Partner misconduct allegations – getting the investigation right

Guest post by Andrew Pavlovic, partner at City firm CM Murray

Pavlovic: Avoid knee-jerk decisions

In recent years, there has been a marked change in the approach taken by law firms to allegations of partner misconduct.

That change has arisen for a variety of reasons including:

(1) societal change resulting from the MeToo movement and a hardening attitude to misconduct in the workplace generally;

(2) cultural/generational shifts, with associates and junior staff being less willing to tolerate sexual harassment or discriminatory conduct than may previously have been the case, and

(3) regulatory pressures, with the Solicitors Regulation Authority (SRA) making clear that misconduct allegations should not be hushed up through the use of non-disclosure agreements, and the lowering of the threshold for self-reporting misconduct allegations to the regulator.

Most firms are now aware of the need to conduct robust and independent investigations which stand up to external scrutiny, and to make decisions following such investigations which are based on the gravity of the misconduct rather than the profitability or seniority of the partner involved.

Nevertheless, firms need to be aware of the following issues which commonly arise in investigations and which can, if not handled properly, present a regulatory risk.

Allegations against senior individuals

Where allegations are made against a managing/senior partner, the firm will need to consider whether they are capable of conducting the investigation internally or whether it should be outsourced to an external investigator.

In 2019, the SRA brought proceedings in the Solicitors Disciplinary Tribunal against a firm, a partner and the firm’s HR director in respect of their conduct of an investigation of misconduct by the firm’s managing partner.

It was alleged that the firm/individuals had allowed the managing partner to exert influence over the investigation and that they had failed to put in place an independent process.

Ultimately the firm/individuals were cleared of regulatory misconduct, but the tribunal noted that there were aspects of the investigation which did not represent best practice, and that the level of ongoing communication with the managing partner throughout the investigation raised the question, which ultimately the firm/individuals were able to answer, as to the fairness of the process.

Pre-determining outcomes

In September 2021, an independent review by Alison Levitt QC heavily criticised the approach taken by the Royal Institution of Chartered Surveyors’ general counsel to an internal investigation into a boardroom dispute.

The review found that she had “picked a side” in the dispute, failing to identify who the client was for the purpose of the investigation, and appointing as external investigators the law firm at which she had trained and qualified.

Failing to self-report

Firms are required to self-report promptly to the SRA where they have a reasonable belief that there has been a serious breach of the regulatory arrangements.

In practice, this means that firms are now required to submit an interim report to the SRA promptly after potential misconduct is brought to their attention, stating what the allegation is and the steps they are taking to investigate the matter.

If the SRA is reassured that the firm is dealing with the matter properly, they will usually allow the firm to complete its own internal investigation and present the findings to the regulator in due course.

The evidence suggests that firms are fully aware of their self-reporting obligations. In the press release accompanying the SRA’s recent sexual misconduct guidance, the SRA said it had received 251 reports relating to sexual misconduct since 2018, presumably most were self-reports by law firms.

Nevertheless, were the SRA to find out about a misconduct allegation through a dissatisfied complainant or the press, the firm would need to explain why it had not already been reported to them.

Inadequate investigations

Once an investigation is complete, the firm will usually then be required to submit a follow-up report to the SRA setting out whether any misconduct had been established. Do not assume the SRA will accept the findings, particularly if the investigation has been carried out poorly and/or has not been adequately documented.

Where the SRA decides it needs to separately/independently investigate due to the inadequacies of the firm’s investigation, this is a drain on the time and resources of firms which could have been avoided if they had got it right the first time.

Firm culture

The SRA published its guidance on workplace environments in February 2022. This makes clear it will take action against firms where cultural/systemic issues have played a role in individual misconduct.

In a hypothetical case where a firm failed to properly investigate an initial complaint about a partner, and that partner then went on to commit further acts of misconduct, it would be reasonable to assume that the firm would be investigated and potentially prosecuted by the SRA for failing to stamp out the behaviour at an earlier stage.

The guidance emphasises the need for firm’s to create a ‘speak up’ culture and people are less likely to speak up if they do not feel as though their complaint will be investigated properly or that particular individuals are beyond sanction due to their status in the firm.

In light of the above, when a firm does receive an allegation of misconduct, it is vital that they take a calm and considered approach, and do not make any knee-jerk decisions that could compromise the investigation, leading to reputational damage (both from within and outside the firm) and the risk of regulatory action.

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