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10 Legal and Regulatory Issues for Law Firms to Consider in Managing an Investigation into Partner Misconduct

In recent years there has been a renewed focus on how misconduct allegations are managed by law firms. That focus has arisen for a variety of reasons, including cultural shifts resulting from the #MeToo movement, generational changes, heightened media scrutiny and regulatory pressures.

In this article, first published for ThoughtLeaders4 Disputes Magazine, Regulatory and Professional Discipline Partner Andrew Pavlovic and Partner and General Counsel Beth Hale outline the 10 legal and regulatory issues for law firms to consider when managing an investigation into partner misconduct allegations.

Once a complaint of misconduct is received, the situation can escalate extremely quickly. Internal and external pressure on management to send a strong message in relation to misconduct can result in decisions being made in haste, leading to accusations from the accused partner of procedural or substantive unfairness. It is vital that firms have a plan in place to ensure a robust and independent investigative process, which treats all sides fairly and is capable of standing up to external scrutiny.

  1. Independence and consistency of process – Control of the investigation and the firm’s response must be placed in the hands of people who are not involved in the allegations and all partners should be treated consistently as far as possible – irrespective of profitability or seniority – to minimise the risk of discrimination complaints.
  2. Consideration of suspension or other amendments to working arrangements – Firms should consider whether it is appropriate and necessary in all the circumstances to suspend anyone involved in the allegations or make any other temporary amendments to working arrangements, including reporting lines. These should not be knee jerk decisions and firms will need to consider carefully what powers they have to take any such action.
  3. Prompt regulatory reporting – Firms are required to self-report promptly to the SRA where facts or matters give rise to a reasonable belief that there has been a serious breach of the regulatory arrangements. In practice this means that once an allegation of misconduct has been made, firms are required to submit an interim report to the SRA promptly, stating what the allegation is and the steps they are taking to investigate the matter. If the SRA are reassured that the firm is dealing with the matter properly, then they will usually allow the firm to complete its own internal investigation and present the findings of that investigation to them in due course.
  4. Identity of the investigator –Where allegations are very serious and/or made against senior individuals, the firm will need to consider whether it is possible to conduct a properly independent investigation internally or whether it should be outsourced to an external investigator.In 2019 the SRA brought proceedings in the Solicitors Disciplinary Tribunal against a firm, a partner and the firm’s HR Director in respect of their conduct of an investigation into alleged misconduct by the firm’s managing partner. It was alleged that the firm/individuals had allowed the managing partner to exert influence over the investigation and that they had failed to put in place an independent process. Whilst the Tribunal ultimately found that the investigation had been fair, the level of on-going communication between the investigators and the managing partner throughout the investigation gave rise to the accusation of unfairness.
  5. Wellbeing of all parties involved – An investigation can be incredibly stressful, distressing and isolating for all concerned; not only for the complainant, but also the alleged perpetrator and potential witnesses. Firms should take ongoing, proactive steps to provide appropriate support and assistance throughout, and, if necessary, be willing to make reasonable adjustments to facilitate participation in an investigation.
  6. Prevention of victimisation and retaliation – Clear, robust instructions should be given to all parties involved in an investigation to ensure that neither complainants nor witnesses are subjected to any mistreatment as a result of their involvement in the process.
  7. Avoiding pre-determination – In September 2021, an independent review by Alison Levitt KC heavily criticised the approach taken by RICS’ General Counsel to an internal investigation into a boardroom dispute. The review found that the General Counsel had pre-determined the outcome of the investigation, failed to identify who the “client” was, and appointed as external lawyers a firm with whom she enjoyed a close relationship and were accordingly not sufficiently independent.
  8. Ensuring adequacy of the investigation from the outset – Once an investigation is complete, the firm will usually then be required to submit a follow up regulatory report to the SRA setting out the results of their investigation and whether any misconduct had been established. It should not be assumed that the SRA will simply accept the findings of the firm’s investigation, particularly if it has been carried out poorly, subject to delay, and/or has not been adequately documented. If the SRA decide that, due to the inadequacy of a firms’ investigation, they need to re-interview witnesses or reconstruct events, this can be a significant drain on the time and resources of firms, given the typical length of SRA investigations.
  9. Internal/external messaging – The investigation team should be as limited in size as possible to avoid the potential of internal/external leaks whilst the process is on-going. PR consultants often play a role, preparing either proactive statements within organisations or reactive statements to the press in the event of leaks. Any statements must balance the need to give individuals/employees reassurance that matters are being taken seriously whilst also ensuring that the confidentiality of the process is protected.
  10. Firm culture – Finally, the SRA published its guidance on workplace environments in February 2022. In that guidance the SRA makes clear that it will take action against firms where it is considered that cultural/systemic issues have contributed to individual misconduct. The guidance emphasises the need for firms to create a “speak up” culture, in which individuals who suffer harassment/unwanted conduct feel that they will be supported if they report it. Firms need to have clear reporting lines in place so that individuals know who to complain to in the event of issues. Firms also need to ensure that they take a “zero tolerance” approach to misconduct and do not allow complaints of bad behaviour to go unresolved or allow them to escalate.

In light of the above, when a firm does receive an allegation of misconduct, it is vital that they balance the need for speed with the importance of taking a measured and calm approach, avoiding any knee jerk decisions that could compromise the investigation, leading to reputational damage (both internal and external) and the risk of regulatory action.

This article was first published in ThoughtLeaders4 Disputes Magazine.

If you would like to discuss investigations into partner misconduct or have any questions arising from this article, please contact Regulatory and Professional Discipline Partner Andrew Pavlovic or Partner and General Counsel Beth Hale.