First in a series looking at the roles of firm, lawyer and regulator in the fiercely debated case of KP.

The SRA’s Regulatory Settlement Agreement with KP, published in July and reported in the Law Society Gazette, generated fierce debate. Contributors raised thorny issues, including whether and what KP’s employers knew of her illness, the 'put up and shut up' culture within the profession, and the appropriateness of the action taken by the SRA in the circumstances.

In truth, the bare-bones information in the settlement agreement does not allow for reliable conclusions to be drawn. What it does allow, in general terms, is an opportunity for reflection on some of the competing ethical considerations involved for each of the key actors in this drama – the firm, the lawyer and the regulator. This series looks at these in turn – this week: the firm.

A firm’s duties in respect of its employees range from common law and statutory through to regulatory. Each of these will influence how a firm runs its business and engages with its staff – especially its lawyers – by, for example, setting minimum standards for ensuring welfare, health and safety at work and the like. But these are exactly what they appear to be: minimum standards, mandatory to ensure a business can operate in compliance with the law.

A more contested issue is the extent to which firms go beyond those minimums to provide a more holistic package to its staff to facilitate healthy working practices and a positive, supportive working atmosphere. This might be by nurturing what has become known as an 'open' working environment and a 'no blame' culture, by actively monitoring recorded hours and discouraging sustained periods of working long hours or by engaging external, independent mental health support services for employees. There are compelling reasons why firms might take this approach, beyond bare compliance with legal and regulatory obligations, for instance: to reduce risk by ensuring robust and clear lines of reporting; to develop and underpin ethical behaviour and values among the firm’s staff; to facilitate staff wellbeing and attendance and thereby promoting consistent billable hours; and to enhance the firm’s reputation as a responsible and fair employer.

The reality is, however, that none of these proactive steps is fail safe, taken individually or collectively, in providing an early warning system for identifying lawyers experiencing difficulties at work or at home: highly driven professionals will always seek to get on, to give of their best, no matter the culture of the firm and the fact remains that everyone copes with problems – professional, personal or medical – in their own way, including by hiding them from view entirely.

Moreover, such steps can come at a financial cost and will always be balanced against one fundamental business imperative: profitability. A recurring theme among the comments on the Gazette's article was the proposition that some businesses are more concerned about the impact of an employee’s illness on the business than about that employee’s well-being and any contribution to the illness by the firm itself.

These issues touch on a number of the key questions arising from the KP case. To what extent was her firm aware of her health problems? If they were, what steps were taken to support her? If they were not aware, why was that? In respect of her admitted misconduct, in all of the circumstances which were known or should have been known to the firm at the time, was KP properly supervised and supported? What was KP’s previous level of performance? If there were concerns about her performance, were these ever raised with KP, even if they did not lead to detection of the issues which led ultimately to this RSA?

To add to the complexity of this situation, the firm also has its own regulatory obligations to consider: its duties to its clients, to uphold the administration of justice and, perhaps most acutely, to report material breaches by its employees of the code of conduct. Depending on the seriousness of the mistake, it might also be necessary for the firm to alert the client and to seek to rectify the position with any third parties, where possible. In some circumstances, it might be necessary to do all of this fairly urgently.

If misconduct is suspected, it may in certain circumstances be necessary to notify the SRA of any relevant potential breaches of the Code. Although arising primarily from the use of non-disclosure agreements, the SRA has announced a consultation on 'Reporting concerns' with a view to including guidance on the question in the next code of conduct, due in 2019.

Assuming other important factors such as the interests of the client can be satisfactorily addressed in the process, where does the balance lie when weighing the need to address an individual’s performance (and, potentially, health) issues with the duty to report? It is for the COLP at the firm to weigh the facts and circumstances of the case taking into account whatever factors appear appropriate and to decide on whether the potential misconduct crosses a notional line for reporting. But a report to the regulator brings with it its own peculiar pressures both for the individual and the firm, not to mention the impact it may have on the working relationship between the two.

And where does this all leave the firm, particularly in a highly competitive and increasingly straitened market? Does it mean firms should simply not bother to go beyond the bare minimum of satisfying their legal and regulatory obligations? Or should it motivate firms to take a more holistic – perhaps more ethical – approach to those obligations, even if that comes, at first, at a cost? Take, for example, the role of human resources teams. Whilst HR can be a useful point of contact for dealing with the day to day issues arising in a workplace, those teams still owe a duty to the employer to pass on information to the firm, particularly the COLP, where relevant – hardly likely to encourage employees to approach them for support.

Ultimately, it is a decision to be taken by each firm on the basis of its own circumstances, whatever those may be. At all events, however, it is hard to avoid the sense that a firm which treats its staff properly and ethically, in light of all the demands placed on them, encourages ethically sound behaviour from its staff in return.


Gideon Habel is an associate solicitor in Leigh Day’s Regulatory & Disciplinary law team