Lawyers Covered - September 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 August 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.

Court critical of "high octane" litigation tactics

In two recent decisions, the Court has been critical of certain litigation tactics deployed by parties.

First, Lord Justice Coulson in MEX Group Worldwide Limited v Stewart Owen Ford & Ors criticised the way in which the respondents presented its case on non-disclosure. The Court of Appeal judge said that the approach of making multiple allegations of non-disclosure was not a "sensible or proportionate way in which to address this sort of allegation". The Judge made the point that the parties should seek to concentrate on the allegations which are clear-cut and obviously important as otherwise there is a real risk that the best points are lost. The Judge concluded that the consequence of this approach was "trench warfare of the most attritional kind".

Second, the conduct of the claimants in Camran Mirza & Ors v CMS Cameron McKenna Mabarro Olswang LLP [2024] EWHC 2058 (Ch) was criticised by Master Kaye. The court heard that the claimants' representatives, Candey, had served an unsealed copy of the claim form at 11.07pm. Master Kaye said that she was "at a loss to understand on what rational basis issuing a claim at 11pm on 4 October 2023 was intended to help". Master Kaye went on to say that this "high octane approach is entirely inconsistent with the overriding objective".

These decisions are important reminders to litigators to carefully consider the litigation tactics they choose to deploy and that the Court (and the SRA) will be critical if they consider tactics are overly aggressive and fall below the type of conduct expected. Furthermore, use of such tactics may well have cost consequences for the offending parties.

The deployment of aggressive litigation tactics continues to be a "hot" topic following the SRA's recent thematic review of conduct in disputes, as well as the scrutiny on the legal advisors advising on the Post Office Horizon IT public inquiry.

Growth vs. client care: SRA’s warning on mergers and the risk to public trust

The SRA issued a warning notice on 17 June 2024 (Mergers, acquisitions and sales of law firms) to its regulated firms and individuals) setting out concerns about detriment to client interests as a result of some mergers or acquisitions. The warning notice sets out the SRA's view that client interests are paramount and sets out in detail the SRA's expectations from firms and solicitor managers appointed by administrators of law firms.

Read our analysis of the warning notice here.

One small step for AI regulation but is a giant leap needed?

The use of Artificial Intelligence (AI) remains an increasingly hot topic in the legal sector. With the possibility of it bringing great benefits to the sector, something with such powerful potential is likely going to have to be subject to significant regulation to protect the rule of law.

The government has turned its mind to this issue, taking an initial step towards regulation of AI by signing a Council of Europe Framework Convention on Artificial Intelligence. This framework has been a work in progress since 2019 and has been drafted by 46 members of the Council of Europe. The Council of Europe states that the aim of the Framework is "to ensure that activities within the lifecycle of artificial intelligence systems are fully consistent with human rights, democracy and the rule of law, while being conducive to technological progress and innovation." The framework is wide reaching, relating to public authorities and private actors.

Importantly, the framework appears to recognise that this is an area that is developing rapidly. It is therefore drafted to be 'technology neutral' as opposed to trying to directly regulate specific technology. The framework intends to create a series of rights and safeguards to achieve its aims. For example, it includes a requirement that notice is given when interaction is with an AI system as opposed to a human being.

The legal sector has long strived to balance protection of the principles of the rule of law against utilising technology to innovate and keep up with the demands of modern society. AI is now very firmly a key factor in this battle. The innovation side is moving rapidly and many law firms are already utilising AI for the benefit of their clients. As with all advancement, especially in the legal sector, we can expect that regulation will not be far behind. So far, the steps towards regulation have been somewhat small and preliminary, but in such a swiftly developing area, will great leaps soon be coming / needed to ensure the rule of law is upheld?

Conveyancing and the climate: check your precedents and comment on the consultation

ESG has been a real concern of businesses across all industries for some years now and law firms are no exception.  The SRA's current focus on workplace culture is arguably an emanation of the "social" strand of ESG. The "environmental" strand is the topic of a Law Society consultation opened on 19 September 2024: Climate risk and conveyancing.

The Law Society published a guidance note (The impact of climate change on solicitors) in April 2023 and its research has found that solicitors want more practical guidance on how climate risk affects conveyancing. The Law Society have answered the call by preparing a draft practice note, which has been released as part of the consultation, with an invitation to comment.

The draft practice note highlights three key risks arising from climate change that solicitors need to be aware of and, crucially, provides guidance about what advice solicitors should give. It is also a timely reminder for conveyancers and firms to ensure that their engagement letter addresses whether or not advice on climate risk is within the scope of the retainer and to ensure that their precedent reports on title are fit for purpose.

As the proposed practice note is likely to be deployed by claimants pursuing negligence claims arising from climate risks (albeit it is, at best, a suggestion of best practice), conveyancers and firms carrying out property work should consider and comment on the note, which can be done by completing this online form by 31 October 2024.

Junior solicitor struck off for dishonesty surrounding past employment

A solicitor (JH) admitted in 2021 has been struck off at a SDT hearing heard at the end of August.

JH was responsible for drafting and arranging the affirmation of witness statements in a matter at her previous firm. JH forgot to send the witness statements for signature to the respective witnesses. When her seniors checked in on the status of the witness statements, JH lied and said that she was waiting for the signatures from the witnesses. JH then falsified emails to pretend that she had sent out the witness statements.

After investigation, the firm terminated her employment. Subsequently, JH applied for a role at another firm, but failed to disclose the true reason for the termination of her employment.

On 28 August 2024, at a hearing before the SDT, the SDT accepted the agreed outcome between JH and the SRA and found the two allegations against her proven. JH was struck off and ordered to pay costs of £5,000. The SDT commented that a misrepresentation over the reason for leaving or being fired from a firm is similar to falsifying a CV. 

Solicitors should be very wary to ensure that they are honest in their representations surrounding past employment even if that entails hard truths or the risks are catastrophic.

Hong Kong: Court of Appeal considers allegation of bias against a Chair of Solicitors Disciplinary Tribunal  

In an important judgment in Miller (A Solicitor) [2024] HKCA 741, the Court of Appeal allowed the solicitor's appeal against an order of the Solicitors Disciplinary Tribunal (SDT). The SDT had fined the solicitor HK$370,000 for breaches of (among other things) the Solicitors Accounts Rules over a five-year period.

However, as part of his appeal to the Court of Appeal, the solicitor alleged that the Chair of the SDT had shown apparent bias in the disciplinary proceedings by seeking to influence him through a third party to admit all the disciplinary complaints in return for an adjournment or leniency in sentence. The third party was an experienced solicitor who was known to the appellant solicitor and the Chair of the SDT, but he was not acting in the matter. The Chair of the SDT had telephoned the third party and referred to the disciplinary proceedings. 

Having heard evidence from the witnesses who gave evidence in open court during the appeal proceedings, the Court of Appeal concluded that it – "would have appeared to a fair minded and informed observer that there was a nexus between the contents of the Disputed Telephone Conversation and the consequences that Mr Miller faced for not admitting the Complaints at the 1st Hearing.".  The Court of Appeal considered that the Chair should have recused himself. 

In a fully reasoned judgment, the Court of Appeal allowed the solicitor's appeal.  The Court also reduced the total amount of the fine to HK$250,000.

A cautionary passage in the judgment states (at paragraph 51): "As Chairman of the SDT, [he] should have refrained from disclosing or discussing any details of a disciplinary case, even a passing comment, to a third party.".  Such sentiments should be self-explanatory and are equally applicable to any tribunal member. In short, a tribunal member should be fair and be seen to be fair.

Additional Contributors: Catherine Zakarias-Welch, Sally Lord & Aimee Talbot