Lawyers Covered - October 2024

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered! Welcome to the October edition of our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

Stop press: New legislation - requires immediate action

A new proactive duty on employers to take reasonable steps to prevent sexual harassment will come into force on 26 October 2024. It will apply to UK employers and some non-UK employers. Is your business ready? 

This is a significant change designed to root out and tackle the causes of sexual harassment at work. Failure to comply with the new law carries significant legal, reputational and financial risk. Complying is more than just a "tick box" exercise – you will need to take business-specific steps tailored to your organisation, as well as some general steps, which may include the creation and implementation of:

1. auditing and monitoring programmes
2. independent reporting lines
3. record keeping and regular reviews of the same
4. effective training programmes
5. fit for purpose policies in relation to both employees and third parties such as customers
6. measures to support a "speak-up" culture.

Here is our recent article about this duty. The deadline is fast approaching. 

Please get in touch – we can help. Our market leading employment, engagement and equality team has decades of experience in supporting clients on these matters. We can provide guidance and support in the creation and implementation / roll out of the above, as well as advice on anything else your organisation might need to do to ensure its compliance with the new duty to ensure that you are ready.

When you know they know, but they don't know that you know what they know: an exploration of knowledge under section 14A Limitation Act 1980

In Kay v Martineau Johnson, the Claimant (Ms Kay) sought damages from Martineau Johnson (the Firm) arising out of allegedly negligent advice in her divorce proceedings, which settled on 25 April 2008. Ms Kay issued her claim almost 15 years later, on 6 March 2023.

The parties accepted that primary limitation on Ms Kay's claim had long expired, as of 25 April 2014 (six years after accrual of the cause of action). Ms Kay sought to rely on (1) section 14A of the Limitation Act 1980 (LA 1980), i.e., the secondary limitation period of 3 years from the date when she said she acquired the requisite knowledge to bring a claim, and alternatively (2) section 32 LA 1980, alleging that the Firm had deliberately concealed facts relevant to Ms Kay's cause of action and that the limitation period did not start to run until Ms Kay discovered (or should have discovered) that concealment.

The High Court rejected both of Ms Kay's arguments, and the claim was dismissed as time-barred. HHJ Russen KC's judgment is a thorough discussion of the key authorities on both secondary limitation and deliberate concealment, and worth reading in depth.

On the s14A argument, Ms Kay was required to prove that she lacked the relevant "trigger knowledge" that might reasonably lead her to consider she had a claim against the Firm, until 6 March 2020 (three years before she issued). The court held that Ms Kay had in fact had cause to make enquiries and seek advice on her position some time before 6 March 2020, and accordingly by the time she issued her claim, she had had the requisite knowledge for more than 3 years. She had had suspicions that her divorce deal might have been an undersettlement "by no later than the end of 2009", which had caused her to return to the Firm for advice on whether the deal could be set aside. Interestingly, the Court also rejected Ms Kay's plea that she did not have the necessary financial resources to obtain advice at the point when secondary limitation began to run; the Court held that such subjective, personal characteristics were not relevant to whether it was reasonable for her to seek advice.

On deliberate concealment, the Court said there was "simply no evidence" to support Ms Kay's case, because it clearly did not occur to the firm that there was anything potentially wrong with the settlement in 2008 or 2009 when Ms Kay acquired knowledge to bring the claim.

Changes to the SRA's Business Plan: increased costs transparency and guidance on bulk claims

The SRA's recently released 2024 – 2025 Business Plan and Budget contains several changes following consultation outlining the SRA's changing priorities around transparency for consumers on costs and a new, tailored approach to bulk claims.

The conclusion reached from the SRA's recent stakeholder perception research (soon to be published) is that transparent cost structures are a crucial driver underpinning confidence and trust in the legal profession.  The SRA will build on significant work already undertaken in previous years (including the introduction of the SRA Transparency Rules in 2019), which could mean that the rules around costs transparency could be extended into other areas of law.  Given that family and personal injury were in the initial draft but did not make the final list, it is a reasonable assumption that any expansion will encompass these areas first.  Having said that, caution is being exercised in areas such as family law, where the advertised price of services may influence a consumer's decision to engage a lawyer at all.  The Transparency Rules were deliberately focused on more commoditised services, such as conveyancing, and there is real concern that mandating it for more contentious areas may force firms to advertise a broad range of costs – which may sufficiently deter consumers that an access to justice issue arises.  The SRA will further its research into this area to understand what helps consumers make informed choices, rather than rolling out further requirements for firms before the impact can be fully understood. 

In addition, the SRA aims to consider a long-term framework on bulk claims litigation in the wake of the high-profile collapse of SBB Law, following which hundreds of residents are facing large legal bills after pursuing 'no win no fee' compensation claims which fell apart when SBB went into administration owing more than £200m.  Given the "significant detriment" caused to consumers – and that the SRA considers bulk claims could pose an increasing risk to the public – it intends to scope further work to address this issue in the near future.  At present, guidance on issuing many claims on a single claim form is being considered.   

These changes to the SRA's business plan will inevitably put its £157m budget under strain and an increase to the practising fees for 2025/26 to cover any shortfall cannot be ruled out.

LeO Tackling Legals-Costs-Iceberg with New Guidance

One in ten complaints to the Legal Ombudsman (LeO) relate to the amount of legal fees consumers are being asked to pay. The recent high-profile cases involving legal fees has drawn the spotlight even closer on costs.

The LeO has been taking steps to tackle the rise in complaints. This includes issuing new guidance to legal providers, consumers and their representatives (Complaints about legal costs). The new guidance seeks to inform interested parties on the types of disputes that can arise, how best to resolve them, and what can be done to prevent complaints arising. In many cases, consumers are represented by firms instructed to reclaim legal fees on the consumer's behalf, and their actions have frustrated solicitors on the receiving end. The LeO expects those firms to act in a professional and constructive way and that complaints are only pursued where it is likely that a consumer has unfairly lost out. Likewise, solicitors receiving requests for information need to respond constructively.

First and foremost, the LeO recommends that to avoid complaints arising from legal fees solicitors should ensure consumers, from the start, fully understand what they would or might have to pay in legal fees. The new guidance also provides helpful case studies highlighting possible issues and reiterates the LeO's stance on success fees and Conditional Fee Agreements.

Hong Kong: Law Society announcement regarding complaint information and process

In his weekly letter to the profession, dated 5 September 2024, the President of the Law Society of Hong Kong announced "Reform Initiatives" regarding the Law Society's compliance function. 

Solicitors and registered foreign lawyers in Hong Kong are regulated by the Law Society. There are approximately 13,200 solicitors, 860 trainees and 1450 registered foreign lawyers. The compliance and registration function of the Law Society is its biggest department.

The reform initiatives appear to be the start of a process and involve:

• the publication of complaint related information (on the Law Society's website: "Complaints of Professional Misconduct/Statistics") – such as statistics on the number and nature of complaints in the first half of 2024;
• a summary of decisions of the Solicitors Disciplinary Tribunal in the last few years (the Tribunal is an independent statutory body); and
• a commitment to acknowledge receipt of a complaint within three working days.

The timing of the President's letter is interesting given previous concerns that the Law Society's complaint handling process can be too slow and inefficient. These concerns are not without some justification. More valuable time and resources could be focused on serious complaints involving (for example) – alleged misappropriation of client funds, serious breaches of Solicitors' Accounts Rules and incidents of serious professional misconduct.

While the announcement came in the form of a "President's (Weekly) Letter", the Law Society's senior management will have seen it prior to publication.  It appears (at the time of writing) that the position of "Director of Compliance" is "vacant"; which may be a coincidence to the announcement – however, lawyers hear of coincidences but do not often see them.

A more efficient way also needs to be found to dismiss complaints that are unmeritorious or raise trivial matters. Reform of the complaint handling process is overdue and in the public interest; so that more time and resources can be spent on investigating serious complaints.