Sheldon: Agreed with Law Society and SRA
Unqualified employees of law firms can support a solicitor in conducting litigation – but cannot conduct litigation under the supervision of a solicitor, the High Court has ruled.
In a significant decision [1] interpreting the Legal Services Act 2007, Mr Justice Sheldon said the Solicitors Regulation Authority (SRA) had wrongly advised a law firm about this.
Both the Law Society and the SRA intervened in the case – with the SRA’s position different to that in its advice – and their position was accepted by the judge.
The case arose out of City law firm Charles Russell Speechlys instructing specialist debt recovery practice Goldsmith Bowers Solicitors (GBS), based in Bradford, to recover nearly £55,000 in fees owed by former clients Julia Mazur and Jerome Stuart.
The claim form was signed by GBS and the particulars of claim by Peter Middleton, described as its head of commercial litigation.
The couple took issue with the fact that Mr Middleton was not a practising solicitor and the case was stayed pending the firm explaining the position, as nobody else from GBS seemed involved in the matter.
Before the hearing took place, Mr Middleton was replaced on the case by solicitor Lisa Adkin.
The firm also self-reported to the SRA but the regulator decided not to investigate, saying that GBS’s employees were permitted to undertake reserved legal activities due to section 21(3) of the Act.
“We are satisfied that Mr Middleton has not conducted reserved legal activity without entitlement to do,” it said in a decision letter.
In deciding whether to lift the stay, His Honour Judge Simpkiss said he did not need to decide whether there had been a breach of the Act given the change in personnel and the SRA’s letter.
HHJ Simpkiss lifted the stay and ordered Ms Mazur and Mr Stuart to pay CRS costs of £10,653. They appealed against the costs order on the basis that the underlying decision was wrong in law.
In its submission, the Law Society argued that whether or not a person supporting or assisting a solicitor to conduct litigation was conducting litigation themselves was “a question of fact and degree”.
“Indicators may include the way that important decisions in the case are taken; who drafts or specifically approves formal documents; the degree of direction from the authorised person; evidence as to who is taking specific responsibility for formal steps or, in general terms, who is conducting the case.
“It is expected that those providing support will be properly directed and supervised. Tasks may be delegated but conduct of the litigation may not. General supervision by an authorised person does not mean that an unqualified individual is, or is not, conducting litigation.”
The Law Society contended that the service of process, preparing bundles and searches were “mechanical functions”, and have never been regarded as ancillary steps amounting to the conduct of litigation.
Under the Legal Services Act, it went on, both the employer and employee needed authorisation to conduct litigation, and the authorisation of the employer did not authorise an employee to do so.
The SRA’s position in court was the same. The judge recounted: “The SRA stated that the key question to ask was whether the person has assumed responsibility for the conduct of the litigation and exercises professional judgment in respect of it.
“The SRA submitted that a non-authorised employee who assists a solicitor with conduct of litigation, even to a significant degree, by drafting litigation documents and letters, proofing witnesses, or similar functions does not conduct litigation because it is the solicitor who exercises the final professional judgement about how the litigation is to be conducted and takes responsibility for that judgement.
“That would be different, however, if on a true analysis and focusing on substance not form the non-authorised person was the one responsible for the litigation and exercising professional judgment in respect of it.”
Sheldon J agreed with both and found the position in line with the 2007 Act, which “make a clear distinction between persons who are entitled to carry out reserved legal activities and those who are not”.
He observed that an employer, even if authorised to carry out a reserved legal activity, could commit a criminal offence if one of their employees carried on a reserved legal activity without being entitled to, and therefore committed an offence themselves.
As a result, Mr Middleton was not entitled to conduct litigation merely because he was an employee of GBS and the SRA decision letter was “clearly wrong”; HHJ Simpkiss’s reliance on it was also an error.
Sheldon J said he did not need to decide which side of the line Mr Middleton had been on and it would in any event not be appropriate “given that this would interfere with any regulatory intervention that the SRA may wish to consider in light of this judgment”.
He upheld the appeal and replaced the costs order with no order as to costs, and also refused Ms Mazur’s request to strike out the claim as an abuse of process.
“Whether or not the lodging of the initial claim was tainted by the involvement of Mr Middleton, the matter has been rectified. The signature of a relevant employee at GBS has been added to the claim form.”