The Solicitors Regulation Authority’s (SRA) proposed whistleblowing policy could undermine the role of compliance officers, fail to work because of mistrust by lawyers, and clash with solicitors’ ethical duties, according to the Law Society.
In a damning response to an SRA consultation on so-called ‘co-operation agreements’ between the regulator and witnesses reporting misconduct, the society warned that the lack of trust in the SRA by solicitors was too deep to “act as a positive incentive for potential witnesses”.
The society pointed out that “there are already numerous reporting obligations both on individuals and on compliance officers”. Further: “We are concerned that the proposed policy risks undermining the newly established role of compliance officer by encouraging direct reporting to the SRA rather than through the COLP.”
Under the SRA’s proposals, a number of safeguards would apply, including no rewards to witnesses for information, no guarantees of leniency, no agreements without full disclosure and, if required, evidence in court. The authority suggests co-operation agreements could speed up investigations, limit damage to clients, and reduce compensation fund or insurance claims.
For a whistleblowing policy to work, the society argued, witnesses would have to trust the SRA because no guarantees would be given until after full disclosure. But “trust between the SRA and the profession is limited”, and while SRA has tried to improve it, “we do not believe that matters have improved to the extent where this policy will act as a positive incentive for potential witnesses”.
The society also argued the policy raises ethical problems. Solicitors need to be seen to act with integrity and a failure to report would be a breach of their rules. By incentivising them to report matters they are already obliged to report, it “undermines the duty of solicitors to act ethically”.
The society questioned the reliability of evidence from witnesses who were themselves involved and pointed out that co-operation agreements can make it hard for prosecutors to question their evidence. But it acknowledged the existence of co-operation policies can in principle enable regulators to identify breaches they would not otherwise know about.
However, it disagreed there was a need for a policy at all, given that voluntary reporting by firms can already be taken into consideration under the SRA’s existing enforcement regime. “The co-operation agreement policy does not appear to add much to the enforcement policy,” said the society.
It added that the evidence presented by the SRA to underpin the necessity for such a policy, and also provided by the experience of other regulators – such as the Financial Services Authority – was “limited”.
Lastly, the society hinted that the whistleblowing policy might impact unfairly on black and minority ethnic solicitors because it appears to focus on the smaller firms in which they are heavily represented. “Therefore the SRA should consider how this policy might impact upon this section of the professio,” it urged.