects of conduct are found in or shaped by the common law and therefore lack certainty. However, that is not per se objectionable in a common law jurisdiction, nor in relation to a profession that practises common law and is “co-regulated” by the Court.
“In these circumstances, the standard of conduct required by the obligation to act with integrity must be drawn from and informed by appropriate construction of the contents of the Handbook, because that is the legally recognised source for regulation of the profession.” At paragraph 33.
Again this analysis does not recognise the existence of other sources for the regulation of the profession. The Handbook is a legally recognised source for regulations but is not the only source.
“Whether that line between personal opprobrium on the one hand and harm to the standing of the person as a provider of legal services or harm to the profession per se on the other hand has been crossed, will be a matter of assessment for the Tribunal from case to case, but where that line lies must depend on a proper understanding of the standards contained in the Handbook". At paragraph 43.
The example of convictions exemplifies the issue with the Court’s analysis. Conviction cases are normally based on Principle 6. The Court’s analysis only permits Principle 6 to be determined by reference to the Code of Conduct. Yet there is nothing in the Code of Conduct that says a solicitor should obey the law. Nonetheless such cases have been upheld by the High Court on numerous occasions.
The LSA is not mentioned in the body of the judgment at all but is mentioned in a footnote to paragraph 33 which deals with the fact there is no definition of lack of integrity in Section 1(3)(a) mentioned above. However, no mention is made of the rule approval provisions of the LSA which are of much greater importance in the scheme than the discretionary power to make Rules under Section 31 of the Solicitors Act. In addition, the Court does not deal with the fact that its interpretation of the Principles does not accord with the approach taken by the LSB in approving both the 2011 Handbook and the 2019 Standards and Regulations. The LSB has always advocated principles based regulation where the principles set the wide parameters of behaviour and the Code deals with more specific and narrower circumstances. The Court does not seem to have grappled with the issue that its interpretation was not simply contrary to the position adopted by the SRA at the hearing but that this approach is advocated by the statutory body responsible for the oversight of regulation of the legal professions. Principles based regulation is not a whim of the SRA but an approach borne of extensive policy development and numerous public consultations. In purporting to strike down this approach by dealing with it simply as a matter of construction, the Court seemed to be unaware of the wider implications of its analysis. In addition, the approach is difficult to reconcile with the decision of the High Court in R (on the application of the British Bankers Association) v Financial Services Authority  EWHC 999 (Admin) where Ousley J found: “The fact that such a particular area of conduct is specifically dealt with does not mean that all other conduct is permissible or within the standards of the profession. It is thus ordinarily open to professional disciplinary tribunals to apply sanctions for professional misconduct generally, regardless of whether it is conduct singled out for mention in the rules. Were it otherwise, professional people might be permitted to conduct themselves in plainly deplorable ways without any disciplinary control.”
While it cannot be denied that the judgment makes some very persuasive points in relation to the increasingly blurred boundaries between solicitor’s private life and the practice of their profession, it seems that it has also created a great deal of uncertainty, arguably unnecessarily, by seeking to place the Court’s findings in an overall framework of regulation of solicitors to which it does not sensibly fit. In doing so it may turn out that the decision in Beckwith does not provide a sound foundation to build a better understanding of where the boundaries are between private and professional life.
A version of this article was first published in the January 2021 Edition of the Law Society’s Legal Compliance Magazine.
He is General Editor of the leading textbook on legal services regulation, Cordery on Legal Services as well as Chair of the Association of Regulatory and Disciplinary Lawyers.
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 This is a “may” power. Prior to the Legal Services Act 2007 amendment the power was “may, if it thinks fit”
 The LSA also required separation of the regulatory and representative functions so that the Law Society’s statutory powers are now exercised independently by the SRA although it currently remains part of the Law Society.
 Hat tip to Richard Coleman QC for reminding me of this case when reviewing this article.
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