Regulatory System before the Legal Services Act 2007

In contrast, it was implied in Garbutt v Edwards^{[1042] [1043] that the conduct rules were binding, but not necessarily all the guidance or supplementary codes issued under the rules. The rules appearing in the Guide, however, often went beyond the Solicitors’ Practice Rules. The same applied to the other codes that were developed. The Client Care Code of 1999 or the Solicitors’ Publicity Code, for example, had a debatable legal status and could not be regarded as legally binding.[1044] Nevertheless, the 1999 version of the Guide firmly noted that Law Society guidance was ‘treated as authoritative’ by various bodies, including ‘the Solicitors’ Disciplinary Tribunal and the Court’. [1045] The legal status of the 2007 Rules was probably firmer, but they were not in place for long enough to attract significant judicial guidance.}

Codes of conduct are often conceived of as the basis on which professionals offer services to the public. There may therefore be perceived to be an implicit obligation to obey explicit and unequivocal rules of the code of conduct. Surprisingly, this propo­sition is open to question. Writers in several disciplines criticise approaches which reduce ethical decision-making to simply following rules.^[1046] Approaches which place heavy reliance on lawyers exercising their own judgement and discretion^[1047] strengthen the lawyer’s own ‘ethical autonomy’, but at a substantial risk to client autonomy.

iv. Making and Changing Rules of Conduct

Since it acquired rule-making powers in 1933, the Law Society’s rules had to be approved by the Master of the Rolls. The Courts and Legal Services Act 1990 established the Lord Chancellor’s Advisory Committee on Legal Education and Conduct (ACLEC).^[1048] The ACLEC, a body consisting of lawyers and laypersons, had to recommend approval of proposed rule changes relating to rights of audience and the conduct of litigation before approval by the Lord Chancellor and four designated judges. Government had wanted the Lord Chancellor alone to approve professional rules.^[1049]

By 1998, ACLEC was under attack from the Lord Chancellor. One of his con­cerns was the amount of time it took to obtain approval for change. The Access to Justice Act 1999 changed the rules to require the consent of the Lord Chancellor to any rule changes concerning audience rights and rights to conduct litigation. He also had the power to review rules he considered unduly restrictive, taking advice from the designated judges and the Legal Services Consultative Panel.^[1050] Consultation on rule changes was required, for example on competition issues, with the OFT and the Financial Services Authority (FSA).

C. Legal Services Ombudsman

Before 1991, solicitors were subject to the jurisdiction of an official called the Lay Observer. The post was established by statute^[1051] to deal with situations where complainants were dissatisfied with the profession’s response. The Lay Observer was replaced with the Legal Services Ombudsman (LSO) by the Courts and Legal Services Act 1990. The remit of the LSO was to consider complaints about the way legal pro­fessional bodies, including the Council for Licensed Conveyancers, the Institute of Legal Executives, Bar Council and Law Society,^[1052] handled complaints against their members. The LSO was appointed by the Lord Chancellor and was required to be a qualified lawyer.^[1053]

Although the LSO’s main task was to review complaints handling, he or she could also investigate the complaint itself.

On completing investigations, the LSO sent a written report to the complainant, the lawyer against whom the complaint was made and the relevant professional body. The LSO’s report was a public document and absolutely privileged, in the same way as a legal judgment. A failure by the lawyer complained of, or the professional body, to do what the Ombudsman ordered within three months could result in that failure being publicised and a further order for costs. The Ombudsman’s reports were not directly enforceable in any other way.

In 2004-05 the LSO reviewed 1,265 cases against solicitors. This represented just around 7 per cent of the total complaints made to the Law Society, an improve­ment on the figure of 10 per cent, which was common in the late-1990s. The LSO was dissatisfied with the way 38 per cent of these complaints were handled. Of 455 complaints against barristers, the LSO dealt with 174, but she was satisfied that nearly 79 per cent had been properly handled.^[1055]

In addition to reviewing complaints handling by the professional bodies, the LSO acquired the role of Legal Services Complaints Commissioner (LSCC), set up under the Access to Justice Act 1999, with powers to monitor and set targets for the Law Society complaints service. Despite the oversight of the LSO, most clients with a com­plaint about professional services were required to first use the procedures operated by the professions themselves.

D. Complaints

Complaints systems fall within broad definitions of regulation. The primary purpose may be to provide recompense to injured clients but they may also bring about changes in the parties complained about. One of the main ways by which the profes­sion enforces its ethical and regulatory rules is by receiving, investigating and acting on complaints received from clients or, sometimes, from other solicitors or the courts. Complaints and disciplinary procedures run by the professions were accused of being slow and providing inadequate redress to the consumer.

i. Complaints about Solicitors

a. Firms’ Internal Complaints Handling

The Law Society was keen that firms set up effective complaints systems in order to minimise the number of complaints. The OSS, the predecessor of the Complaints Service, dealt with some 12-20 complaints per 100 solicitors a year.^[1056] The requirement that firms have an internal complaints-handling system was first introduced in 1991. Solicitors were generally slow to comply. In 1997, 86 per cent of all firms stated that they had a formal complaints procedure, but in the case of single partner firms, only 66 per cent had complied. Only 29 per cent of solicitors had received any training in handling complaints.^[1057] The LSO Report noted that the Law Society’s attempts to encourage proper complaints handling at firm level had largely failed.

Research into solicitors’ firms’ complaint systems concluded that it is ‘probably a mistake to press solicitors to adopt systems which do not accord with their sense of professional obligation, and which, in the context of their particular practice, do not make economic sense’.^[1058] Research conducted for the Clementi Review noted that the requirements of the old Rule 15 (which preceded Rule 2 in the 2007 Code) were ‘either derided or misunderstood by a sizable proportion of the profession’.^[1059] Firms responded by not complying or complying grudgingly. Some were said to use incom­prehensible client care letters.

By the time the Solicitors’ Code of Conduct 2007 was enacted, the requirement for firms to have in-house procedures for handling complaints was reinforced by rules. Every firm had to have a written complaints procedure for clients and ensure that complaints were handled ‘promptly, fairly and effectively’.^[1060] Clients had to receive a letter setting out who to complain to in the firm, how complaints would be handled and within what timescales. They had to be given a copy of the procedure on request. Solicitors were not allowed to charge for handling complaints.

b. Complaints Handling by External Bodies

The Solicitors’ Complaints Bureau

Until 1986 complaints were dealt with directly by the Law Society. This led to the criticism that the process was more concerned to protect the profession rather than the public.^[1061] In 1986, the Society set up the semi-autonomous Solicitors’ Complaints Bureau (SCB). This was accused of being insufficiently independent of the Law Society and also of being very slow. It would not deal with complaints of negligence as the Law Society considered that these should be dealt with by the courts. While it would deal with shoddy work, this was not defined in written professional standards and clients found it difficult to establish that work was shoddy. The line between negligent and shoddy work was difficult to draw.

Criticisms of the SCB extended to its communications, which were seen as legalistic and evasive. According to both the Lord Chancellor’s Department and the National Consumer Council, the administration of complaints was not working.^[1062] In his 1996 Annual Report, the Legal Services Ombudsman (LSO) said that

[i]n... 1995... I expressed the view that, unless the professional bodies were able to deliver a higher level of consumer satisfaction with the way that complaints were dealt with, it was unlikely that self-regulatory complaints handling would survive into the next century.^[1063]

In the 1997 Annual Report the newly appointed LSO, Ann Abraham, warned that poor communication in dealing with complaints ‘pervades the dealing of both prac­titioners and the professional bodies with clients and complainants [which] suggests a... significant and deep-rooted introspection which fails to engage with the legitimate expectations of the contemporary consumer of legal services’.^[1064] Solicitors were not happy with the SCB, which they saw as favouring clients and as an expensive pub­lic relations disaster. The SCB cost £13,213 million in 1994-95, a rise of just over 23 per cent on the previous year.^[1065]

The Office for the Supervision of Solicitors

The SCB was replaced by the Office for the Supervision of Solicitors (OSS) in 1996. This was thought to be a last chance to retain a measure of self-regulation in the field of complaints. Complaints rose sharply at the end of 1997 and the delays in dealing with them once again became unacceptable.^[1066] The delays and the criticism, especially from the LSO, continued, leading to targets being set by the Lord Chancellor’s Office. The OSS was asked to deal with 75 per cent of complaints within six months, but by November 2003 the OSS was ‘falling well short of its agreed targets’.^[1067]

The Law Society attempted to remedy failings in the OSS by appointing its own lay Complaints Commissioner to audit the system, a post that lasted until 2005. As the LSO noted in her 2003-04 Report, reorganisations were welcome but ‘insufficiently robust’.^[1068] The LSO was satisfied with the Law Society’s handling of complaints in only 53 per cent of the cases brought to her. This was down from 67 per cent satisfac­tion in the previous year.

The penultimate complaints system operated by the Law Society before the Legal Services Act was the Consumer Complaints Service (CCS), created in April 2004. The quality of complaints handling had improved but the speed and quantity had declined since the previous year. The Law Society continued to fail all but one of the targets on time scales.^[1069] The immediate response of the government was to utilise a power, originally created by the Access to Justice Act 1999,^[1070] to appoint the LSO to the post of Legal Services Complaints Commissioner (LSCC). From February 2004 the LSO was charged with the task of reviewing the Law Society’s performance, setting targets and imposing penalties (of up to £1million) if necessary.

In May 2006, the LSCC fined the Law Society £250,000 for failing to improve com­plaints handling sufficiently and for not having a plan to do so.^[1071] The chair of the Law Society’s Consumer Complaints Board described this as being ‘wholly unreasonable’ and ‘outrageously disproportionate’.^[1072] Eventually, £30,000 of the fine was remitted when a plan setting targets for the CCS was agreed.^[1073]

The Legal Complaints Service

In October 2004 Sir David Clementi said, ‘I do not believe that the current system delivers sufficient independence from the legal practitioner, nor that it provides appropriate levels of consistency and clarity’.^[1074] Clementi recommended setting up an independent Office for Legal Complaints. The Law Society then separated its regula­tory and representative functions, placing the latter under an independent Solicitors Regulation Board, now the Solicitors Regulation Authority (SRA).

In 2006, the Law Society set up a separate Consumer Complaints Board (CCB) under the Solicitors Act 1974 and the Law Society Charter. This was to be respon­sible for the Consumer Complaints Service. The final change, in 2007, was to rename the CCS the Legal Complaints Service (LCS). It pledged to keep both sides better informed on the progress of complaints and to go online from September 2007.

Towards the end of its life, the LCS was dealing with more than 18,500 complaints a year. In April 2007, the Board agreed with the LSO that at least 67 per cent of complaints should be closed within three months of receipt and no more than 65 files should be open for more than 12 months. The LSCC criticised complaints handling in the year 2006-07, being satisfied with the conduct of only 68 per cent of the 1680 cases referred to her. While this was an improvement over previous years, she considered the service was ‘still well short of where a modern, customer focussed organisation should be’.^[1075] In June 2008, the LSC was fined £275,000 by the LSCC for having an inadequate complaints-handling plan.

ii. Complaints against Barristers

a. Bar Complaints Schemes

Until April 1997 there was no effective complaints system for barristers’ clients. Abel noted that the majority of complaints since 1957 were dismissed before reaching the Senate.^[1076] In 1979, the Senate rejected a recommendation of the Royal Commission that it should interview all complainants, a measure that might have improved the success rate.^[1077] In so far as a system did exist, its function was to alert ‘the Professional Conduct Committee to possible breaches of the Bar’s code of conduct’.^[1078]

Suspicions about the Bar’s receptiveness to complaints were reinforced by its treat­ment of those experiencing problems with advocacy. Because of the civil immunity from negligence claims until 2000, the Bar excluded advocacy from its complaints jurisdiction. Consumers obviously disliked the rule, but it also came under increas­ing criticism from lawyers and judges. For example, in Kelley v Corston, Lord Justice Judge commented,

the immunity of the advocate is not founded on some special protection granted by the court to the legal profession to enable lawyers to avoid justified complaints by dissatisfied clients... The immunity arises in very limited circumstances when the general public interest prevails against even a meritorious claim.^[1079]

In other respects, the Bar did not encourage complainants. There was no indication in the Bar Code of Conduct as to what should be done if a client or solicitor wished to complain, although it did set out, in an appendix, details of the workings of the Professional Conduct Committee. About 400 complaints were received by this com­mittee each year. After lengthy and often acrimonious negotiations^[1080] the Bar Council launched a new complaints system dealing both with matters of discipline and also with inadequate professional service. Heads of chambers had to ensure that chambers had a properly operated complaints procedure. Only complainants not satisfied after having used this system could use the Bar complaints system.

b. Professional Conduct and Compliance Committee

The 1997 reform introduced an improved but complex system with a Professional Conduct and Compliance Committee (PCCC). The procedure ran to 71 lengthy paragraphs with numerous sub and sub-sub clauses.^[1081] The Bar Council also appointed a lay Complaints Commissioner to vet all complaints and to send those that merited referral to the PCCC. This then referred cases of inadequate professional service to an adjudicating panel chaired by the Complaints Commissioner. Complaints against barristers rose by 25 per cent after the introduction of the new system. Of the 551complaints made in 1997, 140 were referred to the PCCC.^[1082]

In 1998 the Complaints Commissioner published a report on the new system that reached rather mixed conclusions. It concluded that the Bar had a good system in which the strengths outweighed the weaknesses.^[1083] The report noted, however, that

a very small percentage of barristers are disciplined as a result of criminal conviction. A slightly larger percentage apparently make mistakes through incompetence or cutting cor­ners. Overwork or laziness leads to mishaps. Arrogance and self-importance result in rudery and bombast. Sometimes these can cause real disadvantage and distress.^[1084]

Complaints, and references for action, continued to rise after 2000. There were 667 complaints against barristers in 2004 and 877 in 2005. In 2006-07, 166 cases were referred from the Bar complaints system to the LSO. She was satisfied that 84 per cent of cases had been satisfactorily dealt with.^[1085] Remarkably, there was no significant increase of complaints following introduction of the direct access rules.

While the Bar complaint system was potentially confusing for non-lawyers, it seemed to work quite well. In 2004, the LSO found the Bar complaints machinery to be reasonably competent.^[1086] It only needed to be made more responsive to the needs of complainants, less complex, more independent and more accessible.^[1087] Even the Clementi Report joined the chorus of approval.^[1088]

c. The Professional Conduct and Complaints Committee of the Bar Standards Board

From 2006 complaints had to be made to the Bar Standards Board and dealt with by the Professional Conduct and Complaints Committee (PCCC). Matters of professional misconduct were referred to the Bar Disciplinary Tribunal. Up until March 2011, after which date consumer complaints had to be referred to a Legal Services Ombudsman, the PCCC considered whether there was a realistic prospect of a finding of inadequate professional service. If there was such a possibility, but no realistic prospect of a find­ing of professional misconduct, it could direct that the complaint be referred to an adjudication panel to be dealt with as a case of inadequate professional services alone.^[1089]

Adjudication panels comprised two lay persons and two barristers. They decided whether, on a balance of probabilities, a barrister had provided inadequate profes­sional services. In terms of remedies the adjudication panel could direct the barrister to: ----- make a formal apology to the complainant for the inadequate service provided; ----- direct the barrister to repay or forego all or part of any fee rendered in respect of the inadequate service;

---- direct the barrister to pay compensation to the complainant in such sum as the panel shall direct not exceeding £15,000;

---- direct the barrister to complete Continuing Professional Development of such nature and duration as the panel shall direct and to provide satisfactory proof of compliance with this requirement to the Complaints Committee.

Where a barrister was directed to apologise to the complainant, the panel could direct that the apology was approved by the chair of the panel before being sent to the complainant. Appeals lay to a five-person panel containing two lay members and chaired by a QC.

Issues of professional misconduct had three possible outcomes, depending on sever­ity. The first level involved holding an informal hearing before two barristers and one layperson. If the complaint was upheld the panel could order compensation of up to £15,000 to the client for any element of inadequate professional service involved. More serious cases of professional misconduct were dealt with by a Summary Procedure Panel consisting of a QC, a barrister and a layperson or by the Bar Disciplinary Tribunal (BDT).

d. The Professional Conduct Committee

When the Bar lost jurisdiction over consumer complaints, the PCCC was reconsti­tuted as the Professional Conduct Committee (PCC). Its procedures are set out in Part 5 of the new BSB Handbook 2014 in the Complaint Regulations.^[1090] These give the PCC numerous powers, including the right to direct the investigation of complaints. It can determine whether any complaint discloses a potential breach of the Handbook, a potential case of professional misconduct or possibly satisfies the disqualification condition and, if so, deal with it accordingly.^[1091]

The rules provide that any complaint made against a BSB-regulated person, or against an individual working as an employee or manager of a BSB-authorised body, by or on behalf of a client must be referred without further consideration to the Legal Ombudsman.^[1092] This obviously reduces considerably the scope of the PCC’s work. Where a breach of the Handbook justifies an administrative sanction, the PCC can impose small fines. The maximum level of fine that can be imposed is £1000 on a BSB-regulated individual and £1500 on a BSB-authorised body.^[1093] Appropriate cases can be referred to the BDT.^[1094]

E. Intervention

In addition to other regulatory powers the professions had power to directly intervene in the conduct of firms’ and chambers’ businesses. These powers are usually reserved for extreme cases, those where a legal practice poses a threat to its clients, the public or the reputation of the profession. Whereas complaints systems were changed following the LSA 2007, powers of intervention remain solely with the regulators.

i. Solicitors

The Law Society, and subsequently the SRA, had powers to intervene in the conduct of the firm’s business under the Solicitors Act 1974, section 35. The specified cir­cumstances included those where the solicitor was suspected of dishonesty, adjudged bankrupt or sent to prison.^[1095] These powers could be used to prevent a firm from operating freely or at all. Documents could be possessed, finances frozen and monies due to the solicitor received if the Council passed a resolution.^[1096] Solicitors’ practising certificates could be suspended where there was a suspicion of dishonesty.^[1097]

The Solicitors Act specified the circumstances calling these powers into operation. They included the need for urgent action to protect clients, where dishonesty was suspected, where the solicitor was bankrupt, had been imprisoned or otherwise incapacitated or where he or she was practising without a practising certificate.^[1098] When exercising powers of intervention, the regulator is bound to preserve the confidentiality of clients of the firm. It cannot even disclose information to an insurer seeking evidence of a partner’s complicity in dishonesty, material which may affect its obligation to provide indemnity.^[1099]

Power of intervention in firms was exercisable where there was a breach of certain practice rules, in particular relating to the Solicitors’ Indemnity Insurance or Accounts Rules. Although a client complaint about a solicitor was insufficient, undue delay in responding to a complaint investigation could trigger intervention. The SRA conducted some 50 to 60 interventions a year, the majority in sole practitioner firms.^[1100] Solicitors were given written notice of the intention to intervene and eight days in which to object.

The High Court could grant orders withdrawing intervention. In Sheikh v Law Society,^[1101] a solicitor had committed breaches of the Accounts Rules. She applied for withdrawal of intervention on the ground that there was no evidence of dishonesty and the breaches were not serious. At first instance she succeeded, but the Court of Appeal held that the court should be slow to substitute its own views for those of the Law Society. The Law Society should look at the whole situation, including the likelihood of future compliance, bearing in mind the potentially catastrophic consequences of intervention for solicitors and their clients.

ii. Barristers

The Bar had less developed powers of intervention than solicitors, probably because barristers did not handle client money. The Bar Standards Board did initiate a Chambers Monitoring Scheme in 2008 to assess compliance with the Code of Conduct. Chambers and sole practitioners were required to complete the question­naire under the Code of Conduct.⁸¹ Failure to complete and return the questionnaire could result in disciplinary action being taken by the BSB against the head of chambers. Low levels of non-compliance were reported.⁸²

The Bar introduced an additional system in 2007, whereby poorly performing bar­risters could be referred to an advisory panel for help. Referrals came from solicitors, barristers or judges. This was not a part of either the complaints or disciplinary proce­dures. It was an intervention intended to provide assistance to struggling practitioners with a view to pre-empting a complaint.

III.