The Law Society of New South Wales, ‘FLIP Report’: some initial thoughts

The Future of Law & Innovation in the Profession (FLIP) commission of inquiry took place last year as an initiative of The Law Society of NSW. Its final Report, available online here, which was published last month adds to the growing collection of recent, profession-led, inquiries into the future of legal services, including the American Bar Association’s Commission on the Future of Legal Services (on which FLIP was modelled), and the Canadian Bar Association’s Futures Initiative.

In its own words, the broad aim of the inquiry was to:

better understand the changes taking place in and around the legal profession and to provide the profession with recommendations that will enable lawyers to better
accommodate new concepts and ideas, and adapt to changes that are taking place…

As the title suggests, its change focus is predominantly shaped by its legal profession orientation, and by the profession’s continuing fascination with technology and process innovation/disruption. This of itself, of course, shapes and skews the nature of the inquiry (something I’ll say more about later). Nonetheless, the FLIP Report 2017 is an interesting, informative and very clearly argued presentation of some critical issues facing the profession in NSW, and, one must suspect, Australia more generally. In this short review, I offer some initial reflections on the value and insights of the process. In subsequent posts I will focus specifically on two areas of the report that are of particular interest to me: its observations on professional regulation and legal education.

The inquiry was organised as an exercise in thought leadership. It did not commission research, and it’s not clear how extensive a review it undertook of the voluminous literature, though there are useful end of chapter references, and a short bibliography. It structured itself as a commission of inquiry and took evidence, both orally and in writing from a range of ‘witnesses’. This worked well in terms of producing a focussed and often pithy report, with some useful quotes and insights from many who are innovators and thought leaders in the field. At the same time, this methodology also placed the onus on the ‘commissioners’ to inquire deeply and thematise the evidence effectively. This is a demanding task, and in these respects the Report is sometimes a little lacking. For my money, though it acknowledges (astutely) the fundamental nature of the questions change raises at the intersection of “jurisprudence, ethics and technology” (p.45), it does not engage deeply enough with the capacity for technology to transform not just process but the form of law itself. Blockchain in this respect (which is discussed in the Report) is really just the tip of an iceberg.

Moreover, the profession-centric nature of the process has its limitations. Law is not unique in the challenges it faces, and a broader ranging inquiry might have helped the commissioners take that deeper and longer view. The great majority of the 103 witnesses were from within the legal profession and legal academia: the inquiry could have heard more widely from experts in other professional service sectors, and the consumer voice is also somewhat lacking. The focus at times is rather protectionist (I’ll say more about this in the post on regulation). Consequently, while the Report (chapter 4) rightly highlights both the potential for technology to facilitate access to justice, and the risks of continuing under-investment in technology for personal legal services, the potential for technological and regulatory disruption and deprofessionalisation to enhance (alternative) access to justice remains something of an elephant in the room.

The Report makes a total of 19 ‘Key Recommendations’ which are framed as actions for the Law Society. A number of these are, as one might expect, useful but fairly unexceptional ‘inform’ and ‘advocate’ recommendations, but two structural initiatives in particular are of wider interest, and reflect the influence of US thinking on the Report. First, Recommendation 2 calls on the Law Society to establish a “centre for legal innovation projects” to raise awareness, conduct research, develop training and create and participate in strategic partnerships (interestingly universities are not mentioned in the range of prospective partners) in respect of legal technology and innovation. Secondly, Recommendation 3 invites the Law Society to “consider establishing an incubator in New South Wales dedicated to technology-enabled innovation in the law”. Both of these initiative are to be welcomed, but at the same time, their potentially limited scale and reach must be acknowledged. The Law Society is not the ABA, and individual state-centred initiatives are not going to have either the resources or the reach of a national centre or national incubator initiative. A recommendation that the Law Society commit itself to collaborating nationally on such initiatives with the Law Council of Australia and other state representative and co-regulatory bodies, would have been groundbreaking, as well as offering the profession considerably more bang for its buck, but, I guess, may have been less ‘positionally’ attractive, and/or less of a ‘headline’ for the Society.


Some thoughts on the proposed SQE and its implications for the English law degree

I highly recommend Richard Moorhead’s blog on the recently published consultation by the Solicitors’ Regulation Authority on the  standardised competence assessment for all those seeking qualification as a solicitor in England and Wales. In this post I just want to add a few thoughts of my own to the conversation. I’m also conscious that the SRA’s work is of interest to a wider audience than the UK. Here in Australia, for example, the Law Admissions Consultative Committee is continuing to follow post-LETR developments in England closely. The Hong Kong Law Society has also proposed the introduction of a Common Entrance Exam, though the scope of the HK proposal is less radical, and debate has, for now, been paused and rolled into a wider review of legal education and training that is now underway.* In this post I intend to reflect only the possible implications of the SRA proposal for the English qualifying law degree (QLD) – not least because I want avoid anything that might appear to pre-judge the Hong Kong debate.

The SRA consultation paper starts from three possible, broad, models for a potential qualification regime (para 11):

  • Option 1: Continuing to prescribe a limited number of pathways to qualification, the details of which we specify, which are aligned to the Statement of Solicitor Competence Statement, Statement of Legal Knowledge, and Threshold Standard

  • Option 2: Rather than prescribing a limited number of pathways, authorising any training pathway developed by a training provider which enables a candidate to demonstrate they can perform the activities set out in the Statement of Solicitor Competence to the standard required in the Threshold Standard.

  • Option 3: Developing a centralised assessment of competence that all candidates are required to undertake prior to qualification, again aligned to the Statement of Solicitor Competence, Statement of Legal Knowledge and Threshold Standard.

Option 1 represents largely a continuation of the status quo; option 2, I suggest, comes closer to the base position advanced in the 2013 LETR Report, while Option 3 is the SRA’s preferred approach for reasons essentially of cost, consistency and flexibility/diversity. The paper offers some compelling arguments for its preferences, and some balanced evaluation of the options, though I felt overall that it was perhaps a little more robust in critiquing options 1 and 2 than it’s preferred option 3 – though it does also, rightly, point out that none of the options are mutually exclusive (and indeed the LETR Report could be seen as recognising the value of elements of both options 2 and 3 – the latter notably in the use of standardised clients in skills assessments).

Much of the detail (and hence the devil) of the preferred approach remains to be developed. The paper is clear that the SRA anticipates a separate two-part assessment of knowledge and skills. The modularised assessment of knowledge must be completed first, and would be assessessed via computer-based objective testing. The second part would involve standardised practical exercises akin to the standardised clinical  assessments used by medical schools and in the current Qualified Lawyer Transfer Scheme. The paper is relatively open on the question whether, and if so how much, work experience should be required before the Part 2 assessments are completed.

The proposed scope of the knowledge assessments is broad. It will encompass ethics and professional conduct, wills and probate, taxation, business law and practice, property law, torts, criminal law and evidence, criminal litigation, civil litigation, contract law, trusts and equitable wrongs, constitutional law, EU law, human rights, and the English legal system (para. 41). The assessments are to be modularised, to facilitate “integration with other education and training programmes.” There is, however, no discussion at this stage of the broader assessment framework, prerequistes and sequencing of modules, or of the frequency of assessments.

Implications for the QLD

The paper is very clear that possession of a law degree should not be a basis for any exemptions from the knowledge (or skills) requirements of the SQE. In short, if this proposal goes through, the QLD as we currently think of it is dead – at least for the solicitors’ profession.

I agree with Moorhead that, if these proposals go through, we are likely to see the creation of a more divergent education and training playing field: possibly with growing differences between traditional liberal and what Moorhead calls ‘almost practice ready’ law degrees, plus a greater variety of postgraduate and, I would add, possibly non-graduate (in structure, though potentially graduate in level) options such as apprenticeships.

The consequences of all this for the law school sector as a whole are potentially substantial, and may be very serious. They include:

Recruitment: Law has undoubtedly grown as an academic subject on the back of its professional status and recognition. Even though less than 50% (and I suspect in some post-92 law schools the proportion could be 30% or even lower) actually make it to being a solicitor, between 60%-70% appear to enter law school with solicitor/barrister ambitions. Recruitment implications of the loss of QLD status are thus both potentially significant and very hard to judge. Will regulation reshape the market for training, or will the market for training adapt as minimally as possible to the regulation? There are significant vested interests involved, including the elite law schools, and the big LPC providers who will not let a multi-million pound business simply disappear overnight. Much may depend on how the elite law firms and their ‘preferred suppliers’, the elite law schools respond to these changes, and whether they (continue to) function as a congeries of reputational interests. (The reputational risks of marginalising the law degree are not addressed in the SRA paper. In the LETR research phase, by contrast,  quite a lot was made of the reputational importance of the graduate standing of the profession in the international marketplace. Whether ‘graduateness’ without the Oxbridge or Russell group badge carries the same cachet is moot). If some form of LLB + LPC remains a significant pathway, the recruitment effects may be mitigated – at least for some parts of the sector. If it doesn’t, the future becomes infinitely more difficult to predict.

Expansion of the knowledge-base – The new knowledge base essentially represents an amalgam of the knowledge requirements of the QLD and LPC. It thus reflects the continuing influence of the reserved areas of practice and thereby excludes much of what many (especially commercial) solicitors do. For those who want to develop nearly-practice ready degrees, it might not change the game that much from the current exempting degree model. However, that assessment also depends in large part on how much current flexibility over (QLD) content is reduced by the so-far unwritten assessment framework. To expect the  academic community to vote on the options in the absence of this seems rather like asking turkeys to vote for something that may or may not be Christmas; you really would like to know first.

Doubling-up of assessment burden: those who continue to do degrees are likely to be confronted with a growing assessment burden. Under the preferred model university assessments will not count for the SQE, and it would be a radical change of policy for universities to accept entirely external assessments as part of a (concurrent) degree. Moreover, the fact that the SRA currently sees SQE assessments as both pass/fail and sitting outside the Framework for Higher Education Qualifications (FHEQ) (see paras 57-58) makes any inclusion by recognition a less, not more likely, prospect. The impact, including diversity impact, of the scale, scope, timing, frequency and cost of SQE assessments on law students specifically appears not to have been addressed at this stage.

Implications for innovation and diversity of intellectual approaches: a drift towards nearly practice ready degrees may have significant ‘unintended’ (or from the SRA’s point of view, ‘none of our concern’) consequences for academic law. Joint degrees may decline because they simply cannot address enough of the SQE ‘core’ knowledge. Unless a clear secondary market develops in SQE test preparation (a matter which in itself may have some diversity implications), universities are also likely to find themselves under some pressure to teach to the test. That is likely to (further) undermine socio-legal, theoretical or other alternative intellectual approaches to doctrinal legal analysis. (Recall that the LETR Report data highlighted the limited value professionals attached to jurisprudential or socio-legal content/ approaches.)

The anxiety has begun…

*The Hong Kong Review under the auspices of the Standing Committee on Legal Education and Training is being undertaken by a panel comprising Justice KH Woo, Professor ATH (Tony) Smith and myself.


Implementing the LETR

I was sorry to miss the latest Westminster Legal Policy Forum (WLPF) event in London on 5 November, but unfortunately I was otherwise occupied in the southern hemisphere. The event was timely, given that the SRA has recently published its consultation on its draft competences and the BSB have also just given us some further detail of their training strategy (though still not a lot – HT here to Steven Vaughan’s recent guest blog on Richard Moorhead’s Lawyer Watch).

The WLPF summarised the event as follows:

Sessions brought together key stakeholders working across the current legal education and training framework – including colleges, universities, careers advisory services, vocational training providers and regulators – alongside law firms, chambers and wider legal employers. Delegates had particular opportunity to consider the prospects for developing new qualification pathways and access routes to legal professions, as well as possible changes to competency frameworks and Continuing Professional Development. Sessions also focused on current proposals to streamline regulatory involvement in education and training processes, and the challenges ahead for a revised framework in supporting both innovation and standards.

The work of the LETR research team is, of course, long-finished, but it was good to see that my colleague on the team Professor Avrom Sherr was invited to open the event and did so, in his own words, by going provocatively “off message”, not least on the challenge to the representative bodies to maintain their relevance after the Legal Services Act; on the tendency of the LETR to be about “regulation, regulation, regulation” rather than “education, education, education”, and on the potential boringness of the SRA’s competence statement. This all bodes rather well for our joint Upjohn Lecture in January 2015!

I have storified all the tweets I could track from the WLPF event here (in reverse chronology):

When Facebook doesn’t ‘like’ lawyers

…it sues them. Or so it seems given the recent civil complaint filed by Facebook and its CEO Mark Zuckerberg in New York last week. The claim has been brought against DLA Piper, Lippes Mathias Wexler Friedman, Milberg LLP, and Paul Argentieri & Assoc., and a numbers of named partners in those firms.

The case arises out of an attempt, since 2010, by Paul Ceglia to establish a claim to ownersip of a substantial share of Facebook, actions which have so far led not only to the summary dismissal of Ceglia’s civil suit in 2013, but to Ceglia’s indictment before a grand jury on criminal fraud charges. (Though it should be noted both that the criminal charges have not yet come to trial, and that Ceglia has appealed the dismissal of his civil claim against Zuckerberg – the latter one assumes more in hope than expectation given the Magistrate Judge’s damning comments on the quality of Ceglia’s evidence).

The case against DLA Piper (US) and the other law firms is of interest for a number of reasons, beyond the spectator sport of a big corporation turning on ‘big law’ (what some may see as a variation on Oscar Wilde’s theme of the unspeakable in pursuit of the uneatable). It will almost certainly raise procedural-ethical issues regarding lawyer-client privilege, and, further, the lawyers’ duty not to mislead the court. In the latter context it also raises a larger meta-ethical issue for the court, as to its willingness to permit a plaintiff with deep pockets to pursue lawyers through the courts for (allegedly) just doing their job… or not.

And that will be the crux of the case. Ceglia managed to go through lawyers faster than the proverbial knife through butter before his claim was dismissed. Facebook’s full complaint (posted here by Above the Law) has been selective in choosing as its targets those that it sees as most culpable. The defendant most vulnerable in this regard is surely Paul Argentieri and his firm, since the local NY attorney Argentieri is not only the lawyer who has lasted longest by Ceglia’s side, but the one who devised the initial litigation strategy that sought to bolster the credibility of Ceglia’s claim precisely by bringing in a number of ‘blue chip’ firms like DLA Piper. It is of course this very strategy that now threatens those who bought into it with a very uncomfortable few months, and which gives Facebook’s (civil) claims of malicious prosecution and conspiracy at least a scintilla of a chance – or better.

The liability of DLA Piper, Milberg and others will likely turn on key events between the end of March 2011 and May 2012, when Milberg lawyers Dumain and Young withdrew. Ceglia’s claim was based primarily on a contract with Zuckerberg which appeared to show that the latter was engaged by Ceglia to work on “The Face Book” and another project called “StreetFax”. Around the end of March 2011 one of Ceglia’s attorneys (from Kasowitz, Benson, Torres & Friedman) found what appeared to be an original of this contract on Ceglia’s computer hard drive, but without the whole first page which made reference to Facebook. This led the Kasowitz attorneys to the conclusion that the ‘StreetFax’ contract was redrafted long after the event to include Facebook, and Ceglia’s claim was therefore fraudulent. Kasowitz immediately withdrew from representation, communicating its concerns about the apparent forgery to Argentieri. DLA Piper and Lippes Mathias continued to represent Ceglia. DLA apparently playing a significant part in amending, and bolstering Ceglia’s complaint by reference to emails (the provenance of which also came to be heavily contested) said to be between Ceglia and Zuckerberg, but which had not been mentioned in the original complaint. The Amended Complaint was filed on 11th April, and on that same day another of Ceglia’s representative firms, Connors & Vilardo withdrew their representation, being replaced by additional counsel from DLA Piper. On 13th April, attorney Marks of Kasowitz wrote to Lippes Matthias, DLA Piper and Argentieri, memorialising his earlier discoveries about the contract and prior communications with Argentieri. Marks indicated that he would not report the matter to the District Court pending an investigation promised by Dennis Vacco of Lippes Matthias. Whether there was an investigation by Vacco is moot, but it appears that DLA Piper and Lippes Matthias continued to represent Ceglia into June 2011, with both firms withdrawing only at the end of the month, and on the eve of a court hearing brought by Facebook seeking expedited discovery.  Neither of these firms (nor Kasowitz) appears to have alerted the court as to concerns as to the falsity of any facts as alleged by Ceglia. After the withdrawal of his counsel Ceglia continued to be represented by Argentieri and a San Diego sole practitioner, Jeffrey Lake (until 18th October 2011), when the lawyer merry-go-round set off again. The final defendant firm, Milberg joined the action in early March 2012, withdrawing at the end of May,  There appears to be some uncertainty as to why Milberg withdrew, but, again, nothing in the public record indicates that they raised concerns of a possible fraud on the court.

At the core of Facebook’s case, then, seems to be a claim that the failure of successive firms to disclose why they were withdrawing effectively kept Ceglia’s action on the road, and forced the company to keep defending long after the wheels should have come off what was (in the view of Facebook/Zuckerberg) a groundless scam. But that by itself is unlikely to be enough for Facebook/Zuckerberg to win in court. The action here is proceeding on the basis of two tortious claims: malicious prosecution and deceit/collusion with intent to deceive a court (the latter specifically under the New York Judiciary Law). Malicious prosecution is not easy to establish: the plaintiff needs to show the suit was brought without probable cause, initiated out of actual malice, and (in New York) there is also a requirement to show special damage. Each of these requirements set the bar high for a plaintiff. Probable cause may be the least of it: if the defendants can be shown to have known, or ought reasonably to have known that Ceglia was engaging in fraud, perjury or the suppression of evidence, then that element could well be satisfied. Proving malice and special damage is likely to be more difficult, though the extent to which the defendants investigated Ceglia’s claims is certainly a matter that Facebook will pursue, as failure to investigate may itself be regarded as evidence of malice.

Discovery will likely be interesting; some evidence is already in the public domain from the original action, but we must wait to see how critical a part lawyer-client privilege (and the crime/fraud exception) will play in limiting the defendants’ exposure to scrutiny.

How the second action for deceit plays out will also be interesting. Courts do not like being deceived, and that is clearly reflected in section 487 of the NY Judiciary Law, which not only creates a specific action of deceiving the court, but requires the court to award treble damages where deceit is proven. But courts are also nervous of being used by plaintiffs for purely strategic or vengeful ends, and there is some concern, particularly in the US, following the Chevron litigation, that corporate plaintiffs are adopting a tactic of using the courts to deter lawyers from acting against them.

While I can’t say I’m a fan of corporate power in the courtroom, I’m not particularly convinced by that argument either, given its continuing dependence on the ideal-typical lawyer as a disinterested neutral partisan. There is surely a risk with high profile-high value litigation that lawyer self-interest gets significantly caught up in the mix, not least because success in a high value claim not only offers a substantial payday for the firm (particularly if the case is run on a generous contingency), but because it can be a reputation-maker for the lawyers involved. Whether that is what happened in the original Ceglia case, we must wait and see, but the tendency of some very experienced and high profile firms to get involved in this case, particularly as more and more lawyers pulled out, seems hard to explain on entirely rational grounds – at least with the benefit of hindsight!

If the Facebook claim does get to trial (and I would hesitate to bet against it, despite the obstacles) the outcome if the defendants lose are not going to be pretty, either financially or reputationally. Moreover though this action, of course, does not have a disciplinary function, a finding against the lawyers involved for Ceglia could also have disciplinary consequences for them, as proof of malicious prosecution would surely offer at least prima facie evidence of breaches of their professional obligations to the court (here under rules 3.1 and 3.3 of the New York Rules of Professional Conduct).

Reforming solicitors’ CPD

At its meeting on 21 May the Solicitors Regulation Authority (SRA) Board approved the move by the SRA to implement a new system of ‘continuing competence’ to replace the current, and largely discredited, input-led CPD scheme for solicitors in England and Wales. The decision remains subject to approval by the Legal Services Board, but if approved (as seems likely) the new ‘scheme’ will be phased in from Spring 2015, for early adopters, coming fully into force in November 2016.

The changes follow-on from a consultation document published in February which spelt out three optionsfor CPD:

 Option 1, the SRA’s preferred option, which would  revoke the current CPD scheme and rely instead on existing conduct of business regulation, requiring a proper standard of legal work and of training and supervision. Option one would be supported by non-mandatory guidance;

Option 2, would replace the current CPD scheme with a new cyclical/outputs based framework, imposing a requirement to reflect on practice and implement a development plan without a mandatory hours requirement; and

Option 3, would retain the current requirement to do a minimum number of CPD hours, and would require the training to relate to current or anticipated legal practice and recognise a wider range of development activity.

The consultation on these options received 64 responses in total – unsurprising, perhaps, but still depressingly low given the scale and significance of the changes being proposed. Understandably the SRA did not therefore attach a great deal of weight to the numbers in its response to the consultation, instead addressing the responses more qualitatively. Nonetheless it is interesting, if somewhat unsurprising (again) that the majority, 33, including the Law Society,  opted for Option 3 (13 expressed no preference for any of the options). This was, of course, the most familiar and conservative alternative given, and the one least consistent with best practice highlighted by the LETR Report! The SRA has nonetheless opted for its original preference, Option 1, on the basis that it focuses on the effectiveness of training, gives individuals—and firms—more flexibility and choice in selecting appropriate training, and reduces the burden of regulation. The changes will also mean that training providers will no longer require authorisation from the SRA.

 So has the SRA got it right? If it was to drag CPD into the 21st century, it had to choose Option 1 or 2, and to that extent should be applauded. Option 3 in that sense always struck me as a hostage to fortune for the SRA, unless it was going to ignore both what came out of the LETR Report (see paras 2.147-2.166, 6.72-6.95) and the LSB’s statutory guidance.

But equally there are significant risks with Option 1, given the extent to which it deregulates CPD. In this regard it comes close to the system developed in Alberta, Canada, and it is notable that, for all its strengths, that scheme has run into some challenges in making  individuals properly accountable for completing their CPD. Option 1, more than Option 2, begs the question always begged by heavy reliance on what is essentially principles-based regulation, namely: how do you enforce a culture change where there are no clear rules? The SRA in its response has recognised that there will need to be a significant culture change, and has therefore proposed a substantial transition period from Feb 2015 to Nov. 2016 to facilitate that. But this still means that the SRA is relying predominantly on the guidance it will produce, and that of course will be, by definition, non-mandatory, so the question still remains. Moreover, if the SRA is to rely ultimately on the broad obligations to deliver an acceptable quality of work/training, as the Legal Services Consumer Panel’s response noted, it will be interesting to see how it plans to go about identifying a lack of quality such as to trigger monitoring or enforcement action. The link between quality and CPD is not straightforward; if the SRA gets this wrong it may well increase rather than reduce the likelihood that some system of professional re-accreditation will be required sooner rather than later.

More generally, given the statutory responsibilities on the SRA, I also think it is unfortunate that there has been so little analysis of how the proposed changes achieve the Legal Services Act regulatory objectives. For example, how differently does each option support the public and consumer interests? The risk that regulatory intervention relating to CPD may not go far enough in protecting the public interest has already been highlighted, but it could as easily go further than required. How does it contribute to the development of a strong, independent, effective and diverse profession?  In the latter context in particular, the LETR Report highlighted needs for continuing ethics, management skills and diversity training (Rec. 9) – do these become non-mandatory under Option 1. If so is that consistent with the objective? How much Option 1 relative to Option 2 reduces the regulatory burden for firms, rather than for the SRA, may also be moot.

Ultimately, though, the key question is, will it make a significant difference to the kind of learning that takes place, and to the extent to which practitioners are enabled to catch their breath and actually reflect on what they are doing? For the answer to that we must wait with baited breath (or maybe not…); the evidence certainly suggests the potential is there, though option 1 again raises the stakes by placing a premium on firm culture in a way that few systems have attempted to date.


Plus ca change

In the week that the “iconoclastic” (according to Legal Business ) Professor Nigel Savage announces his pending retirement as President of the University of Law, it is interesting to reflect on the words of another senior vocational provider, commenting on the need to develop a more effective system of blended learning between the classroom and the office for the training of would-be solicitors:

…. a reform in this direction will eventually be forced upon the profession by the growing complexity of the law and the absurdity of spending many thousands a year on an official system of legal education which is debarred by out-of-date restrictions from giving of its best.

Sounds familiar? But the rub is the quote’s not from one of Nigel’s competitors at Kaplan or BPP, or any other current LPC provider, it was said by Dr G.R.Y. (Geoffrey) Radcliffe, Principal of the Law Society’s School of Law and Fellow of New College, Oxford in July 1939 during his Presidential address to the Society of Public Teachers of Law. Moreover, it referred to an even earlier proposal of the Cardiff Law Society that the (then) five year period of articles should be organised on what we might today call a sandwich model, layering sequential ten month blocks at law school, with 15 month blocks in the office. No disrespect to much that Nigel Savage has achieved, but given that 75 years on we are still engaged in variations of the same debate, how do we define iconoclasm in legal education? And when we’ve worked that out, could someone please tell the journos at Legal Business?

Regulators behaving badly?

Warning: approx. 2500 word post!

Following the BBC Scotland Lawyers behaving badly programme I thought I would have a look at what the Scottish disciplinary tribunal, the SSDT, had actually been deciding in its dishonesty cases. These are an important group of cases. Dishonesty is at the top of the misconduct pyramid, so robust handling of dishonesty matters both for public protection, and to protect the reputation of the profession. Before looking at the cases its worth making a couple of preliminary points. As we saw in the last post, straightforward dishonesty will normally merit the highest sanction of striking off – removal from the Roll of solicitors, but dishonesty can cover a fairly broad spectrum of acts, including embezzlement, forging signatures on documents (whether for financial gain or to cover up administrative mistakes or incompetence), misleading clients, and misleading the court, another lawyer or a non-client, whether at the behest of your client or otherwise. There may be degrees of culpability and specific circumstances may offer an element of mitigation. Dishonesty will also often be mixed up with other disciplinary failures, such as technical breaches of accounting rules. In short there may be a range of factors to take into account in assessing the appropriate outcome, and the tribunal has an element of discretion. We would not expect a 100% strike off rate, even for dishonesty.

The reported decisions are also, of course, only part of the story. These are the cases that are prosecuted successfully. We don’t know how many prosecutions are dismissed and on what grounds because those decision are not reported. We don’t know much about how regulators exercise their discretion to prosecute. There are various ways of dealing with possible dishonesty. Even if there is putative evidence of dishonesty, a case may not, eg, for evidential or public interest reasons, be pursued as one of dishonesty. By taking the case out of the dishonesty category, this effectively (though sometimes only marginally) reduces the seriousness of the misconduct, and opens up a greater range of disposal options to the tribunal. Something like this appears to have happened in O’Donnell (2009), where a taking of money without the client’s consent was characterised as “borrowing”. This in our view saved the respondent from a likely suspension (at the very least). I have not surveyed the entire SSDT database to look for cases where the conduct disclosed possible dishonesty in fact, but the case was not disposed of as a dishonesty case.

A final warning: the relative brevity with which the tribunal’s reasoning is often reported makes interpreting and applying these decisions more of an art than a science. This may add to the scope for reasonable disagreement.

The two cases on which the BBC focused were O’Donnell and Murray – neither is a straightforward dishonesty case, and this is part of what makes them both interesting and problematic. Each involved multiple hearings dealing with a range of misconduct.The first hearing in O’Donnell in 2008 clearly did not involve dishonesty, and culpability was reduced by what the tribunal accepted to be clear evidence of clinical depression. In the 2010 hearing the ‘borrowing’ of £60,000 from a client was, as noted, not treated as dishonesty, and the tribunal regarded the lack of complaint from the client, the fact that there was ultimately no financial loss to the client and the respondent’s continuing ill health as mitigation. Murray is factually quite tangled. Nonetheless, there appear to be two clear findings that Murray misled clients. This is dishonesty, which in my opinion would have merited striking off, or a suspension if he was lucky, in the first proceedings in 2004/05. The decisions to censure on this occasion, and subsequently to suspend rather than strike off for a further act of deception are thus somewhat surprising. But are they out of line with SSDT practice? This is where the cases analysis comes in.

The SSDT website identifies 44 decisions since 1995 in which dishonesty was proven or admitted. In 33 of those cases the respondent solicitor was struck off, leaving 11 instances (25%) in which lesser penalties were imposed, ranging from censure and fining to suspension. 25% seems a rather high level of exceptional cases, so it is worth looking at those in more detail. In four of them lengthy suspensions, of five years or more, were imposed. Suspension of such duration certainly suggests the tribunal treated the misconduct in these cases as very serious; in practice, lengthy periods of suspension may kill a solicitor’s career as effectively as a strike off. This leaves seven cases where more minor penalties were applied: Cohen (2009), Hay (2009), Donald (2008), Sheppard (2008), Kirk (2007), Malcolm (2005), and Young (2002).[i]  In two of these, Sheppard and Kirk, the solicitors’ names had already been removed from the Roll, thereby limiting the penalties available to the tribunal. Consequently there were only five cases across a 12 year period in which dishonesty was proven and strike off or suspension was clearly considered excessive by the tribunal. Four of these involved misrepresentations in which there was no element of theft or other financial impropriety by the respondent, though one, Malcolm (2005), did involve substantially misleading the client. This case, and the last, Cohen (2009) (which involved an attempted expropriation by the respondent of around £3,000 in unclaimed tenants’ deposits which had been sitting in various trust accounts for about 20 years) are, on my reading, both cases where the respondent may have been lucky to escape a period of suspension. So, aside from Murray and O’Donnell, neither of which formed part of the SSDT’s dishonesty dataset, there are two out of 44 cases where (in my judgment, FWIW) the penalty seems on the lenient side relative to current norms.

This doesn’t of course mean that everything is necessarily hunky dory in the world of professional discipline. A growing body of academic work on lawyer deviance has highlighted a number of common concerns across a range of jurisdictions.

Firstly, traditional discipline systems seem to create disincentives to complain/inflict relatively high rates of attrition on client complaints. There is some evidence that separating responsibility for complaints from the representative body has generally increased both the number of initial client complaints, and the number that make it to disciplinary tribunals (see the data summarised by Rick Abel, Lawyers in the Dock, Oxford, 2008, 503-5). The creation in 2008 of the Scottish Legal Complaints Commission (SLCC) as a single gateway for complainants has certainly given the Scottish system an element of independence. Complaints about unsatisfactory service are dealt with by the SLCC separately from the Law Society of Scotland, but that still leaves the Law Society responsible for professional misconduct investigations, whereas in England and Wales that function is now undertaken by the SRA. To that extent, then, there is a greater degree of formal independence in England and Wales. How much difference that actually makes is moot, and we are not going to find the answer by looking at tribunal decisions: we would need to know much more about how investigations are conducted and the ways in which decisions to prosecute are made.

Secondly, there is some concern that prosecutors tend to focus on what are called ‘high reward/low risk’ cases for the regulator, ie, cases that involve demonstrable reputational harm – dishonesty, deceit, mishandling of client accounts – or a history of disciplinary infringements/lack of governability (eg failures to communicate with or cooperate with the regulators). The lack of risk in pursuing such cases may be increased by a tendency also to target lower status or marginal practitioners – particularly solo and small firm practitioners. Cases involving powerful actors or more morally ambiguous behaviour appear correspondingly less likely to be prosecuted (see, eg, Leslie Levin, ‘The ethical world of solo and small firm practitioners’ (2004) 41 Houston Law Review 309; Alice Woolley, ‘Regulation in practice: The ‘ethical economy’ of lawyer regulation in Canada and a case study in lawyer deviance’ (2012) 15 Legal Ethics 241. Note also the ongoing independent case review being undertaken for the SRA by Professor Gus John to examine evidence of disproportionality and discrimination in the disciplinary process – The Scottish dishonesty cases certainly fit that pattern with a preponderance of small firm and sole practitioners among the ranks of those prosecuted.[ii] That said, arguments about disproportionality should not detract from the fact that, as Rick Abel pithily concludes: “the harms… of solo and small firm practitioners are real – and the victims are even more disadvantaged and vulnerable than the perpetrators” (Lawyers in the Dock, p.506).  At the same time, who complains and why, and who is prosecuted and why, remain interesting, and potentially morally loaded questions that have been under-researched.

Thirdly, comparative work also points to a tendency among tribunals to hand out relatively light ‘symbolic’ sanctions, particularly for first offences.This may be seen by the tribunals as justifiable because the majority of lawyers do not actually re-offend. O’Donnell (2008) might be looked at as just such a case of symbolic sanctioning; there was no dishonesty involved; there was evidence of ill health in mitigation, and the respondent had taken steps to address his problems, though even so, by English standards, a fine of £500 would be exceptionally low. The continuing leniency in the second hearing (2010) seems harder to justify. It has been argued that a more aggressive approach than has been the norm may be needed in dealing with repeat and recalcitrant offenders if the public protection objectives of the discipline system are to be properly met (Leslie Levin, ‘Misbehaving lawyers: Cross-country comparisons’ (2012) 15 Legal Ethics 357).

Dishonesty cases tend not to fit that pattern because of their perceived seriousness. A dishonesty offence is still most likely to receive a suspension or strike off, even if it is a first offence. A number of the Scottish dishonesty cases nevertheless appear to raise interesting questions in this light about prosecution policy and the ways in which the Law Society of Scotland has assessed risk in the past (with the caveat that this analysis is based purely on the reported disciplinary tribunal findings which tend not, of course, give a full picture of the circumstances behind each). In a number of these cases there are early and continuing warning signs, often of poor accounting and case/risk management practices which can be a signifier of more serious trouble ahead, especially for smaller firms. In Kay (2013) an inspection of his practice reported that there had been no proper accounts for at least the previous three years. He had also consistently failed to respond to Law Society correspondence and statutory notices between 2007 and 2009; had not responded to correspondence to Master Policy insurers, and failed to pay his insurance excess on a professional negligence claim that had been brought against him. In Ruark (2012) the respondent had been subjected to frequent inspections between 2004-07 which highlighted continuing failures to complete and record property transactions and their financing in the proper form. Ruark and Kay were ultimately struck off, but there were signs of significant problems as early as 2004; in addition to other failures already noted, Kay also had two findings of inadequate professional services made against him in 2008 and 2009 and, it appears, had not paid the compensation ordered on each occasion. These cases may be outliers, but why did it take the Law Society so long to initiate the final and decisive intervention?[iii]

The extent to which and robustness with which a prosecutor can appeal seemingly lenient tribunal decisions can act as an important corrective to outlier decisions, and may also provide the tribunal with judicial guidance on the exercise of its powers. One question worth speculating on is whether an independent regulator might be more robust in its role as prosecutor when it comes to appealing lenient outcomes. There is certainly some feeling in England and Wales in the wake of the Spence (2012, unreported) and  SRA v Davidson [2012] appeals that the SRA has become more willing to challenge SDT ‘failures’ to strike off through the courts.

Finally, there are also debates about the extent to which regulatory systems should continue to separate discipline from redress and rehabilitation. Even though tribunals see their jurisdiction at least partly in terms of public protection, this does not always extend to awarding compensation or restitution to clients for inconvenience, financial loss or other harm suffered, or to requiring lawyers to undertake rehabilitation through appropriate retraining or (eg) compulsory drug/alcohol programmes. Training or other rehabilitative orders are not an option under either the Scottish or English legislation. Similarly the tribunal In England and Wales cannot order compensation, however, in Scotland it now can, though the financial limit is relatively low (£5000 maximum). It is notable that the use of compensatory powers in the larger Australian jurisdictions has become widespread (see Linda Haller, ‘Professional discipline for incompetent lawyers? Developments in the UK and Australia’ (2010) 17 International Journal of the Legal Profession 83). It will be interesting to see how the practice develops through the SSDT in Scotland,

So what’s my conclusion? From this somewhat cursory analysis the Scottish discipline system, in its treatment of dishonesty cases, seems to share many of the strengths and weaknesses seen across other systems in the Common Law world. It does not appear that outcomes in dishonesty cases are radically out of line, though there are certainly some decisions that raise questions of principle. The number of arguably ‘lenient’ decisions, proportionately, does not seem excessive to me (I’d be interested in other’s views on that) but the time taken to initiate disciplinary proceedings in a number of cases ought, from a public protection perspective, be a matter of some concern. Does that mean the Scottish regulatory system can disregard calls for a more independent regulatory structure? If I was a serious critic of this (or any other) system, I wouldn’t make my argument by looking (just) at alleged failings at the most serious end of the continuum. The regulator’s robustness in prosecuting and appealing decisions; the resource it commits to investigation and risk management, and how the system deals with more ‘routine’ misconduct may provide far more telling indicators of its actual independence than its approach to what should be the most egregious of cases.

[i] I have excluded Miller and Morrison (2005) from this subset as Morrison was censured for her inadequate supervision of Miller, not for dishonesty. Miller, an assistant solicitor, was struck off.

[ii] The respondents in the Scottish dishonesty cases also fit the pattern seen in other studies of lawyer deviance in that they tend to be older practitioners and disproportionately male (only 4 out of the 45 respondents are female).

[iii] Though in Ruark’s case the disciplinary process would have been somewhat delayed while criminal proceedings were under consideration.