Acting with integrity
Issued on 23 July 2019 | Effective from 25 November 2019
Effective from 25 November 2019
This guidance relates to rules coming into force on the 25 November 2019. The current guidance should continue to be used until that date.
How solicitors can work
Under the new regulations solicitors will be able to work, and offer services to the public, in a number of different ways.
This guidance is to help you understand your obligations and how to comply with them. We may have regard to it when exercising our regulatory functions.
Who is this guidance for?
All SRA regulated firms, their principals, role holders and employees.
All solicitors registered European lawyers or registered foreign lawyers.
Purpose of this guidance
To explain the requirement to act with integrity in SRA Principle 5.
Lack of integrity vs dishonesty
SRA Principle 5 requires you to act with integrity. Whilst someone acting dishonestly can be said to be acting without integrity, the concept of integrity is wider than just acting dishonestly (see SRA Principle 4: Act with honesty and associated guidance).
This means that it is possible to behave without integrity without necessarily being dishonest.
The meaning of integrity has been considered several times by the courts in recent years. The most recent cases were that of Wingate and another v SRA and Malins v SRA1, considered together by the Court of Appeal in 2018.
Case background: Facts of the Wingate and Malins cases
- W was a partner in a solicitors' firm who arranged a large loan for the firm from a litigation funding company called Axiom.
- The written terms of the loan were that it was to be used only to fund litigation.
- In fact, it was used to partly repay the firm's debts and to pay an arrangement fee to a corporate manager of Axiom.
- It was accepted that this use of the money was based on a verbal agreement between W, the Axiom corporate manager and a solicitor representing Axiom, and that W expected the written loan agreement to be replaced by a less onerous arrangement in due course.
- However, the Court of Appeal found that W was aware that his firm could not and would not comply with the written terms, that the firm would not receive the money unless the "sham" written agreement was entered into and that doing so would trigger serious financial consequences.
- When Axiom later went into receivership, W's firm were only able to repay part of the loan and the Axiom investors lost out.
Although it was not alleged in the Court of Appeal that W had acted dishonestly, the Court found that he had acted without integrity. It did not matter for these purposes that the investors in Axiom were not clients of W or his firm.
- The solicitor had created and backdated a false letter in order to be able to claim an after the event insurance fee from an opponent.
- The SDT struck the solicitor off finding that he had acted dishonestly and with a lack of integrity.
- At first instance, the High Court overturned the decision of the SDT on the grounds partly of procedural unfairness and partly because, it was said there was no difference between lack of integrity and dishonesty.
- The Court of Appeal allowed the SRAs appeal and reinstated the SDT decision, and in doing so made it clear that a solicitor could behave with a lack of integrity without being found to be dishonest.
In giving the leading judgment, Lord Justice Jackson said:
"Integrity is a broader concept than honesty. In professional codes of conduct the term "integrity" is a useful shorthand to express the higher standards which society expects from professional persons and which the professions expect from their own members"
Lord Justice Jackson added that
"Integrity connotes adherence to the ethical standards of one's own profession. That involves more than mere honesty. To take one example, a solicitor conducting negotiations or a barrister making submissions to a judge or arbitrator will take particular care not to mislead. Such a professional person is expected to be even more scrupulous about accuracy than a member of the public in daily discourse. The duty to act with integrity applies not only to what professional persons say, but to what they do."
When are we are likely to take action for lack of integrity?
Cases where we are likely to take disciplinary action for lack of integrity:
- Where there has been a wilful or reckless disregard of standards, rules, legal requirements and obligations or ethics, including an indifference to what the applicable provisions are or to the impacts or consequences of a breach.
- Where the regulated firm or individual has taken unfair advantage of clients or third parties or allowed others to do so.
- Where the regulated firm or individual has knowingly or recklessly caused harm or distress to another.
- Where clients or third parties have been misled or allowed to be misled (except where this is a result of simple error that the regulated firm or individual has corrected as soon as they became aware of it).
If the circumstances of a case demonstrate dishonesty on the part of the regulated firm or individual, then we will take action for breach of SRA Principle 4 (Act with honesty). However, we may also take action for lack of integrity, particularly where allegations are contested and therefore pleaded in the alternative.
The examples below are all cases which illustrate the principles outlined above where we took disciplinary action against the solicitor(s) involved on grounds of acting without integrity and this conclusion was subsequently upheld by a court.2
Solicitor E entered into a sham partnership with solicitor O in order that E could practise as a sole practitioner when he did not have the necessary three years' experience to do so. E and O were also found guilty of breaches of other regulations including the Accounts Rules. The SDT fined O and E and the SRA appealed saying that the correct penalty should be a suspension or strike off. O and E argued that neither of them had been found guilty of dishonesty and that suspension or striking off should be reserved for far more serious cases.
Mr Justice Burnett allowed the SRA's appeal and determined that both solicitors should be struck off.Mr Justice Burnett said that the essential principle was that identified by Thomas Bingham MR in Bolton v Law Society.
"The profession of solicitor requires complete integrity, probity and trustworthiness. Lapses less serious than dishonesty may nonetheless require striking off, if the reputation of the solicitors' profession "to be trusted to the ends of the earth" is to be maintained".
Mr Justice Barnett added that this meant that, in cases where there has been a lapse in standards of integrity, probity or trustworthiness, a solicitor should expect to be struck off, even if dishonesty has not been proved.
Solicitor B worked as a legal manager for a national newspaper. He was asked for advice on a potential story concerning an individual (K) who had been identified using unauthorised access to K's e-mail account. B advised that this was unacceptable and unlawful. The reporter concerned then pieced together publicly available information which he claimed would have enabled him to have lawfully identified K, and the allegations in the story were put to K.
K brought an application in the High Court to prevent publication. B handled the litigation, and he filed a witness statement on behalf of the reporter stating that K had only been identified by lawful means. In correspondence with K's solicitors, B also stated that the allegation that K's e-mail account had been accessed was "baseless". K's application for an injunction was dismissed.
In subsequent disciplinary proceedings before the SDT, B stated that he had not revealed the hacking of the e-mail to the Court because the information had been given to him in confidence and was legally privileged. The SDT found B's duty to the court outweighed any such confidence. It stated that B had not acted dishonestly but had knowingly allowed the court to be misled and had acted without integrity. B appealed the decision in the High Court.
In allowing the appeal in part only, Mr Justice Wilkie (who has the leading judgment) held:
- That although B could not have breached legal privilege, he was under an obligation to discharge his duty not to mislead the Court in a way compatible with not breaching it. He could, for example, have persuaded the reporter to waive privilege, or he could have made it clear in either the witness statement or the pleadings that it was not claimed that K had been identified via legal means only but that he could have been.
- That since the SDT had found that B had not acted dishonestly, it was not open to them to find that he had "knowingly" misled the Court
- However, B had "recklessly" misled the Court (going beyond mere negligence) and on that basis it followed that he was also guilty of a breach of failing to act with integrity.
Two solicitors had introduced numerous conveyancing clients to stamp duty tax avoidance schemes which were of considerable potential risk and disadvantage to the clients but of considerable potential profit to the solicitors in the form of commissions and referral fees from the scheme providers. They did not inform the clients of the risky nature of the schemes or of their own personal opportunity to gain commissions: thereby putting the interests of their clients below their own personal profit.
Although the two solicitors had not been accused of dishonesty, the Administrative Court found that on these facts a finding of lack of integrity was inevitable.
A solicitor had made a number of improper payments from client account. The SDT found him to have acted without integrity but not dishonestly and ordered him to be struck off.
Dismissing the solicitor's appeal to the Administrative Court, Sharp LJ said:
"A person can lack integrity without being dishonest. One example which applied here, was by being reckless as to the use of various client accounts. As the SDT found, the appellant had not enquired as to the reasons for the improper payments and transfers out of client account, he had not cared at all about what he was instructed to authorise, and he had not shown any steady adherence to any kind of ethical code. Accordingly, it was not so much a case of what the appellant thought, but that he neither thought nor cared about what was required by the rules governing his profession…."
Solicitor N had recruited two new partners with no real vetting. When N became aware that a fraud had been committed by one of the new partners in a conveyancing matter, she had taken no real steps to protect clients in other transactions.
In agreeing with the SDT's conclusion that the solicitor had acted without integrity, Mr Justice Morris in the Administrative Court said:
"…. actual knowledge or recklessness in the sense of being aware that the conduct posed a risk and consciously taking it, will be highly likely to give rise to a finding of lack of integrity. However, I accept the SRA's submission that it is wrong to define lack of integrity as requiring recklessness. Lack of integrity does not necessarily involve risk taking. So, for example, the solicitor who dips into the client account with the intention of putting the money back lacks integrity because a client account is sacrosanct regardless of the risk of the money not being repaid"
Solicitor W represented a bankrupt client who was seeking to arrange the purchase by an associated company of his former home from the creditor bank. The solicitor did not inform the bank that the client had received a much higher offer from a third party than the proposed purchase price to be paid by the associated company. The plan was for the associated company to resell the property to the third party with a share of the profit going to the client. Instead W told the Bank on several occasions that the price offered was the highest that he felt could be achieved but that he would try and negotiate more.
The Administrative Court dismissed findings of dishonesty made against the solicitor by the SDT on the basis that there had been procedural irregularities but allowed a finding of lack of integrity to stand.
Giving judgment, Carr J stated "want of integrity arises when, objectively judged, a solicitor fails to meet the high professional standards to be expected of a solicitor. It does not require the subjective element of conscious wrongdoing."
Sir Brian Leveson P added "Honesty i.e. a lack of dishonesty, is a base standard which society requires everyone to meet. Professional standards, however, rightly impose on those who aspire to them a higher obligation to demonstrate integrity in all of their work. There is a real difference between them."
If you require further assistance, please contact the Professional Ethics helpline.
- 2018 ECWA Civ 3666
- These cases were also quoted as examples by Lord Justice Jackson in Wingate and another v SRA and Malins v SRA