Code Amendments: Solicitors without practising certificates - amendment to the definition of professional client in the code of conduct

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1 Code Amendments: Solicitors without practising certificates - amendment to the definition of professional client in the code of conduct The Bar Standards Board would like to make the following amendment to the Code of Conduct using the de minimus process if possible: ) An amendment to the definition of professional client in Part X of the code of conduct to clarify that barristers may only accept instructions from solicitors with current practising certificates. Background:. The Bar Standards Board has recently considered the question of whether a barrister can be instructed directly by a solicitor without a practising certificate. The Bar Council Ethical Helpline receives a large number of queries in relation to this and has always advised that only a solicitor with a current practising certificate may instruct for any purpose. This advice is based on previous advice given by the Professional Conduct and Complaints Committee of the Bar Council (prior to the establishment of the BSB). This view does not however appear to be supported by any concrete provision in the Code.. No indication is given in the Code as to whether there is a requirement on the part of the solicitor to hold a current practising certificate in order to be able to act as a professional client and instruct a barrister. Paragraph 40(a) of the Code states that: 40 A self-employed barrister whether or not he is acting for a fee: (a) may supply legal services only if appointed by the Court or is instructed: (i) by a professional client; or In Part X of the Code (Definitions), the definition of professional client is stated, among other things, to include a solicitor. Solicitor is later defined in Part X to mean a solicitor of the Supreme Court of England and Wales. 4. Section 6 of the Solicitors Act 974 requires a roll to be kept of all solicitors of the Supreme Court. This roll includes both practising and non-practising solicitors, implying that a solicitor of the Supreme Court of England and Wales could be non-practising and hence, despite not having a practising certificate, could be considered a solicitor for the purposes of the Bar Code of Conduct, and therefore able to instruct Counsel. 5. When considering this issue, the BSB had regard to an extract from Cordery on Legal Services (see Annex ) which suggests that solicitors need a practising certificate in order to be able to instruct counsel. The Board also considered the Solicitors Code of Conduct and the accompanying guidance issued by the Solicitors Regulation Authority. There are no specific rules in the Solicitors Code of Conduct covering this issue, however, the SRA guidance that accompanies rule 0.0()(b) states:

2 Instructing counsel is not restricted to any particular category of person by statute. However, barristers only accept instructions made professionally on behalf of clients from solicitors and limited categories of non-solicitors - see the Bar Standards Board's website for details - If you instruct counsel as a solicitor, you will be practising as a solicitor and must have a practising certificate. 6. The Board concluded that the current position in the code of conduct is unclear and that the definition of professional client in the code should be amended to clarify that barristers may only accept instructions from solicitors with current practising certificates. The Board has agreed that the definition of professional client in part X of the code of conduct should be amended as follows: "professional client" means a solicitor with a current practising certificate or other professional person by whom a self-employed barrister is instructed that is to say: (a) solicitor, solicitors firm, LLP or company, Recognised Body regulated by the Solicitors Regulation Authority,authorised litigator, Parliamentary agent, patent agent, European Patent Attorney, trade mark agent, Notary or a European lawyer registered with the Law Society of England and Wales; 7. Following the significance, risk and impact framework I would suggest that the amendment should be exempted for the following reasons: Significance The amendment is minor, it clarifies advice that has historically been provided by the Bar Council Ethics team and mirrors guidance issued by the SRA. The amendment would not have required approval under the old MoJ process; The amendment does not have any adverse impact on the regulatory objectives in the Act and is consistent with the Better Regulation Principles. The amendment does not require a statutory instrument and / or parliamentary time in order to be considered. Impact The impact of this amendment will be minimal, it clarifies the current situation which is that barristers are only permitted to accept instructions from solicitors who hold practising certificates. Risk If an amendment to the definition is not made, barristers may be unclear as to whether they are permitted to accept instructions from solicitors without practising certificates. The absence of a practising certificate might conceal disciplinary issues or suspension from practice. In addition, the extract from Cordery (see Annex ) suggests that if you do not hold a practising certificate, you are not, in law, a solicitor. An equality impact assessment and consultation are not required because this code amendment mirrors the SRA guidance and clarifies in the code the advice that the Bar Council ethics team has historically provided.

3 If you require any further information or if you feel it would be useful to meet up to discuss this please feel free to contact me. Annexes 4. Annex : Extract from the upcoming Cordery on Legal Services Clare Vicary July 0

4 Annex Extracts from the upcoming Cordery on Legal Services Section 5 Practising certificates A INTRODUCTION [40] Although a solicitor may have his or her name entered on the Roll the solicitor cannot practise as such unless he or she has in force a current practising certificate issued by the Law Society (acting through the Solicitors Regulation Authority). Any person who does not satisfy these requirements will not be qualified to act as a solicitor. This applies equally to employed solicitors, locums and consultants and to principals in private practice 3. Very few solicitors outside government service can escape the requirement to hold a practising certificate 4. The regulation of practising certificates is accordingly an important element of the overall regulation of solicitors. Until July 009, the procedure for dealing with practising certificates was mainly statutory. On that date a new regime was introduced following the coming into force of amendments to the Solicitors Act 974 contained in Schedule 6 to the Legal Services Act. The central element of this new structure is the SRA's Practising Regulations 009 which now contain many of the provisions that were previously contained in the Solicitors Act. One notable addition to the scheme is the requirement that sole practitioners be recognised sole practitioners as well as holding a practising certificate before they can practise in that capacity. 3 4 Solicitors Act 974, s. See []. The Law Society has delegated its regulatory and disciplinary functions to the Solicitors Regulation Authority ( SRA ), which now deals with all matters relating to practising certificates. SA 974, s. SA 974, s A. See []. See also Solicitors' Code of Conduct 007, r 0 at 3 [5]. See rule 0 of the Solicitors' Code of Conduct 007 and the commentary at D[XXX]. B ISSUE AND RENEWAL OF PRACTISING CERTIFICATES [40] For most solicitors obtaining and maintaining an annual practising certificate is a chore that does not impact upon their day to day practice. Applications for a practising certificate may be made at any time, although renewal applications should be made by the replacement date, and must be signed by the applicant unless the SRA has given written permission in exceptional circumstances for another solicitor to sign on his or her behalf or the application is completed on behalf of a number of solicitors in a practice by a solicitor authorised to do so by the practice. The application must be accompanied by a fee, together with a contribution to the Compensation Fund. [403] SRA Practising Regulations 009, Reg.(a). Practising Certificate Regulations 995, Reg.3. Provided the SRA is satisfied that: (a) (b) an applicant's name is on the Roll; he or she has not been suspended from practice;

5 (c) the applicant has supplied satisfactory evidence that he or she will comply with or be exempt from the Solicitors' Indemnity Insurance Rules; and (d) the application is made in accordance with the SRA Practising Regulations 009, then a certificate will be issued. SRA Practising Regulations 009, Reg.. Date and expiry of practising certificates [404] Every practising certificate runs from the date of issue until 3 st October each year and is due to be replaced on that date.. However, even if a solicitor has not replaced his or her practising certificate by 3 October it does not expire until a new certificate is issued or some other step is taken. If a solicitor does not apply to renew a practising certificate prior to the renewal or replacement date then the SRA may revoke the certificate. However, this cannot be done without giving 8 days notice with reasons 3. Whilst these arrangements do provide certain safeguards for the solicitor, every solicitor should be careful to ensure that his or her certificate is properly renewed within the regulations as revocation would lead to a solicitor having to cease to practise immediately in order to avoid committing a criminal offence. 3 SRA Practising Regulations 009, Reg 8.. SRA Practising Regulations 009, Reg 9. (a) (ii). SRA Practising Regulations 009, Reg 9.3 (a). Conditions upon practising certificates [405] While generally speaking the issue of practising certificates by the SRA is a simple administrative function, and an obligation imposed upon the Law Society (acting through the SRA) provided the statutory requirements are satisfied, there are certain circumstances in which the SRA has a discretion either to refuse to issue a practising certificate or to issue a certificate subject to conditions, either on renewal or with immediate effect, and to suspend a current practising certificate. [406] Solicitors Act 974, s 0. See [9]. SRA Practising Regulations 009, Reg 3., 6.4 and sections 3A, 3B and 5 of the Solicitors Act 974. On an initial application for a practising certificate, or on an application for its renewal, or at any other time if the public interest so requires the SRA has a discretion to impose conditions on the certificate, or to refuse the application following certain events which are listed (the lettering and numbering reflects that used in Regulation 3.): (a) The applicant has been: (i) (ii) reprimanded, fined or made the subject of an order under section 43 of the Solicitors Act 974, ordered to pay costs or made the subject of a recommendation to the SRA to consider imposing a condition, by the Solicitors Disciplinary Tribunal; made the subject of an order under section 43 of the Solicitors Act 974 or rebuked or fined under section 44D of that Act by the SRA;

6 (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (iii) (iv) made the subject of, or been a manager of a recognised body which has been the subject of, an intervention by the SRA; or made the subject of a disciplinary sanction by, or refused registration with or authorisation by, another approved regulator, professional or regulatory tribunal, or regulatory authority, whether in England and Wales or elsewhere. The SRA has requested an explanation from the applicant in respect of a matter relating to the applicant's conduct and has notified the applicant in writing that it does not regard the applicant's response, or lack of response, as satisfactory. The applicant has failed to deliver within the period allowed an accountant's report required by rules made under section 34 of the Solicitors Act 974. The applicant's practising certificate or registration has been suspended and the suspension: (i) (ii) (iii) has come to an end; was continuing when the applicant's last practising certificate or previous registration expired or was revoked; or is continuing. The applicant has been suspended from practice and the suspension has come to an end. The applicant's last practising certificate or previous registration expired or was revoked whilst subject to a condition. The applicant's practising certificate or registration is currently subject to a condition. The applicant's right to practise as a lawyer of another jurisdiction or as a lawyer of England and Wales (other than as a solicitor) is subject to a condition or restriction. The applicant has been restored to the roll or register, having previously been struck off. The applicant is an undischarged bankrupt. The applicant: (i) (ii) (iii) (iv) has been adjudged bankrupt and discharged; has entered into an individual voluntary arrangement or a partnership voluntary arrangement under the Insolvency Act 986; has been a manager of a recognised body which has entered into a voluntary arrangement under the Insolvency Act 986; has been a director of a company or LLP which has been the subject of a winding up order, an administration order or administrative receivership; or has entered into a voluntary arrangement under the Insolvency Act 986. (l) The applicant lacks capacity (within the meaning of the Mental Capacity Act 005) and powers under sections 5 to 0 or section 48 of that Act are exercisable in relation to the applicant. (m) The applicant has been committed to prison in civil or criminal proceedings and: (i) (ii) has been released; or has not been released.

7 (n) (o) (p) (q) (r) (s) The applicant has been made subject to a judgment which involves the payment of money, other than one: (i) (ii) (iii) which is limited to the payment of costs; or in respect of which the applicant is entitled to indemnity or relief from another person as to the whole sum; or which the applicant has paid, and supplied evidence of payment to the SRA. The applicant is currently charged with an indictable offence. The applicant has been convicted of an indictable offence or any offence under the Solicitors Act 974, the Financial Services and Markets Act 000, the Immigration and Asylum Act 999 or the Compensation Act 006. The applicant has been disqualified from being a company director. The applicant has been removed from the office of charity trustee or trustee for a charity by an order within the terms of section 7()(d) of the Charities Act 993. The applicant has been the subject in another jurisdiction of any circumstance equivalent to those listed in (j) to (r). If any of these circumstances applies an application for replacement of a practising certificate must be commenced at least six weeks before the replacement or renewal date. If Regulation 3 applies by reason of paragraphs (j) (bankruptcy), (m) (committal to prison), (n) (money judgment) or (p) (conviction of a relevant criminal offence) and the judgment or order is subject to appeal the application for a practising certificate must not be refused before the determination of the appeal, unless in the opinion of the SRA the appeal proceedings have been unduly protracted by the appellant or (again in the opinion of the SRA) they are unlikely to be successful, but the SRA may in the meantime postpone a decision on the application and may impose a condition on the applicant's practising certificate. If Regulation 3 applies by reason of paragraph (o) (the applicant is currently charged with an indictable offence) the application may not be refused unless the applicant is convicted, but the SRA may postpone a decision on the application and may impose a condition on the applicant's practising certificate in the meantime 3. If a condition is to be imposed on a current certificate the SRA must give 8 days' written notice, with reasons to the individual concerned, but may shorten or dispense with the 8 day period if it is satisfied on reasonable grounds that it is in the public interest to do so 4. If the SRA has decided to impose a condition it may postpone the issue of the certificate pending determination or discontinuance of any appeal against the decision; but the postponement may be rescinded if in its opinion proceedings on appeal have been unduly protracted by an appellant or (again in the SRA's opinion) are unlikely to be successful. [407] 3 4 SRA Practising Regulations 009, Reg 3.. SRA Practising Regulations 009, Reg 3.3(b). SRA Practising Regulations 009, Reg 3.3(c). SRA Practising Regulations 009, Reg 6. and 6.4. Prior to the SRA Practising Regulations 009 there was no written policy by the SRA or its predecessors as to how it would exercise its jurisdiction or impose practising certificate conditions. However, it was clear that the purpose of practising certificate conditions was to protect the public, primarily the solicitor's clients, by managing risk. The various circumstances in

8 which Regulation 3. of the Practising Regulations applies (see para 3[006] above) are situations in which a solicitor may be regarded as representing a greater risk. Conditions are to protect the public, not to punish the solicitors (although they may have adverse financial consequences). The Master of the Rolls put the matter in the following terms: [The advocate for the SRA] submits that regulatory conditions are imposed either to protect the public interest or the reputation of the profession or both. It appears to me that the essential point is whether conditions are necessary and proportionate to protect the public interest. Reference to reputation of the profession is really an incident of the protection of the public interest I am also unable, however, to accept what I think may be [the SRA's] submission, that the SRA does not have to identify a specific risk. Absent identification of the risk, it appears to me that the SRA cannot properly assess the reasonableness or proportionality of any conditions that it seeks to impose. And: Regulatory conditions are imposed where they are necessary in the interests of the public and the reputation of the profession. They must not only be necessary but also reasonable and proportionate. It seems to be accepted by the SRA that the tests set by the Master of the Rolls by reference to the former statutory framework remain equally applicable to the present system. Thus in cases of accounts that have been badly kept and substantial accounting errors and breaches of the Solicitors' Accounts Rules have occurred, more frequent Accountant's Reports would be the obvious course. Where serious errors of judgment have occurred, and there is a risk of repetition, or where there have been serious administrative failings, a condition of approved partnership, or possibly, approved employment, would be appropriate. In contrast to the previous approach, Regulation 6. of the SRA Practising Regulations 009 sets out the purposes for which the SRA may impose conditions either at the outset of a practising year or at any time during it and the previous approach needs to be considered in the light of these provisions. These are: (a) (b) (c) (d) (e) (f) The SRA considers the individual concerned unsuitable to undertake certain activities in relation to a legal practice, either at all or save as specified in the condition, and that imposing the condition will, in the public interest, limit, restrict, halt or prevent the involvement of the individual concerned in those activities. The SRA considers that the individual concerned is putting or is likely to put at risk the interests of clients, third parties or the public by taking certain steps in relation to a legal practice, and that imposing the condition will, in the public interest, limit, restrict, halt or prevent the taking of such steps by the individual concerned. The SRA considers the individual concerned unsuitable to engage in certain business agreements, business associations or practising arrangements and that imposing a condition requiring the applicant to obtain the SRA's written approval before taking certain steps will, in the public interest, limit, halt or prevent a risk to clients, third parties or the public. The SRA considers that imposing the condition will, in the public interest, require the individual concerned to take specified steps conducive to the carrying on of efficient practice by the individual concerned. The SRA considers that imposing the condition will, in the public interest, facilitate closer monitoring by the SRA of compliance by the individual concerned with rules and regulations. The SRA considers that it would be in the public interest to impose the condition in any other case during the currency of a practising certificate or registration.

9 Razeen (No 5 of 008) [008] EWCA Civ 0 at [] and [3] See Odunlami v The Law Society [008] EWCA Civ 598. [408] Conditions have in the past been most frequently imposed following an order of the Disciplinary Tribunal, as a result of a failure to provide a sufficient and satisfactory explanation on a matter of conduct, when Accountant's Reports are not delivered on time, after a period of suspension or where there is evidence that the solicitor is or has been in financial difficulties. The usual conditions imposed are concerned with the frequency of Accountant's Reports or the form of practice permitted. It is usual in any situation where there is perceived to be a greater degree of financial risk; for example as a result of failure to deliver an earlier Accountant's Report on time, where there have been breaches of the Accounts Rules for which there has been no satisfactory explanation, or where there is evidence of insolvency or indebtedness, for a condition to be imposed requiring the delivery of half-yearly or even quarterly Accountant's Reports, as opposed to the annual reports normally required. [409] In more serious cases, particularly where the solicitor has been suspended from practice and the suspension has expired, or where the solicitor has been referred to the Disciplinary Tribunal in respect of particularly serious allegations, and it would be contrary to the public interest to allow him to continue to practise (for example) as a sole practitioner, one would expect a condition that the solicitor should only practise in approved partnership or employment, thus preventing the solicitor in question from practising on his or her own account, and requiring that he or she obtain the specific approval of the SRA of any employment or partnership in advance. Such a condition is designed to ensure that the solicitor is subject to some measure of control and supervision. It is normal to allow a period of three months to enable a sole practitioner to make appropriate arrangements if this course is followed. Approval of a partnership is likely to be withheld if the solicitor seeks to join with, for example, more junior partners whom he is more likely to exercise control over than to be controlled by. [40] Comments of Lord Donaldson MR in No 4 of 99 unreported; No 8 of 00 (Burdett) [00] EWCA Civ 94 and No 3 of 00 (Walker) [00] EWCA Civ 596. In cases where a solicitor has been referred to the Disciplinary Tribunal, it is proper and reasonable for the SRA to take into account, when imposing conditions, the seriousness of charges faced by the solicitor in proceedings yet to take place before the Tribunal, even if those proceedings have not been concluded, or even commenced. [4] No 8 of 00 (Burdett) [00] EWCA Civ 94, Sarfaraz Alam Awan v The Law Society [003] EWCA Civ 969 and No 3 of 00 (Walker) [00] EWCA Civ 596. Although the SRA has a theoretical discretion to withhold a practising certificate altogether in such circumstances, it is rare for this to occur but it could be expected if, for example, a solicitor had previously been granted a certificate subject to conditions with which he had wholly failed to comply. [4] Per Sir Thomas Bingham MR in No of 993 unreported.

10 The SRA may also impose conditions designed to improve a solicitor's quality of work or practice management, and may impose conditions notwithstanding that they may result in expenditure being incurred by the solicitor. This has resulted in conditions being imposed that require, for example, that a solicitor undertake a recognised course of training or re-training. [43] SA 974, s (4A). See []. Once conditions are imposed upon a practising certificate, conditions are likely to be re-imposed from year to year, although it is open to the solicitor upon renewal to apply for a certificate free from conditions. If the condition was imposed by reason of a set of circumstances which by their nature continue (for example the existence of judgment debts), the solicitor can expect the condition to continue until the underlying cause is removed (for example by the discharge of those debts). [44] Comments by Lord Donaldson MR in No 6 of 990 unreported. If the cause of the condition was a particular event, such as the imposition of a penalty by the Tribunal, a failure to give a satisfactory explanation upon a matter of conduct or a return to practice after suspension, conditions are likely to be imposed for at least three or four years, although there is no hard rule to this effect and it may well be possible to secure an unconditional certificate if it can clearly be demonstrated that the problem period is over, and there is no continuing cause for concern or the need for any additional safeguard. [45] Grounds for the imposition of conditions may lapse. If a practising certificate has been granted without conditions referable to the relevant event under regulation 3.(a), (b), (c), (d)(i), (e), (j), (k), (m)(i), (n), (o), (p), (q), (r) or (s), the SRA was aware of all relevant facts when making the decision, and no new circumstances have arisen relevant to those provisions, regulation 3 ceases to apply. [46] See SRA Practising Regulations 009 Regulation 3.3(a). The SRA may be prepared to enter into a regulatory settlement as an alternative to the imposition of practising certificate conditions. Such agreements may enable undertakings to be given, for example not to engage in a particular form of work, such as conveyancing, or acting for lenders, or litigation, or to practise only as an employee after a specified date, pending the outcome of an investigation, or to provide independent evidence that accounts are in compliance, or of a return to medical or psychiatric good health. The SRA now intends to publish regulatory decisions on its website unless there are exceptional reasons not to do so. All decisions to impose practising certificate conditions, where the investigation that led to the decision commenced on or after January 008, are likely to be published when conditions are first imposed or materially varied. Decisions will not generally be published when they are the subject of an appeal either internally or to the Master of the Rolls. Published information will usually be limited to a short statement as to the decision and the reasons for it. Refusal suspension and revocation of practising certificates [47]

11 The SRA may direct that a practising certificate currently in force be suspended where a solicitor has been convicted of an offence involving dishonesty or deception or a serious arrestable offence and the SRA has made an application to the Tribunal against him. [48] Solicitors Act 974, s 3B(). See [5]. Any such suspension must be for a fixed period not exceeding six months, may be extended by a further direction for a further period not exceeding six months, but only once 3, and comes to an end if the conviction is quashed or set aside or when the Tribunal has determined the application or if the application is withdrawn 4. [49] 3 4 Solicitors Act 974, s 3B(). See [5]. SA 974, s 3B (4). SA 974, s 3B(5). See [5]. SA 974, s 3B(3). A current practising certificate may also be automatically suspended in certain circumstances. Bankruptcy serves automatically to suspend any practising certificate of a solicitor for the time being in force (whereas, as has been seen, an individual voluntary arrangement under the Insolvency Act 986 only creates a discretion as to the issue, conditionally or otherwise, of a practising certificate and a discretion to impose immediate conditions 3 ). In the context of interventions, an intervention into a solicitor's practice on the grounds of a suspicion of dishonesty, a breach of the Solicitors Accounts Rules or because the solicitor has been committed to prison in criminal or civil proceedings also serves immediately to suspend any practising certificate for the time being in force 4, subject to any contrary direction by the panel resolving upon the intervention 5. [40] Solicitors Act 974, s 5(). See [7]. SA 974, s ()(i). SA 974, s 3A()(c). See [4]. SA 974, s 5(A). SA 974, s 5(B) and (C). See [7]. Where a practising certificate is suspended in any of these circumstances (that is otherwise than by an Order of the Tribunal), or if an Order of the Tribunal of suspension from practice expires before the replacement date of a practising certificate which the solicitor had at the time of the Order, the solicitor may apply to the SRA for a termination of the suspension, and the SRA may in its discretion terminate the suspension either unconditionally or subject to conditions or may refuse the application. [4] Solicitors Act 974, s 6(3). See [9]. SA 974, s 6(4). The SRA may revoke a practising certificate at any time, if it is satisfied that it was granted as a result of error or fraud, if the replacement or renewal date has passed and the SRA has not

12 received an application for renewal of the certificate, or as a result of a decision to refuse to renew a practising certificate. [4] SRA Practising Regulations 009, Reg 9.(a). In any case in which the solicitor is aggrieved, either by the imposition of conditions on renewal of a practising certificate or the refusal of the SRA to issue a certificate, or the immediate imposition of conditions on a current practising certificate, or upon a direction that a practising certificate be suspended 3 or the refusal of an application to terminate the suspension of a practising certificate 4, or as to the conditions imposed upon such termination, or by reason of a decision to revoke a certificate, the solicitor has a right of appeal to the High Court Solicitors Act 974, s 3. See [3]. SA 974, s 3A(6). See [4]. SA 974, s 3B(7). See [5]. SA 974, s 6(5). See [8]. See SRA Practising Regulations 009, Reg 7. Records and publication [43] [500] Pursuant to Regulation 0 of the SRA Practising Regulations the SRA must keep a register of those who hold practising certificates and sole solicitor endorsements and conditions imposed in relation to them and other information relating to the solicitor such as practising address and date of admission. This register is open to inspection by members of the public unless there are exceptional reasons why this should not be the case.