SLAPPS and the SRA

The Solicitors Regulation Authority (SRA) published new guidance on Conduct in Disputes in March 2022. It had a positive reception across the profession and it was endorsed by the government in its Call for Evidence on SLAPPs (Strategic Lawsuit Against Public Participation). The guidance has been cited frequently since then in the context of ongoing cases and it is the foundation of the SRA’s latest warning notice on SLAPPs issued last November.

The previous guidance called Balancing Duties in Litigation was issued in 2018, before the SRA’s new Standards and Regulations came into force. The introduction of the new Codes of Conduct in 2019 heralded a fresh era of regulation based on a simplified rule book. The previous handbook, with long lists of outcomes and indicative behaviours, was replaced with concise descriptions of minimum standards of ethical behaviour and professional conduct.

Following Russia’s invasion of Ukraine in February 2022, SLAPPs emerged as a focus for regulatory intervention. This was an ideal opportunity for the SRA to take the lead in bringing about regulatory reform to tackle the misuse of the legal process.

The SRA’s primary objective in its 2020-2023 Corporate Strategy is to set and maintain high standards for the legal profession. Part of the thinking was how guidance could be improved to deliver against this objective, by driving up standards of compliance without the need to take regulatory action.

One key aim was to create an effective tool for practitioners to help them determine the threshold for reporting misconduct. In some ways, the reporting process is at the front line of the SRA’s regulatory functions. Reporting plays a crucial role in the gathering of evidence to facilitate investigations and the profession becomes the eyes and ears on the ground to identify and collate information on alleged misconduct. When the line between compliant and non-compliant behaviour is clearly drawn in guidance, the deterrent effect is maximised.

In Autumn 2021, the SRA began a review and undertook a comprehensive redraft and simplification of the 2018 guidance, with these objectives in mind.

The title was changed to Conduct in Disputes and the scope was extended to cover dispute resolution and pre-action advice, not just litigation. The preamble reminds solicitors that this includes matters settled out of court

The two key categories of non-compliant behaviour were renamed from ‘predatory litigation’ to ‘making allegations without merit’ and from ‘abusive litigation’ to ‘pursuing litigation for improper purposes.’ Such clarifications aimed to ensure easier application to a wide range of circumstances in practice.

Duty to report

In parallel with this exercise, the SRA began reviewing reporting obligations. It quickly became apparent how closely guidance and reporting are connected. The government’s Call for Evidence on SLAPPs specifically references the passages in the new guidance reminding solicitors to be vigilant in scrutinising their own and others’ conduct. It also aimed to address how the behaviours described in the guidance can be evidence of misconduct capable of amounting to a serious breach, thereby informing the duty to report.

For a good illustration of how powerful the relationship can be, we can look at the rise of disrepair claims against social landlords. This was, in fact, the original category of cases I used to formulate that link. A disrepair claim is an allegation by a tenant of residential property that their home is in a state of disrepair. Under Common Law, for a landlord to be liable, it needs to have been put on notice that a disrepair exists, and then fail to rectify it within a reasonable time.

As Group Counsel at Southern Housing Group from 2012 to 2021, I witnessed the increase in disrepair claims being issued against us, and according to commentary across the housing media I learned this was a widespread problem for the sector as a whole.

Upon examination, we discovered that nearly every claim we defended in-house had one or more elements that did not comply with the letter or spirit of the Pre-Action Protocol for Housing Conditions Claims or fell afoul of legislation. But at that time, we were struggling to find a clear basis to report misconduct as a way to defeat such claims.

When I joined the SRA in 2021, I had the opportunity to contribute to the re-drafting of the guidance. I renamed it Conduct in Disputes and I recommended changing the heading of the first category of non-compliant behaviour to ‘Making allegations without merit’ as a better generic description that would cover a wide spectrum of behaviours falling short of expected standards.

I added the specific example of ‘disrepair claims that have been issued before a proper inspection or survey has taken place or where disrepair has been alleged where none exists’ to illustrate when a breach is serious and therefore reportable.

The Housing Ombudsman, writing in Inside Housing in December 2022, acknowledged that the problem had been building for years and many social landlords are struggling with rising legal claims and associated costs. He recognised the value of the reference in the new guidance as an effective tool to tackle the issue.

There are six separate paragraphs devoted to the duty to report misconduct in the Regulations. The SRA found, in its Thematic Review published on 14 February 2023, that a significant proportion of firms interviewed had a less than adequate understanding of their reporting obligations.

Through my role as Head of Regulatory Management at the SRA, I became aware of a degree of misunderstanding and misinterpretation of the rules amongst some law firms and individual fee-earners too. I set about preparing a checklist and accompanying report form to help those solicitors decide when and how to report allegations of misconduct.

Reporting misconduct

Paragraph 7.7 of the Code of Conduct for Solicitors requires solicitors to report facts and matters they believe could amount to a serious breach of regulatory arrangements. The most frequent question I had encountered about this obligation when I was at the SRA, was how firms should determine a breach was serious.

The main sources of regulatory arrangements are contained in the SRA’s Standards and Regulations, and breaches will often comprise non-compliance with a combination of SRA Principles and paragraphs of the Codes.

If a potential violation has been found, solicitors should note the factors that, in their opinion, make the breach serious. Assessing seriousness for the purpose of reporting under the code is a professional judgement based on a solicitor’s reasonable belief.

This is where the new guidance really comes into play. The generic descriptions of behaviours lend themselves to application to many different factual scenarios and they can be used as a ready-made professional judgement to support that belief. This means that by using the guidance and by following a very simple three-stage process, solicitors can prepare high-quality reports easily.

A report should set out:

·        the facts and matters you are reporting (ie the evidence).

·        the regulatory arrangements you believe have been breached: paragraphs of the Codes and the Principles.

·        the factors you believe render the breach serious; here you can refer to the relevant descriptions of behaviours in the guidance.

By following these steps, solicitors will be vigilant in making code-compliant reports, thereby maximising the deterrent effect of the new guidance and improving the quality of reports to make for easier investigations. It would also reinforce the SRA’s regulatory purpose of promoting the public interest in the practice of law.

Anthony Armitage was the Head of Regulatory Management at the SRA from May 2021 to September 2022. He is now managing director at First Law firstlaw.co.uk