SRA seeks to clarify threshold for reporting misconduct


Philip: Not for firms to decide whether there was misconduct

The Solicitors Regulation Authority (SRA) is looking to clarify the threshold used by law firms when deciding whether to report concerns over misconduct.

The consultation launched today comes in the wake of the debate over non-disclosure agreements (NDAs) in sexual harassment cases, but the regulator stressed that this was not the primary reason for it.

But it acknowledged that “in recent discussions with firms and individuals” around the use of NDAs, it had become clear that understanding of when to report a breach “can differ”.

The SRA went on: “Some suggest that the obligation to report only arises once they have determined within the firm that regulatory misconduct has indeed occurred.

“Others believe that they should report any potential breach much earlier.

“We want to make sure there is greater clarity about this issue, so all firms better understand their regulatory obligations over what, and when, they should report.”

In a report on sexual harassment in the workplace published last week, MPs on the House of Commons women and equalities committee expressed concern over the use of NDAs by lawyers and the SRA’s action on the issue.

The consultation said the SRA wanted law firms to be clear on when to report concerns over issues which may lead to regulatory action.

The regulator said the existing rule (outcome 10.4) required law firms to “report to the SRA promptly serious misconduct by any person or firm authorised by the SRA, or any employee, manager or owner of any such firm”.

The SRA’s new code of conduct, likely to come into force next year, revises the rule to include other legal regulators, requiring law firms to make a prompt report of “any serious breach of their regulatory arrangements”.

The consultation put forward four options for reform that included subjective and objective elements.

They would require solicitors to report to the SRA or another approved regulator any facts of matters that:

  • “You believe are capable of resulting in a finding of a serious breach of their regulatory arrangements by any person regulated by them (including you)”;
  • “You have reasonable grounds to believe are capable of amounting to serious breach of their regulatory arrangements by any person regulated by them (including you)”;
  • “You believe indicate a serious breach of their regulatory arrangements by any person regulated by them (including you) is likely to have occurred”; or
  • “You reasonably believe indicate a serious breach of their regulatory arrangements by any person regulated by them (including you) is likely to have occurred.”

The SRA said the Bar Standards Board and Financial Conduct Authority had both introduced an objective element into their rules, by using the word “reasonable”.

The SRA’s “initial view” was that “mere suggestion or suspicion” was too low a threshold and would result in over-reporting.

“At a higher threshold, matters could be reported where an allegation of a serious breach is made and the information or evidence supporting the allegation leads the person to ‘believe’ there could be a serious breach.

“It may be appropriate to seek further evidence or corroboration – however, we do not suggest that matters will always require corroboration before they should be reported.

“This may not be practicable, and indeed certain allegations will turn on the complainant’s account of events, which may be sufficient to indicate that the relevant matters may have occurred.”

The SRA said versions of the new rule based on belief were subjective, but under the regulator’s Principles they were expected to act reasonably and responsibly.

If instead law firms were required to decide whether a breach was “likely” to have occurred, it may “add greater certainty” but “unnecessarily hamper” a COLP’s ability to exercise judgement.

“For example, where there is room for doubt, we would expect the person to err on the side of reporting. This will be particularly important in cases which turn on the personal account or memory of witnesses – which may well be imperfect or contested.”

At a press briefing yesterday, SRA chief executive Paul Philip stressed that it was not for law firms to decide whether or not there had been misconduct – that remained the regulator’s role.

The new rules would be supplemented by guidance, possibly in the form of examples or decision trees.

The SRA said any change to the rules on reporting misconduct would, along with the other rules set out in its new Codes of Conduct, need approval from the Legal Services Board. If approved, they could be introduced in April next year.

Meanwhile, the SRA announced yesterday that it has appointed leading education provider Kaplan as the assessment organisation to develop and run the Solicitors Qualifying Examination (SQE). Kaplan will not provide training for the SQE.

It has been appointed for a period of eight years from the introduction of the SQE.

The SQE will provide a single common assessment for all aspiring solicitors. It will be introduced, at the earliest, in September 2020. The costs of the assessment will be determined once the final design is fixed, although the SRA is aiming to provide guidance on indicative costs before then.

The SRA also confirmed that it has been approved by the Institute for Apprenticeships as the external quality assurance body for the solicitor apprenticeship.

As such, it will be responsible for making sure that the apprenticeship standard and assessment plan are fit-for-purpose and that the assessment that apprentices do at the end of their apprenticeship is fair, consistent, and rigorous.

Kaplan will be applying in due course to be the end-point assessment organisation for the solicitor apprenticeship.

Last year around 100 people started the solicitor apprenticeship route.




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