Unethical behaviour damages solicitors everything, says Peter Williamson, which is why the basic principle of acting in the client's best interests must remain paramount


It is no coincidence that the strategy of the Solicitors Regulation Authority (SRA) deals with consumer protection, enforcement and discipline under the same heading. We are committed to tackling ‘unacceptable professional or organisational performance, misconduct and dishonesty by firm, fair and timely regulatory and disciplinary action’.



Most instances of poor service to consumers are handled by the Legal Complaints Service. When things have gone wrong, the most frequent outcomes are the payment of compensation, a reduction of the solicitor’s bill, or mistakes being corrected at the solicitor’s expense.



Cases involving the honesty of the solicitor, however, are passed to the SRA. Although many of these still relate to protection of the consumer, the outcomes may be quite different – ranging from a warning at the bottom end of the scale to referral to the Solicitors Disciplinary Tribunal at the top. The tribunal has the powers to reprimand, fine, suspend or strike off solicitors.



Although solicitors are in the majority on the tribunal’s panels, they frequently take a strong line when it comes to consumer protection. This was illustrated in December, when seven partners of a south coast firm were accused of failing to act in their clients’ best interests and providing inaccurate costs information. The firm had described numerous telegraphic transfer fees of £30 as disbursements. In fact, they were paying out only £10 – the other £20 was secret profit. The firm also charged VAT on each transaction, so that each client was billed £35.25. In the five years to June 2005, the firm made a £145,350 profit from these fees.



Such earnings are often referred to as a ‘secret profit’ because clients are unaware that they are being charged anything on top of the bank’s actual charge to the firm. This misleads clients and makes it impossible for them to make informed decisions about competing prices.



Tribunal proceedings were issued in October 2006 and the solicitors admitted allegations in June 2007. Throughout the process, the solicitors complained that it was unfair to take them to the SDT because the practice of overcharging for telegraphic transfer fees was widespread.



The SDT fined each partner £1,500 and ordered them jointly to pay costs of £25,000. The level of costs demonstrated the amount of work caused by the need to respond to the solicitors’ refusal to accept that what they had done was wrong, as well as their arguments around mitigation.



The tribunal chairman asked the SRA to remind the profession that, however widespread the practice of making secret profits might be, transparency is the order of the day where items such as telegraphic transfer fees, photocopying charges and search fees are concerned.





Miners’ compensation

The SRA’s biggest programme of work to protect consumers concerns misconduct in relation to state compensation awarded to sick miners. More than 50 firms have been investigated; partners from 20 have been referred to the tribunal. About £3.5 million has been returned to sick miners as the result of the initiatives of the SRA and others.



So far, the SRA has succeeded in the three prosecutions before the tribunal relating to misconduct. Substantial fines and costs orders were made against six solicitors. More  hearings will take place in the coming months. Although it would be wrong to second-guess the outcomes of pending cases, we hope the tribunal will continue to accord a high priority to consumer protection.



In the past I have said that, as a solicitor, I am ashamed of what some firms involved in the miners’ compensation scheme have done. That remains the case. The facts are that the cost of the scheme is met by government and the clients were sick men, mostly of modest financial means. It may be true that only a minority of the firms involved in the scheme have been accused of wrongdoing, but some were among the biggest players and they handled many thousands of claims. Especially in the former mining areas, the reputation of the profession has plummeted because of this scandal. Consumer confidence in solicitors has been shaken and it will take hard work and time to recover it.



Neither the secret profits nor the miners’ compensation issues would have arisen had all solicitors stuck to the basic principles of acting in the best interests of each client and not behaving in a way that is likely to diminish public trust in solicitors.



Day-to-day ethical conduct really does not depend on an encyclopaedic knowledge of the rules – though learning the 90 or so words of rule 1 of the Code of Conduct would be a clever move. Nine times out of ten a straightforward instinctive preference to ‘do the right thing’ for your client should be enough to stay out of difficulty.



The SRA is committed to protecting the consumer, because that is fundamental to maintaining public confidence in your profession.



Peter Williamson is chairman of the board of the Solicitors Regulation Authority