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Ethics guidance

New duties for employees and firms

  1. The SRA issued this guidance in March 2009. The guidance does not form part of the rules and is not mandatory, but the SRA may have regard to it when exercising its regulatory functions. Solicitors and others subject to the rules who do not follow the guidance may be required to demonstrate how they have nevertheless complied with the rules.

    Who should read this guidance?

  2. This guidance is most relevant to any person who is (as defined in the Solicitors' Code of Conduct):
    • a recognised body, a "manager" or employee of a recognised body, or
    • a recognised sole practitioner or the employee of a recognised sole practitioner.
  3. It is relevant to all employees (even if non-qualified and non fee-earners) because the rules now directly affect them all. It is relevant to recognised bodies, "managers" of a recognised body and recognised sole practitioners since they will need to ensure that staff receive appropriate training.

    Background

  4. The Legal Services Act 2007, by amending the Solicitors Act 1974 and the Administration of Justice Act 1985, extends the SRA's rule making power to apply to:
    • employees and "managers" in recognised bodies, and
    • employees of recognised sole practitioners.
  5. This is an important plank for firm-based regulation.
  6. Rule 23.01(1)(d) of the Solicitors' Code of Conduct applies most of the rules, generally, to employees. Note that the rules do not apply to non-solicitor employees employed outside England and Wales, except for registered European lawyer employees who are employed elsewhere in the UK. Some rules, however, by virtue of their wording or their subject matter and context, will have no, or only limited, application to particular employees. For example, employees who are neither fee-earners, nor in direct contact with the firm's clients will be subject to a narrower range of obligations; however, employees who are fee-earners (whether or not legally qualified), and those who are in direct contact with clients will be subject to a wider range of obligations; and solicitor employees will be subject to further obligations.
  7. Rule 5.01(1)(i) (supervision and management responsibilities) places a clear responsibility on "managers" to exercise appropriate supervision over all staff and to ensure training of individuals working in the firm to maintain a level of competence appropriate to their work and level of responsibility. This means that "managers" will need to ensure that employees are trained on the requirements of the rules to the extent necessary for the roles they undertake in the firm. Firms may be required to demonstrate that they have done so.

    Don't panic!

  8. In most firms, these changes and the need for "managers" to provide appropriate training should not present a new burden. For example, instructions and information given to employees (usually in the office manual) are likely already to cover the general, basic obligations on all staff (e.g. the need to keep clients' affairs confidential and to behave with integrity), and also those obligations which impact on more specific, usually fee-earning, roles (e.g. checking for conflicts of interests and the giving of undertakings). Although firms should draw the attention of their staff to the relevant provisions, they can reassure staff that the SRA will be proportionate and targeted in the way it exercises its powers (the SRA has published information to be given to employees by firms). The primary responsibility for ensuring compliance with a firm's regulatory obligations rests with the firm itself. However, there may be instances in which there is evidence of personal culpability where the SRA may wish to investigate an individual as well as, or instead of, the firm. The criteria include instances of dishonesty and serious misconduct where the individual bears some direct, personal responsibility (e.g. there has been recklessness). (For the criteria, see Legal Services Act: New forms of practice and regulation – Consultation paper 16 – Better regulation: A new approach to regulating legal services firms and solicitors (PDF 12 pages, 94K), "Annex 2: Criteria to determine the focus of an investigation".)
  9. So, the direct application of the rules to all employees makes less difference than might initially be supposed. The changes do impose a direct obligation on an employee to comply with those rules which apply to him or her. However, employees have previously been, in effect, obliged to comply with the rules—failure to do so would normally put the firm's principals in breach, and will do so still. The pre-existing powers under section 43 of the Solicitors Act in serious cases (e.g. stealing client's money) already permit the SRA and the Solicitors Disciplinary Tribunal to make an order which can amount to a lifetime ban on the employment of an employee by SRA-regulated firms. This power will remain. Note that it is now possible for the SRA , for example, to rebuke the employee or impose a fine of up to £2,000. In the most serious cases, the employee may be disciplined by the tribunal.

    More help

  10. For the rules and guidance, see the Solicitors' Code of Conduct. You may find useful the area of our website that deals with the Legal Services Act—www.sra.org.uk/LSA. Help is also available from our Ethics Guidance Team.

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