Regulation of non-authorised persons

Introduction

Purpose and status of this guidance

We regulate solicitors directly: They are admitted to the roll of solicitors by us. We also regulate two other types of lawyer directly; Registered European Lawyers (RELs) and Registered Foreign Lawyers (RFLs). Both RELs and RFLs are authorised by a regulator abroad, but registered to practice here in England and Wales.

This guidance is about how we regulate people, who, although not authorised by us directly as individuals, are involved in a firm that we regulate. They may be non-lawyers such as an accountant, a finance administrator or an office junior. They might also be lawyers regulated by another legal regulator, such as a barrister or legal executive.

For the purpose of this guidance we refer to all of these people as 'non-authorised persons'.

This guidance aims to identify and explain to decision makers how these individuals are regulated by us and how we exercise the disciplinary and regulatory decision making powers we have over them.

Essentially our approach towards making decisions about non-authorised persons is the same as for the solicitors, RELs and RFLs that we regulate. The public should be able to trust all those involved in the delivery of legal services to act competently and ethically.

Our powers in this area are complex, as they derive from a number of different pieces of legislation and are set out in different parts of our rules. This guidance covers:

  • what a non-authorised person can do in a law firm
  • what our approach is to a non-authorised person's conduct outside of legal practice
  • what our disciplinary and regulatory powers are and how we use them.

This guidance should be read in the context of decision making at the SRA and other guidance. 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.

What can a non-authorised person do in a law firm?

Non-authorised persons can fulfil a wide range of roles in law firms. They may be employees or managers1 working within the firm, compliance officers, owners of the firm, or shareholders. Compliance officers, managers and certain owners must be approved by us as suitable to take up their role.

For more information see our guidance on approval of role holders

In some cases, non-authorised persons are limited in the type of legal work they can do. It may be important to understand what those limitations are and whether they are entitled to undertake the work they are doing. The extent of what they are able to do will vary, depending on whether they are a lawyer, for example a barrister.

The details are set out in Rules 6 and 7 of our Practice Framework Rules. In general, individuals who are not lawyers can only do certain work under the direct supervision of a lawyer in the firm. Certain work is simply not allowed. For example, non-authorised persons can prepare legal documents under the supervision of a lawyer but they cannot stand up in higher courts and represent clients. In all circumstances, they are not allowed to pretend or even suggest they are a lawyer. It is a criminal offence for non-authorised persons to:

  • wilfully pretend to be or take or use any name, title, addition or description implying that they are qualified, or recognised by law as qualified to act as a solicitor (s21 Solicitors Act 1974)
  • wilfully pretend to be entitled to carry on reserved legal activities2 when not so entitled or to take on or use any name, title or description with the intention of falsely implying such entitlement (s17(1) Legal Services Act 2007).

For more information see our guidance on bringing criminal proceedings

What is our approach to a non-authorised person's conduct outside of legal practice?

Our Principles and Code of Conduct do not apply to the actions of non-authorised persons outside of the firm in which they are involved. This means that we do not have power to discipline them for any breaches of the Principles and Code which occur in their private life. This is because our role in relation to a non-authorised person arises when they become involved in legal practice and lasts for as long as they continue to be involved. By contrast, those we authorise remain on our roll or registers. In order to maintain public confidence in the integrity of the roll/registers we need to ensure that they demonstrate the highest standards both inside and outside of practice.

We may, however, take action where a non-authorised person has been convicted of a criminal offence outside of the work place, by imposing an order (s43 Order) which controls where the person is permitted to work.

Read more about when we will impose a s43 Order following a conviction below.

Our disciplinary and regulatory powers

In summary, our powers over non-authorised persons include the ability to seek explanations from them, obtain information and documents, impose disciplinary sanctions if they are employees, control who they work for, or disqualify them from working in an alternative business structure (ABS) regulated by us.

Our decisions about the appropriate outcome will be informed by the risk posed by the behaviour of the non-authorised person, its impact and the likelihood of it happening again. We must consider the need to protect consumers and the public (by supporting the rule of law and the administration of justice), and maintain public confidence in the delivery of legal services.

We can decide to impose more than one of the regulatory or disciplinary outcomes available to us. None of our powers are dependent upon each other. We will consider if we should impose more than one outcome such as a s43 Order or disqualification as well as, or instead of, a disciplinary sanction, in order to address that risk.

The Solicitors Disciplinary Tribunal (SDT) also has similar powers to us over non-authorised persons, including the power to impose unlimited fines and to make a s43 Order. We explain more in our guidance on issuing SDT proceedings and Controlling where the non-authorised person can work - 's43 Order' below.

Obtaining documents and information

All non-authorised persons involved in a firm regulated by us have an obligation to co-operate with us and provide us with an explanation of their conduct if we ask them to.3

We also have statutory powers to require a non-authorised person to provide us with documents and information which we say they must give us. This includes the power to interview them about the documents and information we have asked for.4

More information about our powers to obtain documents and information can be found in our guidance on gathering evidence.

Disciplining the non-authorised person

Our disciplinary outcomes range from sending the non-authorised person a letter of advice, warning them about future conduct to imposing a disciplinary sanction such as a fine or rebuke (where the non-authorised person is an employee or a manager). We also have the power to publish our decision to impose a fine and/or a rebuke.

The purpose of imposing a disciplinary sanction is to maintain public confidence in the provision of legal services and to deter the individual and others from committing similar misconduct in the future. When determining the right sanction, we will take into account the conduct or conviction, the level of seniority and responsibility of the individual, and the type of involvement that they have in the law firm we regulate.

Controlling where the non-authorised person can work - 's43 Order'

We have the power under s43 of the Solicitors Act 1974 to prevent a person from working in a law firm that we regulate without our permission. The SDT also has the power to make a s43 order on our application.

A s43 Order can be made in respect of a non-authorised person who:

  • is employed or remunerated in some way by a firm
  • conducts work under the supervision of a solicitor
  • is a manager of a firm
  • has or intends to acquire an interest in a firm.

The wording is wide and includes consultants and those who intend to take an interest in a firm. In this context, the term "firm" does not include an ABS5. However, the power to impose an Order may apply to anyone 'undertaking work in the name of, or under the direction or supervision of, a solicitor' at the ABS.

We can seek a s43 Order against a non-authorised person as a result of their actions whilst working overseas, for example in the European office of a firm we regulate. They do not have to be physically present in England or Wales for us to have jurisdiction.

Section 43 specifies the two situations6 where an order can be imposed, namely where the person:

  •  s43(1)(a)

    has been convicted of a criminal offence which is such that in the opinion of the SRA it would be undesirable for the person to be involved in a legal practice

  • s43(1)(b)

    has, in the opinion of the SRA occasioned or been a party to, with or without the connivance of a solicitor, an act or default in relation to a legal practice which involved conduct on his part of such a nature that in the opinion of the Society it would be undesirable for him to be involved in a legal practice.

 

Criminal Convictions

We may not always decide that it is necessary to impose a s43 order on the basis of a conviction. We have to decide whether, if as a result of the conviction, it is undesirable for that person to be involved in legal practice in the future. The term "undesirable" is not defined and so we apply its natural meaning and exercise our judgment in deciding if the order is appropriate. In doing so, we will take into account factors including:

  • The type of offence. If it involves dishonesty of any sort we are likely to consider that a s43 Order is appropriate. This is because of the risk that this behaviour will be repeated in the workplace, causing harm to clients. However, we may also impose a s43 order for other types of criminal offences such as a conviction for causing Grievous Bodily Harm. We might do this if we consider that either there is risk of repetition of such conduct in the workplace, or if the conviction is likely to damage public confidence in the delivery of legal services.
  • The seriousness of the criminal offence. As above, we will consider whether the offence is likely to damage public confidence in the delivery of legal services. In deciding the level of seriousness, we look at the sentence given, such as whether a custodial sentence was imposed and any sentencing remarks given by the judge.
  • The circumstances in which the offence took place. Whilst we can impose s43 Orders for offences which took place in the person's private life, we are likely to consider it to be necessary where the offence took place in the workplace or involved clients of the legal practice. For example, we are also likely to consider it more undesirable for the person to be involved in a law firm we regulate, if the victim of the offence was vulnerable. This is because of the damage such an offence would cause to public confidence and the risk that the person would abuse any position of trust they were afforded by working in a law firm in the future.

Example 1

During the course of her employment as a secretary, Ms S took £5,000 from the firm she worked for. She did this by writing out a cheque which she signed on behalf of the senior partner in favour of her mother. She also wrote a fake email which she pretended had been sent from a client to explain the withdrawal. She did this to cover her tracks. She was convicted of a number of criminal offences of fraud and received a six-month suspended prison sentence. Prior to her conviction, Ms S repaid all of the money that she had stolen. Ms S had worked in law firms for 30 years and described her actions as a "moment of madness" due to her severe financial problems at that time.

We imposed a s43 Order so that any future firm wanting to employ Ms S would need our consent to do so on. We also disciplined Ms S for her conduct by imposing a rebuke against her. We did not impose a fine due to Ms S's poor financial position and also took into account her repayment of the money. We published both of our decisions.

Undesirable conduct

We also have the power to impose a s43 Order where the non-authorised person has been involved in an "act or default" in relation to a legal practice and has therefore behaved in a way which we think makes it "undesirable" for them to be involved in legal practice in the future. To fall within this limb, the act must be in connection with legal practice. This contrasts with a conviction which can be outside of the work place.

Again, we exercise our judgment in deciding if the order is appropriate. We give the term "undesirable" its ordinary meaning. However, we take into account conduct that calls into question the person's character and ethics, including behaviour which:

  • is unacceptable in view of a client's expectation of a trustworthy and reliable service
  • demonstrates a serious lack of judgement given their position or role
  • brings into doubt their ability to make sound and competent decisions in the client's best interests
  • demonstrates impropriety or unethical behaviour.

Example 2

Mr A worked as a fee earner in a large law firm, doing personal injury work. He was in poor health and responsible for looking after his elderly parents. As a result he got behind with his work. He did not explain to the firm that he was in difficulty in meeting work deadlines as he felt embarrassed. In one case he gave the client the impression during a telephone call that he had lodged proceedings on her matter, when in fact he had not, lodging them several days later. The matter came to light after Mr A owned up to a colleague. The firm investigated the matter and reported it to us. The client was informed but was happy with the situation and the firm decided to give Mr A a warning under its own disciplinary process.

We decided that it was necessary for us to fine Mr A in this case, and we were concerned about the risk he might pose to clients in the future. We therefore agreed with Mr A that he should be made subject to a s43 Order. We also published our decision.

Who makes the s43 order?

Since the purpose of a s43 Order is to protect the public from risk, we will generally seek to make the order ourselves, rather than issuing proceedings in order for the SDT to make the order. This is because it is quicker and usually more cost effective if we make the order.

However, in certain circumstances we may decide to issue proceedings before the SDT seeking a s43 Order. Our reasons for doing so may include:

  • There are numerous individuals, such as solicitors as well as non-authorised persons being referred to the SDT and, therefore, in the interests of fairness it is appropriate for the s43 Order to be considered by the SDT
  • Serious conflicts of fact need to be resolved by cross examination. Generally we make our decisions about non-authorised persons based on the papers. We do not, as a general rule, need to ask the SDT to make the order simply because we are alleging a serious offence, such as dishonesty, which may be defended, or in order to assess the person's response. However, this will be necessary where that response, or the credibility of any witness, needs to be tested through oral evidence.

Decisions to disqualify

Section 99 of the Legal Services Act 2007 gives us an additional power over non-authorised persons who have worked, or who have an interest in an ABS. We can disqualify them from taking up certain activities, such as acting as a manager, the Head of Legal Practice (HoLP) or the Head of Finance and Administration (HoFA), or from being employed by an ABS at all.7  

How we make disqualification decisions

To make a decision to disqualify, we must be satisfied that the person has (either intentionally or through neglect) breached a duty to which they are subject.8 In summary, this means that they have not complied with our regulatory arrangements, or have caused or substantially contributed to a significant breach of the terms of the ABS's license. We must also be satisfied that, as a result, it is undesirable for the person to engage in the relevant activity and that the disqualification is proportionate to protect the public interest.9  

When making a decision to disqualify, we take into account the criteria set out in Appendix 3 to the SRA Disciplinary Rules 2011. These criteria provide that we may disqualify where we have found that the non-authorised person's conduct:

  1. has caused significant loss or harm
  2. involved an abuse of trust
  3. has caused harm to or to the interests of a vulnerable person
  4. was motivated by any form of discrimination
  5. was deliberate, pre-meditated, repeated or reckless
  6. has put the public confidence in the regulation of the profession at risk; or
  7. indicates the unadmitted person is unsuitable for the role being undertaken.

The following factors support a decision not to disqualify:

  1. the misconduct was committed as a result of a genuine mistake or misunderstanding
  2. the individual has cooperated fully with the SRA
  3. the conduct was trivial; or
  4. there is a low likelihood of repetition of the conduct.

We might also impose other outcomes in addition to disqualification, such as a fine. If we do not consider that disqualification is appropriate bearing in mind the tests above, we may consider that a disciplinary decision on its own is the right outcome.

Example 3

The Head of Finance and Administration of a large ABS we regulate improperly transferred significant sums from a client account on several occasions to ensure the firm's office account kept within the overdraft limits set by the firm's owners. If she had not done so, the firm would have exceeded its overdraft and she would not have been entitled to a large performance bonus. The funds were replaced by the ABS after our investigation. In view of her seniority and the abuse of her position of trust, we disqualified her from being any type of compliance officer or from being a manager in an ABS. We also decided to fine her £10,000 and publish both decisions.

Referral to other regulators

We or the SDT may also decide that the non-authorised person should be referred to another regulator. For example, if the non-authorised person is an accountant their conduct might also be referred to the Institute of Chartered Accountants of England and Wales for them to consider if any action is needed.

Notes

1. We define manager to include someone who is a member of a Limited Liability Partnership; or a director of a company; or a partner in a partnership; or in relation to any other body, a member of its governing body.

2. Within the meaning of s12(1) Legal Services Act 2007.

3. SRA Principles 7 and outcomes 10(8) and 10(9) Code of Conduct 2011.

4. s44B and s44BB of the Solicitors Act 1974 and s93 Legal Services Act 2007.

5. A s43 Order is made under s43 Solicitors Act (or the equivalent under the Administration of Justice Act 1985). There is no equivalent in the Legal Services Act 2007.

6. Relevant caselaw includes in R (on the application of the Solicitors Regulation Authority) v Solicitors Disciplinary Tribunal [2013] EWHC 284 (Admin) and Solicitors Regulation Authority v Liaqat Ali [2013] EWHC 2584 Admin and Ojelade v The Law Society [2006] EWHC 1724.

7. The power is applied only to those involved in an ABS because the power is found in s99 of the Legal Services Act 2007. There is no equivalent power in the Solicitors Act 1974 or the Administration of Justice Act1985.

8. The relevant duties are:

  1. the duties imposed on a Head of Legal Practice by section 91
  2. the duties imposed on a Head of Finance and Administration by section 92
  3. the duties imposed by section 176 on regulated persons (within the meaning of that section), and
  4. the duty imposed on non-authorised persons by section 90.

9. See rule 3.3 and 3.4 SRA Disciplinary Procedure Rules 2011.