Lawyers Covered - August 2023
Welcome to the latest edition of our Lawyers Liability & Regulatory Update, in which we look back over the last month at key developments affecting lawyers and the professional risks they face.
SRA fining powers – putting the SDT out of business?
The SRA is on a mission to increase its powers to levy financial penalties. The last 12 months have seen a substantial increase in its fining powers, and a grant of unlimited fining powers in matters relating to financial crime and SLAPPs is imminent. The SRA has now dramatically upped the ante, seeking the power to levy unlimited fines in all cases of serious misconduct. With the Legal Services Board appearing supportive, the proposal has the potential profoundly to affect the enforcement of professional discipline within the profession.
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Fix up, look sharp: FRC update
The Civil Procedure Rules have now been updated to reflect the new fixed recoverable costs (FRC) rules coming into force on 1 October 2023. The amendments to the CPR are largely in line with the early drafts published by the MOJ, save that the target of 30 weeks from allocation to trial for fast track claims has disappeared, presumably because the Courts simply do not have capacity to accommodate this. Just this week, the Association of Consumer Support Organisations highlighted that delays are getting worse and will not be addressed by the replacement of the County Court Money Claims Centre with the new Civil National Business Centre as this fails to address more complex and higher value claims where backlogs are severe.
The MOJ released a further consultation on the new rules on 21 July 2023 apparently in response to concerns raised by stakeholders, which includes a proposed new costs assessment process. The consultation also contained an announcement that FRC will be reviewed in line with SPPI in April 2024 to reflect high rates of inflation. However, a number of important concerns about the new regime remain unaddressed.
Read Will Sefton's and Aimee Talbot's analysis of these developments and critique of the new regime in our article "Fix up, look sharp: FRC update" on our Professional & Financial Risks blog here. Anyone who subscribes to PLC can also read our guidance note on the new rules here.
'Toxic work culture' claims on the rise amid new SRA regulation.
May 2023 saw the SRA's introduction of guidance on 'workplace environment', which came as a result of complaints that some firms have 'unsupportive, bullying or toxic working environment and culture'. This new guidance, coupled with the increase in SRA's fining powers from £2,000 to £25,000 has left the SRA seeing a surge in claims against these agents concerning a 'toxic work culture'.
Although the SRA's research found that most respondents felt their firms had a positive workplace culture, it also found that a quarter of lawyers felt that their firm did not have a positive work culture due to long work hours, as well as there being apprehension around reporting mental health issues and bullying behaviour. Further investigations have also concluded that only 45% of female legal professionals believe that firms have taken the right steps to remove barriers to their progress, as well as some solicitors with protected characteristics, namely black lawyers, experiencing higher levels of unfair treatment.
The SRA have voiced their concerns about the increase in complaints, stating that the poor mental health of lawyers will inevitably lead to poor outcomes for clients, and that firms should do everything they can, within reason, to ensure those working for them are protected from bullying and harassment. The SRA are also looking into the possibility of fining partners and firms who have connections to those who have committed serious misconduct. The regulatory body believes this would create an effective deterrent to any potential wrongdoings, resolve existing complaints a lot quicker, and overall, mitigate the increased sentiment regarding toxic work culture.
The regulatory body have also recently announced that the increase in complaints justifies a further increase in their fining powers, above the current threshold of £25,000, a suggestion that has been met with resistance from the SDT. The SDT states that greater power given to the SRA concerning these complaints will tip the balance of the status-quo, and the Tribunal will make sure that the SRA's calls for an increase in the threshold will not be met.
All for one and one for all
Two recent decisions have endorsed the use of a single claim form on behalf of a large number of claimants. The most recent of those decisions, on 25 July 2023, involved a claim against a firm of solicitors. In Morris v Williams & Co Solicitors [2023] 7 WLUK 444 the court considered whether a group of 134 claimants could pursue a negligence claim in one claim form and one set of proceedings. These 134 claimants had instructed the defendant solicitors in several unsuccessful property investment schemes. They issued a single claim form against the defendant alleging negligent advice and seeking recovery of damages arising from failed leases and guarantees.
Part 7.3 of the Civil Procedure Rules permits claimants to use a single claim form if the claimants' issues will be "conveniently disposed of in the same proceedings". The solicitors applied to strike out the single claim form as an abuse of process as there was insufficient commonality between the claimants. The claimants argued that there were sufficient common issues including similarities in the retainers and other documents. They submitted that one set of proceedings where lead claimants were selected would save costs and promote resolution of all of the claims. They argued that it was appropriate for court to case manage the claims together.
The judge refused to strike out the single claim form. He found that it was appropriate in the circumstances of these claims for the 134 claimants to proceed by selecting lead claimants, with decisions on the common issues binding each claimant. This decision was in line with a judgment earlier this year in Abbott v Ministry of Defence [2023] EWHC 1475 (KB). In Abbott there were 3,500 claimants pursuing the Ministry of Defence in a single claim form. At first instance the Abbott claim form was held to amount to an abuse of process, but the court disagreed on appeal, on the basis that there were sufficient common causes of action and fact.
These decisions show that the court is increasingly prepared to case manage a single set of proceedings where a claim form has been issued on behalf of multiple claimants, and is prepared to select lead claimants and common issues.
Hong Kong – Extent of abrogation of legal professional privilege headed to "Top Court"
Legal professional privilege is an absolute right that is fundamental to the lawyer and client relationship. Without such right clients are unable to instruct their legal representatives in absolute confidence. The privilege is not some sort of professional advantage – rather, it is rooted in the administration of justice. In this light, any case headed to a final appeal court that involves related issues should be of interest to lawyers and members of the public alike. MK v Director of Legal Aid, FAMV 179/2023, is such a case.
The appellant is challenging the revocation of her legal aid certificate. One of the issues before the lower courts was the extent of a legally aided party's lawyers' duty to report relevant information to the Director of Legal Aid. At first instance the judge held that, pursuant to the relevant legal aid regulation, a legally aided party's lawyers were not obliged or authorised to disclose privileged communications that arose prior to an application for legal aid. The Court of Appeal disagreed, interpreting the relevant regulation as requiring a legally aided party's lawyers to disclose all relevant communications with their client, regardless of when the communication arose.
On 7 July 2023, the Court of Final Appeal granted the appellant permission to commence a final appeal. The final appeal raises a point of great importance – in short, as a matter of statutory interpretation of the relevant regulation, what is the nature and extent of legal professional privilege regarding a legally aided person's eligibility for legal aid.
The final appeal is due to be heard on 28 November 2023. To proceed with her appeal, the appellant will need to satisfy the standard requirement to provide security in the sum of HK$400,000 for the respondent’s costs of the final appeal.
Additional Contributors: Tina Campbell, Sally Lord, Aimee Talbot & Catherine Zakarias-Welch