Dishonesty

Introduction

Purpose and status of this guidance

We explain in this guidance how we deal with concerns that a person we regulate may have acted dishonestly.

This guidance should be read in the context of decision making at the SRA and other guidance documents. It is a living document and will be reviewed and updated as appropriate. It reflects our approach to our regulatory role, and any departure must be capable of justification on the individual facts of the case.

Dishonesty and the SRA

The courts have made clear that the standard of honesty required for solicitors is that they may be "trusted to the ends of the earth".1

Whether or not someone has acted dishonestly is very important because clients and all others who deal with solicitors and law firms have to be able to trust them. For example, they:

  • are relied on by the courts to be honest in how they deal with cases
  • often give important evidence in court cases
  • deal with large amounts of other people's money
  • help people in difficult and distressing situations such as divorce, child protection and defending a criminal case
  • deal with buying and selling many people's most valuable possession, their home
  • are important to the economy in dealing with a wide range of legal matters for businesses, from drafting contracts to helping with setting up pension funds.

A finding that someone we regulate has acted dishonestly is a serious matter. The courts have indicated that confidence in the legal profession as a whole, its collective reputation, is more important than the interests of one lawyer.2 For that reason, as well as to ensure the public is protected from any repetition of the offending behaviour, a finding of dishonesty against a solicitor is likely to result in the most serious disciplinary sanction, being struck off the roll.

It may also act to protect the public more widely. For example, if the person intends to work in another industry such as financial services, where public protection is very important, our decision can be taken into account by the regulator in deciding whether to allow them to work3. Or they may already work in another profession, or industry that is regulated and the regulator there might want to take action based on our decision.

The test we apply

Many different behaviours may be considered dishonest. Some examples include:

  • taking or using someone else's money without their knowledge or agreement. There may be dishonesty, even if the solicitor did not intend to permanently deprive the other person of their money4
  • lying to, or misleading someone, such as telling a client that their case is going well when it has in fact failed
  • knowingly bringing a false case to a court
  • helping other people to act improperly, such as by giving credibility to a dubious or suspicious investment scheme run by others
  • giving false information to the firm's insurer5
  • misleading a court or tribunal
  • misleading a regulator6
  • lying on a CV
  • misleading partners in the firm 7
  • backdating or creating false documents.

When considering if conduct is dishonest, we apply a test which is similar to that used in the criminal courts8 and is well established in case law.9 We will consider people to have acted dishonestly if they:

  • acted dishonestly by the ordinary standards of reasonable and honest people, and
  • were aware that by those standards they were acting dishonestly.

This, therefore, involves two decisions. The first is whether what the person did would be considered by the ordinary standards of reasonable and honest people to be dishonest. The standards to be applied are of reasonable and honest people as a whole and not any particular group.

The courts have rejected arguments that the standard of honesty can be based on how others in the same profession or industry behaved.10 Whilst in a medical case it was decided that the test for professional disciplinary proceedings should refer to the standards of 'reasonable and honest doctors' this was held in another case to have no practical effect. The standards of regulated professionals, who have to comply with rules that set high ethical standards, are: 'at least as scrupulous about integrity in [their] professional work than the population at large might be' and what is important is to 'attribute to any theoretical arbiter enough knowledge of the context and purpose of the activity involved to allow an informed judgment to be developed.'11  

However the way colleagues and peers behave, might be relevant to the second decision; whether the person realised that they were acting dishonestly.12 In considering this, we look at the person's state of mind and will take into account, for example, any mental health issues. This does not, however, mean that individuals are free to set their own standards.

The test for dishonesty comes from case law and it can change, depending on the circumstances. In a case of dishonestly assisting a breach of trust, the second, subjective test was not strictly applied and it was sufficient if the person's knowledge of the transaction meant that his participation was contrary to normally acceptable standards of honest conduct. The test did not require him to have reflected on what those were.13 However, generally we apply both parts of the test.

Even if a person we regulate is not found to have acted dishonestly, their behaviour may still be considered as serious misconduct, and could comprise a lack of integrity where, for example, they did not appreciate the distinction between honest or dishonest standards or were reckless as to the issue14 , and if so we will take action against them to protect the public, as can be seen in example 115

Example1

A young solicitor is accused of being dishonest. He admits that he has been guilty of misconduct, but not that he was dishonest. He sent Wills to clients for them to sign and when the clients returned their Wills, he and the senior partner in his firm signed them as the witnesses. He did this about twenty times. The senior partner, who has since died, had told him that this was normal practice because it was more efficient for the clients. He said that it avoided them having to ask relatives to witness their signing of the Will, which he said "could cause arguments and legal problems". The young solicitor says that other solicitors in the firm had also told him this approach was fine and argues that since it was normal practice, the first part of the test for dishonesty did not apply. The SDT rejects this argument. Ordinary and reasonable people would consider what he did to be dishonest. The SDT accepts that he did not realise this, because of what he had been told and does not find him to have acted dishonestly. However, his behaviour was serious misconduct and could well cause problems for clients whose Wills have not been properly witnessed. He is suspended from practising as a solicitor for two years.

How the SRA deals with dishonesty in practice

We recognise that allegations of dishonesty are a serious matter and ensure that they are subject to careful scrutiny.

Whether or not someone we regulate has been dishonest is relevant to a wide range of our work. For example:

  • If we bring a case before the Solicitors Disciplinary Tribunal and prove that a solicitor acted dishonestly, they will almost invariably be struck off. 16
  • If we find that an employee of a law firm, who is not a solicitor has acted dishonestly, we will almost invariably disqualify them from working in a firm we regulate in the future, or decide that they can only work in a firm we regulate if we grant them permission first.
  • We can intervene into a law firm if we have "reason to suspect dishonesty" by people within the firm. Read our guidance on intervening to protect clients .
  • If we find that a person has acted, or may have acted dishonestly in some way, we may refuse to accept an application they make to us such as to become a solicitor, or to manage or own a firm. Read our guidance on authorisation of Firms, and approval of role holders.
  • We can pay grants from our Compensation Fund to people who have lost money because of the dishonest behaviour of someone we regulate.

Although we will always apply the same legal test, how we approach dishonesty in practical terms will vary in different situations.

Intervening into a law firm

We can intervene into a firm for a number of reasons, but one of them is that we have "reason to suspect dishonesty" by an individual in the firm. That does not require final proof of actual dishonesty, because it recognises that we sometimes have to take action to urgently protect clients and others. The risks arising from a solicitor suspected to be dishonest are very serious.

We will decide on the balance of probabilities whether we have reason to suspect dishonesty. It is important to remember that in such a case, we do not decide that the person actually acted dishonestly, but simply that we suspect it. We will only then go on to intervene into the firm if we decide it is necessary having balanced the public interest of taking action, against the impact on the solicitor or firm. Following a decision to intervene, the solicitor will usually be prosecuted at the SDT and it will decide whether the individual actually acted dishonestly.17

Disqualifying someone from working in a law firm

In contrast, if we need to use our powers to prevent a person from working in a law firm, (completely, or without our agreement first) we may allege that the person has acted dishonestly. We will make the decision as to whether they have acted dishonestly on the balance of probabilities. Our powers to disqualify, or control who works in firms are wide and do not require a finding of dishonesty, although this is one of the most serious grounds for action.

Example 2

Miss C is not a solicitor, but has worked in law firms for 20 years. She is very experienced in dealing with conveyancing. The partners in the firm report to us that they have found that she has not been registering clients as owners of houses they have bought. She has been hiding letters asking about this. She has written to clients incorrectly telling them that their house has been registered, or that there is delay because of inefficiency by others such as the Land Registry. She admits that she "got into a mess" and "behaved stupidly". She argues that she was not dishonest, because she was simply under too much pressure at work and tried to give herself more time by misleading clients. The partners in the firm are fairly sympathetic, but provide us with documents showing that Miss C has done this more than 50 times over three years. We consider her arguments carefully and conclude that there is clear evidence of her lying to clients and other people. We decide that she acted dishonestly and that she can only work in law firms in the future if she has our permission. We also decide to impose a fine on her.

Applications to us

Examples of applications we deal with where questions of dishonesty may arise, include where someone asks us to allow them:

  • to be admitted as a solicitor
  • to be the owner or manager of a firm
  • to be the compliance officer of a firm
  • to open a new law firm, or to change its owners or managers
  • to have their annual practising certificate.

Specific rules apply to each application. If we are concerned that the person applying to us has acted improperly, how we deal with that will depend on the facts of the case.

For example, sometimes we will aim to prove that the person actually acted dishonestly. In other cases, we may simply refer to the risk that the person may have acted dishonestly, because the actual decision about that will be taken separately.

Example 3

Mrs A applies to us for her annual practising certificate. She is not currently working, but wants a practising certificate to try to get a job or to set up a new firm. She has been investigated by our enforcement team as a result of a complaint from her previous employment and they have prepared a report which alleges very serious dishonesty by her, including that over £1 million has gone missing. She strongly denies that she has done anything wrong and argues that she is the victim of a fraud by other people. We are now bringing a case against her at the SDT. When we decide on her application for a practising certificate, we will not decide whether or not she took the £1m. The SDT will decide that. However, to protect the public, we have to take account of the risk that she has acted improperly and perhaps dishonestly. Also, if she realises that she is likely to be struck off by the SDT, she might want to work in a law firm in the meantime to steal more money. We consider refusing to give her a practising certificate at all, but in the end give her a certificate that allows her only to act as an employee of a firm where she cannot control or take any client money.

Example 4

Ms Y wants to be admitted as a solicitor. When we are looking at her application, we do some research and see that she was convicted of assault three years ago for which she was fined £1,000. It seems to have been a family argument that spilled out into the street. She was charged with a much more serious offence, but the court was sympathetic. She had been in a difficult situation but had over-reacted and punched someone in the face. One of our concerns is that Ms Y did not mention this conviction in her application form. In fact, she said she had no convictions. When we ask her why she did not mention it, she says she thought she did. She says that her sister, who is a doctor, had filled in the form for her. Ms Y also says that she herself posted a letter to us enclosing a copy of the certificate of conviction. We have not received it. She says it must have been lost in the post and sends us a copy. We contact her sister who says that she knows nothing about any form. She signs a statement saying that she has had no contact with Ms Y since the assault which she thinks was Ms Y's fault. We look closely at the copy letter Ms Y has sent to us and notice that her address on it is the one where she is currently living and not the one where she lived when she is supposed to have sent the letter to us. We tell her that there is evidence that she has acted dishonestly and ask her to explain the problem with the letter and respond to what her sister has said. She does not reply. We refuse her application to become a solicitor because we decide on the evidence that she has acted dishonestly in three ways:

  • In light of her sister's witness statement, we find that Ms Y lied to us when she said her sister filled in the form for her.
  • Ms Y deliberately did not tell us about her conviction, hoping that we would not find out about it.
  • Ms Y misled us by making up a false copy letter and sending it to us.
 

Alleging dishonesty in a SDT case

When we prosecute a case before the SDT, it is the SDT that decides whether the person has acted dishonestly. We simply present the evidence and the SDT hears both sides of the case.

We will allege that the person acted dishonestly, if we believe that there is enough evidence for the SDT to be asked to decide the issue. It is important to do so:

  • because it is fair, if we consider they have been dishonest, to say so clearly, rather than by implication
  • because the SDT will not generally be able to decide that someone has acted dishonestly, even if that is their view, if we have not clearly alleged it
  • so that an appropriate sanction or control can be put in place
  • so that others, including clients, the public and other regulators, will know about their behaviour and will be able to take appropriate steps to protect themselves
  • because a finding of dishonesty may affect whether we feel able to subsequently reach agreement with the person. For example, to work in a particular law firm, or to take certain steps or comply with conditions.

Evidence and indicators of dishonesty

It can be difficult to assess whether false or inaccurate statements were made dishonestly. People make mistakes and not all inaccurate statements would be considered, by the ordinary standards of reasonable and honest people, to be dishonest. Proof of a dishonest motive is not required for the SDT to make a finding of dishonesty. However, evidence suggesting a motive, for example that the conduct led to financial gain or concealed an error, may carry significant weight.

Evidence of what the person was thinking at the time is very important. The strongest evidence of dishonesty is that the person admits that they have acted dishonestly. Similarly, evidence of the person's actual behaviour and their own words, such as in emails or other documents they write, is often crucial as this can often demonstrate what they knew, or what they were thinking.

Example 5

Mr D is accused of acting for two clients at the same time when there was a conflict between their interests. At first, he denies that he realised there was a conflict. Our investigators find an email he sent to a trainee solicitor at the time. It is marked "highly confidential" and says: "I know this doesn't look good but we need the fees from both of them or we will all be out of a job. You act for him and I will act for her, but we will need to liaise closely to avoid problems." Mr D is found to have acted dishonestly.

In many cases, the evidence is not as clear cut. Instead, it is necessary, to study all of the evidence to decide what it shows overall. An example is the example about Ms Y. She did not admit dishonesty either to us, or in any documents. We drew an inference that she acted dishonestly from all of the surrounding evidence.

In this context, it is important to distinguish between evidence that suggests that the person "must have known" that what they did was dishonest (sufficient for a finding of dishonesty) and that they "ought to have known" (which does not make it clear that the second part of the test is proved).

Example 6

Mrs R is an in-house solicitor for a well-known supermarket company. The company has a problem with staff not paying enough attention to health and safety legislation. Customers, and some staff, are being injured and sometimes catching illnesses because of poor maintenance and hygiene. Instead of fixing the problem, the company pays damages to victims as long as they sign contracts agreeing never to tell anyone about what happened to them. Mrs R feels duty bound to expose them. She contacts a newspaper and gives them information. A very detailed article appears in the newspaper and the directors of the company confront her. When we investigate, she admits that she breached confidentiality but argues that she did the right thing. She now also admits that a lawyer in her position could not disclose their clients' confidential information in order to whistle-blow, but says that she did not realise that at the time, and so she did not act dishonestly. Our investigator reports that she "ought to have known" this. When we are asked to make a formal decision, we refuse to make a finding of dishonesty on that basis. We ask for more information. It is found that she has previously sent emails and letters which make clear that she knew the law that meant she could not disclose the confidential information as a whistle-blower. We decide that she "must have known" when she contacted the newspaper that it was wrong of her to do so. She should have raised the issue instead with the Board of Directors of the company.

Notes

1. Bolton v Law Society [1993] EWCA Civ 32.

2. Bolton v Law Society [1993] EWCA Civ 32.

3. Elliott v Financial Services Authority [2006] UKFSM FSM027.

4. Bultitude v Law Society [2004] EWCA Civ 1853.

5. Ijomanta v Solicitors Regulation Authority [2013] EWHC 3905 (Admin); see also Ijomanta v Solicitors Regulation Authority [2015] EWCA Civ 793. See the comments in Robinson v Solicitors Regulation Authority [2012] EWHC 2690 (Admin) (although dishonesty was not alleged on the facts).

6. Solicitors Regulation Authority v Spence [2012] EWHC 2977 (Admin).

7. See Solicitors Regulation Authority v Dennison [2012] EWCA Civ 421.

8. R v Ghosh [1982] QB 1053.

9. Bultitude v Law Society [2004] EWCA Civ 1853; Professional Standards Authority for Health and Social Care -v- Health and Care Professions Council, Elizabeth Abosede David [2014] EWHC 4657 (Admin)

10. R v Hayes [2015] EWCA Crim 1944.

11. Hussain v General Medical Council [2014] EWCS Civ 2246; Dowson v General Medical Council [2015] EWHC 3379 (Admin).

12. R v Hayes [2015] EWCA Crim 1944.

Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; Kirschner v General Dental Council [2015] EWHC 1377 (Admin).

14. Scott v Solicitors Regulation Authority [2016] EWHC 1256.

15. See also Bryant v Law Society [2007] EWHC 3043 (Admin); Law Society v Waddingham [2012] EWHC 1519 (Admin).

16. Bolton v Law Society [1993] EWCA Civ 32. Law Society v Salsbury [2008] EWCA Civ 1285. Solicitors Regulation Authority v Dennison [2012] EWCA Civ 421.

17. Sritharan v Law Society [2005] EWCA Civ 476.