Status

This document 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 warning notice relevant to?

This warning notice is relevant to all those we regulate who receive and make personal injury referrals from or to third parties, work closely with them or act on their instructions.

The SRA Standards and Regulations

The principles and codes of conduct are underpinned by our Enforcement Strategy, which explains in more detail our approach to taking regulatory action in the public interest. The following principles are most relevant to this warning notice, however other principles and parts of the Standards and Regulations may apply:

• Principle 1: You act in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice

  You have obligations not only to clients but also to the court and to third parties with whom might you have dealings on your client's behalf.

• Principle 2: You act in a way that upholds public trust and confidence in the solicitors' profession and in legal services provided by authorised persons.

  You must behave in a way that maintains the trust the public places in you and in the provision of legal services. Members of the public should be able to place their trust in you. Any behaviour either within or outside your professional practice which undermines this trust damages not only you, but also the reputation of the legal profession and its ability to serve society.

• Principle 3: You act with independence.

  Your duties to the court and proper administration of justice means you have to act independently in all you do.

• Principle 4: You act with honesty.

  Acting honestly in all your dealings is fundamental.

• Principle 5: You act with integrity.

  Integrity is central to your role as the client's trusted adviser and should characterise all your professional dealings with clients, the court, other lawyers and the public.

• Principle 7: You act in the best interests of each client.

  You should always act in good faith and do your best for each of your clients.

In addition to the principles above, you have duties to comply with relevant parts of the code of conduct for solicitors, RELs and RFLs and the code of conduct for firms.

Our concerns

We are concerned that some of those we regulate are failing in their duties to act in accordance with the Standards and Regulations by:

• allowing third parties to cold call potential clients
• entering into referral agreements that are in breach of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO)
• taking and acting on instructions from third parties without making sure that the instructions originate from the client
• settling claims without a medical report
• paying damages or sending cheques to third parties without accounting properly to the client
• bringing personal injury claims without their clients' authority
• in some extreme cases, bringing claims without the knowledge of the named client claimant
• not training and supervising their staff adequately

Those we regulate who conduct cases demonstrating one or more of these features may face regulatory action.

Our expectations

We expect you to comply with LASPO AND your obligations in the Standards and Regulations at all times. If you work in litigation you are involved in the administration of justice and must be alert to any risk of receiving or pursuing fraudulent or questionable cases. Where you identify such a risk, you must act immediately to remove that risk.

Cold calling and publicity

You must make sure that clients do not come to you as a consequence of cold calling by you or a third party. Some third parties obtain client details illegally by the unauthorised handling of personal data.

The Standards and Regulations provide that you must not make unsolicited approaches to members of the public, save for approaches to current client or former clients (paragraph 8.9 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1 (c) of the code of conduct for firms).

You must make sure any introducer is aware of your obligations and you check regularly that their methods of marketing (see paragraph 5.1(e) of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(b) of the code of conduct for firms).

Any publicity in relation to your work, through you or a third party, must not be inaccurate or misleading (paragraph 8.8 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(c) of the code of conduct for firms).

Referral arrangements

In personal injury matters, you must not enter into any arrangements contrary to LASPO.

Where arrangements are permitted by law you must comply with paragraphs 5.1 to 5.3 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1 (b) of the code of conduct for firms. You are required to inform your clients about any fee-sharing agreements you have and to have those agreements in writing. Clients must be informed where you have a financial or other interest either in referrals made to you or by you to others.

You must be satisfied and be able to evidence the fact that an arrangement with a referrer does not adversely affect your independence and your ability to advise your client.

You have a duty to ensure that contracts or other arrangements between your client and a referrer are fair. You must stop dealing with a referrer whose contractual terms or t whose behaviours are contrary to your clients' interests or to the rule of law (paragraph 5 (e) of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(b) of the code of conduct for firms). For this reason, you should review your referral arrangements regularly.

You should be aware that the onus is on you to show that a payment is not a referral fee if it appears to us that it is (paragraph 5.2 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1 of the code of conduct for firms).

You must also make sure clients give informed consent if you refer, recommend or introduce them to a separate business or divide a client's matter between you and a separate business (paragraph 5.3 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(b) of the code of conduct for firms).

Third-party instructions

The nature of personal injury litigation and the role of introducers in this sector means the risks to clients, defendants and the administration of justice are high and you must exercise extra caution to ensure that you are acting on valid instructions. This means taking instructions from - or checking them - direct with your client (paragraph 3.1 of the code of conduct for solicitors, RELs and RFLs and paragraph 4.1 of the code of conduct for firms). This is an ongoing duty throughout the life of a case and will apply in particular to significant decisions such as whether to settle a claim and for how much.

The commercial interest of a referrer means that you cannot safely rely, without further scrutiny, on common practices such as instructions being given on behalf of another person by, for example, a trusted family member or one member of a couple or partnership.

Clients' interests

The Principles are clear that you must act in your clients' best interests and you must act with integrity. Your retainer is with your client and you are responsible to your client both in law and as a matter of conduct. To make sure you act in your clients' best interests and deliver a proper standard of service you must have clear instructions from your client and an agreed course of action. Your client should have all the necessary information to make informed decisions on how their matter should be dealt with (paragraph 8.6 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(c) of the code of conduct for firms). Unless you have regular contact with your client, you will be at risk of failing to comply with your obligations.

Before issuing proceedings, you must have proper authority to do so. You must be fully satisfied that the terms of the claim properly reflect client instructions. Instructions should be confirmed at each stage of the retainer and authority to make, accept or reject an offer must be separately obtained. Acting without client instructions may leave you open to wasted costs orders (see paragraph 2.6 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(a) of the code of conduct for firms) and negligence proceedings as well as disciplinary action. Unless instructions are confirmed with the client at each stage of the retainer, throughout proceedings, you will be at risk of committing misconduct (see paragraph 3.1 of the code of conduct for solicitors, RELs and RFLs and paragraph 4.1 of the code of conduct for firms).

Where your client clearly wishes—and confirms to you directly—that you act on instructions given by a third party, you must satisfy yourself it is in your client's interests to take instructions in this way. You should explain to your client that taking third party instructions means sharing of their confidential information and explain the implications and risks involved of doing this, for example. inaccurate information being acted on or the misuse of information by the third party.

Only if you are satisfied that the arrangement is in the best interests of the client and that there is no conflict between the interests of the client and the person giving instructions may you act in this way. You must be satisfied your client has given free and informed consent to you doing so.

You should be mindful of any arrangements which may incentivise any referrer to take a particular course of action in the case, for example an early settlement, without regard to the best outcome for the client.

In personal injury matters the best information on the facts and consequences of the injury are highly likely to rest with the client. Blanket forms of authority based on bulk or standard terms present a greater risk to the interests of clients and the administration of justice, and are highly unlikely to comply with your obligations.

Identification

Because of the risks involved in bringing false claims, you must properly identify your client by obtaining and verifying proof of identity and address (see paragraph 8.1 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(c) of the code of conduct for firms). Unusual or suspicious factors must be investigated fully. If any third party, including any agent, provides copy documentation such as a photocopy of a passport, you must ensure that the client confirms its authenticity directly to you.

Costs

Your client should be fully aware of the costs you are charging, the costs information you deliver should be transparent and clear. You have a duty to give clients' the best possible information both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter (see paragraph 8.7 of the code of conduct for solicitors, RELs and RFLs and paragraph 7.1(c) the code of conduct for firms).

When giving costs information you should consider the best way to deliver the information to that client. The information may be in writing or discussed with the client first and followed up in writing. You should take extra care when instructed by vulnerable clients.

Accounting

Damages must be paid to the client unless you have a valid reason and valid instructions direct from your client to make payments to a third party. Before making such payments you should familiarise yourself with our warning notice on the improper use of a client account. You should not make payments where there is any concern that the client may be avoiding liabilities eg bank overdraft, benefits claw back. Cheques made payable to the client must be given or sent to the client at their address. Failure to properly account to a client may lead to regulatory action for failure to account for client money.

• 3.3 You ensure that the service you provide to clients is competent and delivered in a timely manner.
• 3.4 You maintain your competence to carry out your role and keep your professional knowledge and skills up to date.
• 8.6 You give clients information in a way they can understand. You ensure they are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.

Should you delay in returning money to your client, you may find your client has moved on and you cannot now easily locate them. You may be able to pay such amounts to a charity (rule 5.1(c) of the Accounts Rules) but you may be required to ask us for permission to do so and in all cases, you will be required to make proportionate efforts to trace the client. Any such costs incurred by you are not recoverable and must be borne by you. Efficient systems to make sure you promptly pay damages to your client will reduce the need to incur such costs and time.

Misleading the court and other parties

You must not mislead or attempt to mislead your clients, the court or others, either by your own acts or omissions or allowing or being complicit in the acts or omissions of others (including your client) (paragraphs 1.4 of the codes of conduct).

As an individual (paragraphs 2.1- 2.3 of the code of conduct for solicitors, RELs and RFLs), you have fundamental obligations not to:

• misuse or tamper with evidence or attempt to do so
• seek to influence the substance of evidence, including generating false evidence or persuading witnesses to change their evidence
• provide or offer to provide any benefit to witnesses dependent upon the nature of their evidence or the outcome of the case.

As a firm you are accountable for compliance with the SRA's regulatory arrangements where your work is carried out through others, including your managers and those you employ or contract with (paragraph 2.3 of the code of conduct for firms). You cannot turn a blind eye to misconduct on the part of others in your firm. You have an obligation to have an effective system for supervising client matters (paragraph 4.4 of the code of conduct for firms).

You should take care not to leave yourself open to accusations of misleading others such as where you are taking instructions from a third party.

You should be aware, for example, that claims subject to the pre-action protocol that are submitted through the claims portal require the legal representative to confirm their clients' instructions to make a claim. Completing the submission when you do not have instructions from the claimant will therefore leave you at risk of legal and disciplinary action.

There are some exceptional circumstances where a solicitor acts on third party instructions, for example, when acting for a minor or on behalf of a client who does not have capacity), or on the implied authority of the client to issue proceedings. This may be where the client has given clear instructions to act, but for some justifiable reason may be out of contact just before issuing proceedings and you are unable to confirm instructions. This causes particular difficulty where the limitation period is about to expire. In these circumstances make sure you can justify your position by evidencing your actions and be aware of the risks inherent in going ahead.

Before accepting a settlement on behalf of your client, make sure you have all necessary information for an informed decision to be made by the client. Be aware that if you settle a matter without first obtaining medical evidence you run the risk of failing in your duty to your client. Without medical evidence you cannot be sure of your client's prognosis and the full extent of their injuries. You leave yourself open to complaints about inadequate compensation and disciplinary action for failing in your duties.

When you receive a medical report, you should take care to fully understand the client's prognosis and be able to assess the information contained within the report. If you are in any doubt as to the honesty or competence of an expert witness, such as a doctor preparing a medical report, you must cease using the expert, review all cases involving that expert, and check the underlying facts direct with your clients.

Staff training and office systems

You have an obligation to make sure that you have effective governance structures, arrangements, systems and controls in place that ensure you comply with our regulatory arrangements , as well as with other regulatory and legislative requirements, which apply to you (paragraph 2.1(a) of the code of conduct for firms).

Before taking on a personal injury matter you should be sure that:

• you have well trained staff who are in a position to offer a proper standard of service to clients.
• systems in place to ensure that matters are triaged effectively by those who have experience in and an understanding of the litigation process.
• systems that allow for the diarising of limitation periods and court timetables.
• staff training that is reviewed regularly to ensure that skills and knowledge are updated.
• full and proper supervision of staff where work is overseen and support and further expertise is available to fee earners and case workers.

(See paragraph 4.3 and 4.4 of the code of conduct for firms)

Taking on files from another firm

Before taking on cases from other firms you should carry out due diligence on the files you will be acquiring. Some files may be in a poor state, with imminent time limits, you should ensure you have the necessary time and resources to deal with the matters on an urgent basis.

You should not take on cases where you do not have the necessary skills and experience.

Enforcement action

Failure to have proper regard to this warning notice is likely to lead to disciplinary action.

Further help

If you require further assistance, please contact the Professional Ethics helpline.