Higher standards

On the 1 July 2007 the Solicitors' Code of Conduct will come into force. It represents a significant change in a year that has already seen the start of the Solicitors' Regulation Authority and the Legal Complaints Service, while the Legal Services Bill will almost certainly become law.

The Code contains much that is familiar. However, a lot is new and there should be no doubt the determination of the Authority to mark an opportunity to drive up professional standards.

Its aim is to make regulation simpler and fairer and to recognise that many firms now have a much more commercial relationship with their clients. There should thus be greater flexibility, while at the same time an adherence to basic principles.

Over many years the existing Guide to the Professional Conduct of Solicitors has grown piecemeal in a way that many have seen as unsatisfactory. It is not easy to navigate and the subtle distinction between rules and principles, interacting with various codes as they have been introduced, has combined to create imprecision.

Comprehensive document

The Code is intended to be a comprehensive document, easy to navigate and the old distinction between rules and principles has gone. There is little doubting its ease of use compared with the Guide.

The tone that the Code strikes is new. It is in terms addressed directly to 'you', the regulated person and thereby emphasises the personal nature of the obligations imposed. There is a personal responsibility to create appropriate management structures for implementation and review.

The Code comprises 25 individual rules, each with guidance notes. Rules 3 and 4 relating respectively to conflict of interest, and confidentiality and disclosure have been in force since May 2006. The others come into force next month. The rules are mandatory however the guidance notes are not.

However, they do perform a very useful function and I would expect them to be taken into account in determining whether the letter or the spirit of an individual rule has been broken. They are likely to feature when cases based on the Code start to come before the disciplinary tribunal. A departure from the guidance notes is almost certainly going to require justification. The tribunal has historically interpreted rules by reference to their spirit rather than their letter and there is nothing to suggest this will change.

Who is covered by the Code?

The Code will regulate if you fall into one of the following categories (rule 23).

• A solicitor in relation to practice as such from offices both inside and outside England and Wales (you are a solicitor if your name is on the Roll of Solicitors and you hold a current practicing certificate) and most practitioners will fall into this category;
• A registered European lawyer in relation to practice as such from offices in England and Wales, Northern Ireland and Scotland;
• A recognised body incorporated in England and Wales in relation to practice from offices both within and without England and Wales;
• A recognised body incorporated in an Establishment Directive state but outside England and Wales in relation to practice from offices in England and Wales, and to a limited extent in relation to practice from offices outside England and Wales (the limited extent is set out in rule 23.01 (d);
• A registered foreign lawyer in relation to your practice as a foreign lawyer from offices in England and Wales, as: a partner in a multinational partnership; a director of a recognised body which is a company; or a member of a recognised body which is a limited liability partnership; and
• A solicitor who was formerly a registered European lawyer in relation to practice as a lawyer of an Establishment Directive state from offices in the UK.
• The professional obligation contained in rule 1, which proscribes conduct that is likely to diminish the trust public places in you or the solicitors' profession, applies outside your practice.

Conduct outside the office

For the first time professional rules expressley apply to conduct outside the office, although the disciplinary tribunal has penalised out-of-office conduct under the existing practice rules if it has brought the solicitor into disrepute. So the wording is new, but the principle is not. It is intended to be a reminder that we can damage the reputation of the profession at any time.

While there are variations in the way the Code applies to solicitors, registered European lawyers, recognised bodies and registered foreign lawyers, it will apply in full to the 100,000 or so solicitors on the Roll and who hold practising certificates.

What will be repealed?

The Code repeals all items specified in Rule 25. Included most notably are the Solicitors' Practice Rules 1990, the Solicitors' Publicity Code 2001, the Solicitors' Introduction and Referral Code 1990, and the Solicitors' Costs Information and Client Care Code 1999.

It is worth checking rule 25 to see what will be repealed, to enable informed judgments to be made about any organisational changes that may be required.

For example, the demise of the Client Care Code and the familiar practice rule 15, and the introduction of a new rule 2 will mean standard client care letters need to be updated or redrafted.

An immediate item of detail which should not be overlooked is the requirement to have notepaper endorsed with the words 'Regulated by the Solicitors' Regulation Authority', in place of 'Regulated by the Law Society'.

It is recognised that firms will require time to use up paper stocks, but the new wording must appear on notepaper used after the 1 September 2007.

It is equally important to remember what will remain unchanged, most importantly the Solicitors' Accounts Rules which contain a full range of accounting obligations and ï'žÂ¸regulatory powers on inspections. Again, a full list of professional obligations that will not be changed is contained in rule 25.

Fundamental duties

A familiarity with rule 1 is probably a necessity. It contains the six core duties which form a framework within which the more detailed and context specific rules in the rest of the Code can be understood. The core duties are fundamental rules. They are:

• you must uphold the rule of law and the proper administration of justice;
• you must act with integrity;
• you must not allow your independence to be compromised;
• you must act in the best interests of each client;
• you must provide a good standard of service to your clients; and
• you must not behave in a way that is likely to diminish the trust the public places in you or the profession.

Individual rules thereafter regulate a wide range of discrete practice areas. Some are new and will require planning before the 1 July. Some will be very familiar. It is not possible in a general article of this nature to look at them in any detail. Rules 3 and 4 dealing with conflict and confidentiality are significant subject matters in themselves and have been dealt with in previous articles by others.

Breach of the rules

There will remain a general freedom to decide whether or not to take on a particular client. That said, Rule 2 requires you to refuse to act or to cease acting for a client when to continue would involve you in a breach of the law or a breach of the Rules, or where you have insufficient resources competence to deal with the matter.

However, having made the decision to take the work on, rule 2 is designed to help both solicitors and clients to understand each other's expectations and responsibilities. One of the recurring themes of client complaints is the absence of adequate information at the start of and during the retainer. Rule 2 makes clear what is required at the outset and as the instruction progresses.

Interestingly, there is now emphasis on explaining the client's responsibilities; it is often forgotten they have them too.

In relation to costs you must give 'the best information possible' at the start of the retainer and as the matter develops. None of this, if you think about it, is particularly difficult or contentious; it just needs thought and planning.

The case of Mastercigars Direct Ltd v Withers LLP decided 25/4/2007 is a very recent Supreme Court Costs Office case that should send the clearest of warnings that failure to provide proper costs information will render bills unenforceable.

It is useful to link rules 2 and 5. Rule 5 requires firms to be properly managed by someone who has received suitable training. The management requirements are extensive and conduct requirement for management is new. Firms will be required to widely risk assess, manage training for all staff, and the manner in whihch legal and other services are delivered.

Professional indemnity insurers will, I believe, place increasing emphasis on this obligation. Rule 2 requires work to be declined if the expertise is not there to do it and insurers still deal with claims arising out of failures to say 'no'. Supervision is crucial in managing risk. Gone are the days of supervising in name only; it must become a reality.

Unfair advantage

Rule 6 is new,and is designed to prevent discrimination in both firms and in-house practices. There is now a professional obligation to comply with legal duties contained in legislation. However, the obligations go beyond simple legislative compliance.

Relations with third parties is a routine area because we deal with third parties every day.

Rule 10 draws together a variety of obligations to deal with people properly. You must not use your position to take unfair advantage for yourself or another, whether client or not.

There is now a clear and unambiguous prohibition on communicating with someone who has to your knowledge instructed a lawyer; principals must fulfil undertakings given by anyone in the firm (and will be liable in conduct for breach) and the tone is one of openess subject of course to the duty at all times to act in the client's best interests.

Properly arguable documents

Rule 11 imposes additional related duties if you conduct litigation or appear as an advocate. 'Court' is widely defined and means any court, tribunal or enquiry of England and Wales, court martial or any court of another jurisdiction.

There is a new requirement not to recklessly mislead a court; to do so knowingly has always been an offence. Interestingly, it will now be professioanl misconduct to draft any documents containing a contention you do not consider to be properly arguable. Advocates are required to follow a much more stringent code (see Rule 11.05)

The Code extends our duties in very many ways and the devil is in the detail. That said, it is easier to understand and to impliment than anything before.

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