The threat of intervention

It is fair to say that modern practice as a solicitor has its fair share of stressful situations but one of the most stressful and emotional events is the threat of intervention.
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In this article, written by solicitor Richard Nelson, we outline some of the key issues to consider if the threat of intervention is likely.

Initial free advice is available from The Solicitors Assistance Scheme 

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If the SRA receives information that there has been misconduct at a solicitor’s practice or that the interests of the public or the profession are at risk it is likely that there will be an investigation which can result in an intervention. Whilst this can be extremely daunting it is important to remain calm and thoroughly prepare for the investigation.
Schedule One of the Solicitors Act sets out the grounds required for the SRA to close down a practice. This is known as an intervention. It is important to take early steps to prepare to challenge any suggestion of intervention so it is necessary to be able to spot the threat.
  • Grounds for intervention

    The grounds for intervention include the inability of a sole principal to manage the practice due to illness, and abandonment of a practice, but more surprisingly any breach of the Solicitors Accounts Rules or the profession’s regulations.

    First, as with strike off by the SDT, it is important to note that dishonesty is not required, although the suspicion that any principal or any employee of the practice has been dishonest is itself a ground.

    Dishonesty on the part of anybody in the practice should be carefully considered particularly where it appears that there is a danger that the dishonesty alleged is the tip of the iceberg.

    Failure to deal firmly and without delay on receipt of evidence that an employee has been dishonest can be an aggravating factor.

    If there is a shortfall in client account the accounts rules require you to make good that shortfall immediately and if necessary from your own resources. Failure to do so increases the risk that the SRA will step in.

    It will cause the SRA extreme concern if the practice looks as if it is shambolic, or the accounts are not properly maintained, and in particular that the reconciliations are not up-to-date, or have been showing shortfalls which have not been addressed.

  • Communication from the SRA

    Two of the indicators that intervention may be considered come from the SRA. If the SRA notify you that they are to visit your practice, (or in Covid times going to commence an investigation remotely,) such a letter will usually give you 14 days notice.

    If the notice period is only 7 days it is a clear indication that the SRA believe that something seriously untoward has occurred. Less than 7 days notice or arriving without notice is a clear indication they suspect dishonesty or other serious breaches.

    The second indication is reference to or mention of Schedule One or section 15 of the Solicitors Act. That gives clear notice that intervention is under consideration.

    Following the investigation it is normal for the solicitor(s) to be invited to comment upon and/or answer questions upon matters found by the investigator. Usually replies are required within a period of 14 days although that time limit can be extended upon request. A shorter response time may indicate that more serious action is being considered.

    It is always important to take advice if you are the subject of an investigation and particularly if you are called upon to respond to written questions or requests sent by the SRA.

    There is no right to silence and there is a regulatory obligation to cooperate fully with the SRA.

    It is by no means inevitable, even in circumstances where the SRA are considering intervention, that the resolution will be passed. Regulatory practitioners are often able to persuade the SRA not to take this course.

    If you are going to take advice do not send your response before you have seen your solicitor. If you are going to draft and submit your own response without taking legal advice the golden rule is that you should never send the response on the day that you draft it because when you reread it the next morning you will almost inevitably spot errors or make changes.

    You should also be aware that being close to the events there is a significant danger you will presume knowledge of facts, or express yourself in an ambiguous way, the meaning of which is obvious to you but may be unknown to or misunderstood by any third party.

  • Stages of intervention

    If an intervention resolution is passed the first the principals of a firm will know is that their bank accounts have been frozen. This will be both the office and client accounts. The next stage is that a fax or email will be sent notifying the firm that the SRA has decided to intervene into the practice and has appointed a solicitor agent to attend the office to take possession of the files and records. This means that your practice has been terminated and you should not deal with or dispose of any material or cases.

    In effect the agent will attend the premises and will ask the staff to assist to gather together the client files and the office records including the hard drives of the computers which will then be uplifted and transported to the offices of the agent.

    The staff will then be sent home. They will not have gone through a  redundancy consultation and in due course may seek to make employment claims against the firm.

    The principals may or may not be asked questions to assist the agent to understand how the practice has been managed. The agent will enquire about immediate commitments such as court hearings. Any clients who telephone the office will be notified that the practice has closed and that they should find an alternative solicitor to advise and represent them.

    The agent will notify all current clients of the firm that the practice has closed and that they should find replacement solicitors and will notify the court and the legal aid agency and any other interested parties accordingly.

    The practice has closed and although the principals will be entitled to submit bills to the clients any money received will be taken and held by the SRA.

    Clients who are owed money held on client account will be told to claim against the compensation fund. One of the first steps to be taken by the agent’s firm will be to reconcile the ledgers and the accounts and to establish whether there is a shortfall.

    Clients who have funds in a general client account which is deficient (ie there is a shortfall for any reason) will only be entitled to receive a proportion of their money back from that fund unless and until the balance is made good.

    Interventions usually give rise to large numbers of complaints and later to awards by the Legal Ombudsman. These awards are payable by the principals of the firm because although they are insured risks, the amount of the awards usually falls within the excess on the policy.

    Although there is a discretion exercisable by the SRA it is usual to suspend the practising certificate of every principal.

    This means that they may not practise as solicitors and may not be employed or remunerated by any solicitors’ practice without the written consent of the SRA.

    If there is a breach of this both the individual solicitor and any firm which has employed or remunerated them is guilty of misconduct. The minimum sanction used to be that the employing party had themselves to be suspended or struck off, and although the minimum sanction has now been removed the breach is still viewed as serious.

    It is open to a suspended solicitor to apply for permission to practise and for restoration of their practising certificate but if granted the certificate will be subject to conditions restricting the activities of the solicitor. There is likely to be a time lapse of at least six weeks before the application is processed by the SRA.

    The intervention resolution usually refers the conduct of the named solicitors to the SDT. Each solicitor named is personally liable for the cost of the intervention.

    In circumstances where the investigation has not been concluded it will continue following the intervention, and further information will be gathered by the SRA as the firm’s papers are examined.

    After an intervention there is a longer delay before the matter can be listed before the SDT. Further breaches of the regulations and accounts rules may become apparent as the documents are examined. Further misconduct may be committed by the suspended solicitors particularly if they fail to comply with orders of the Legal Ombudsman.

  • Support

    If you are facing an investigation or intervention, initial free advice is available under the Solicitors Assistance Scheme.

    You can also contact LawCare for emotional support on 0800 279 6888, email [email protected] or via www.lawcare.org.uk

Richard Nelson is a solicitor in private practice at Richard Nelson LLP specialising in solicitors disciplinary, regulatory and practice management matters. He is a member of the Solicitors Assistance Scheme and the Regulatory Processes Committee of The Law Society. Any comments made or views expressed are his own and not those of or on behalf of any other organisation or party.

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