Self-Reporting for In-House Lawyers – What You Need to Know

A recent case in the Solicitors Disciplinary Tribunal (“SDT”) has highlighted the difficulties that in-house solicitors face when considering their self-reporting obligations, and whether they are being adequately supported by their employers when having to make self-reporting decisions.

In this news alert, Partner Andrew Pavlovic looks at the rules relating to self-reporting and sets out how in-house solicitors facing misconduct allegations can apply these rules, in circumstances where their employer will not usually be SRA regulated, and may not be regulated at all.

SRA V FOSTER

In SRA v Foster, an in-house solicitor working at BNP Paribas was fined £15,000 by the SDT for creating and using inappropriate, unprofessional, and offensive nicknames for colleagues, and using offensive and inappropriate language in the workplace. 

Whilst the facts of the case merit their own attention, from a self-reporting perspective it is noted from the Tribunal’s Judgment that the SRA were first alerted to the matter when an article was published in City AM, referring to the outcome of disciplinary proceedings taken against the solicitor. Whilst the SRA did not bring a separate allegation against the solicitor that he had failed to comply with his self-reporting obligation, there is reference in the Judgment to the solicitor being criticised (presumably by the SRA) for not self-reporting the disciplinary finding until after the article was published (paragraph 22).

THE SELF-REPORTING REGIME

There are requirements on all solicitors to notify the SRA of particular events relating to character and suitability, such as criminal offences and insolvency events, which are straightforward and accordingly not addressed further in this news alert.

However, with the SRA increasingly focussing on non-financial misconduct, most notably sexual misconduct but also other forms of misconduct such as bullying, harassment and counter-inclusive conduct such as that found/admitted in the Foster case, in-house solicitors who are the subject of internal disciplinary investigations and/or findings in relation to these allegations will need to consider whether their reporting obligations are engaged.

In this regard, Rule 7.7. of the Solicitors Code of Conduct (“the Self-Reporting Rule”) provides as follows:

“You report promptly to the SRA or another approved regulator, as appropriate, any facts or matters that you reasonably believe are capable of amounting to a serious breach of their regulatory arrangements by any person regulated by them (including you).”

Where misconduct allegations/findings are made in law firms, Rule 7.12 of the Code of Conduct provides that an individual will satisfy their reporting obligations by providing information to the firm’s Compliance Officers, be that the Compliance Officer for Legal Practice (COLP) or the Compliance Officer for Finance and Administration (COFA), who have their own obligations to ensure that reports to the SRA are made. Furthermore the Firm has its own self-reporting obligation. 

In practice, this means that it is the firm’s COLP/COFA who have to make the decision as to whether an allegation/finding is serious enough to trigger a reporting obligation, which requires (among other things) a consideration of the facts known at the time, whether those facts give rise to a reasonable belief that the alleged misconduct has occurred, and an assessment of seriousness by reference to the SRA’ s Enforcement Strategy.

In-house solicitors working in non-SRA regulated firms will obviously not have this infrastructure, and may not have senior individuals who they can turn to for guidance to assess whether something is reportable to the SRA. Some in-house solicitors may work in regulated sectors (for example the FCA) which have different reporting requirements which do not align with those of the SRA. Alternatively, they may not work in a regulated environment at all. 

As a result, they may find themselves having to make difficult judgment calls as to what is reportable with little/no support. Whilst SRA guidance on solicitors reporting themselves does indicate that regulatory or disciplinary findings may need to be brought to their attention, this does not mean that all disciplinary findings will need to be reported, and although the SRA enforcement strategy indicates that individuals (and firms) should “err on the side of caution” when considering their reporting obligations, an assessment of seriousness will still need to be undertaken. 

The Self-Reporting Rule also requires the individual to report “promptly”, meaning that the in-house solicitor will need to form a view on these issues quickly, or at the very least be able to explain the delay, in the event that something is reported months after the triggering event has occurred. The SRA’s Enforcement Strategy does indicate that, depending on the nature of the allegations, the obligation may be triggered before an investigation had concluded.

Finally, the Self-Reporting Rule also applies to the reporting of others. It is not known whether the recipients of Mr Foster’s conduct were solicitors, or whether solicitors were witnesses to such conduct, but when incidents occur, in-house solicitors working in teams may need to consider whether the conduct of a colleague is reportable.

HOW CAN IN HOUSE LAWYERS ENSURE THAT THEY COMPLY WITH THEIR OBLIGATIONS?

It follows from the above that where misconduct allegations and/or subsequent disciplinary findings are made against an in-house solicitor, they will need to consider their reporting obligations carefully. Steps that could be taken include:

• Consulting others – In-house solicitors may wish to consult with fellow SRA related colleagues, particularly more senior colleagues such as heads of department, who may be more well versed in the relevant SRA Rules/Guidance. However, there may be circumstances where this is not possible, for example where a confidential investigation or disciplinary process is taking place. It is also worth noting that, as stated above, those colleagues will also have reporting obligations, and there may be potential for friction between colleagues if their views on whether something should be reported are not aligned.