A difficult balancing act

Chris Heaps explains why smaller practices are so often the focus of the Solicitors Complaints Bureau's attention

The Solicitors Complaints Bureau (SCB) is often accused of devoting a disproportionate amount of its time and resources to the activities of sole practitioners, and some sole practitioners are convinced that the SCB discriminates against them.

So far as the alleged discrimination is concerned, nothing could be further from the truth. The SCB, like the Law Society Council, fully recognises the contribution to the profession made by sole practitioners and small firms and understands the important part played by them in the provision of legal services throughout the country.

Nevertheless, it is true that some of the duties and responsibilities imposed by the Law Society Council on the SCB, and the Adjudication and Appeals Committee, are mainly concerned with sole practitioners and small firms. These responsibilities are covered in particular by the powers exercised by the Adjudication and Appeals Committee in relation to the Compensation Fund and the powers of intervention which are granted by the Solicitors Act 1974 (as amended by the Courts and Legal Services Act 1990).

The Adjudication and Appeals Committee, of which I have been chairman for two and a half years, is a Law Society Council committee whose terms of reference require it to deal with the conduct of solicitors, registered foreign lawyers and recognised bodies, and the quality of work of such people.

Among the powers delegated to the Adjudication and Appeals Committee by the council are the powers contained in the Solicitors Accounts Rules, the Solicitors Accounts (Deposit Interest) Rules and the Solicitors Compensation Fund Rules; the power to impose conditions on a practising certificate; and the powers relating to inadequate professional services.

The Adjudication and Appeals Committee is often perceived by members of the public to be the Law Society's lap dog. It is not. The committee is made up of 50 per cent lay members and 50 per cent solicitors, and its independence is guaranteed by the procedure whereby all members (other than Law Society Council members) are appointed by the Master of the Rolls.

The profession is well served by the positive and independent thinking of such members who devote a large amount of time to the SCB.

Sole practitioners and small firms may perceive, wrongly, that the SCB and the committee are biased against them because it is generally only in respect of such firms that the committee exercises its powers of intervention under Schedule 1 of the Solicitors Act 1974.

These powers were granted, and are exercised by the committee, to protect the public and I am proud that its careful exercise of such powers has been demonstrated by its decisions being upheld in court on almost every occasion when they have been challenged in recent years.

The most common grounds on which the committee may decide to intervene in a practice are:

* The suspected dishonesty of a solicitor.

* breach of the accounts rules.

* bankruptcy of a solicitor or an arrangement with his or her creditors.

* incapacity by illness, accident or age.

* abandonment of practice.

* practising uncertificated.

The powers to intervene, which have been described by some as draconian, are not exercised lightly.

However, I hope everyone will appreciate that, particularly in cases of suspected dishonesty, urgent action may be required, not only to protect the interests of clients but also, by reducing claims against the compensation fund, the interests of the profession itself.

The Adjudication and Appeals Committee exercises such powers of intervention in respect of sole practitioners because there is no other way the public can be protected.

Where a partner is suspected of dishonesty, for example, such suspicions can be brought to the attention of other partners in a firm and steps can be taken to protect the client account and clients' affairs. The committee only exercises its powers to intervene in a partnership where all of the partners in a firm are suspected of dishonesty.

Similarly, claims against the compensation fund that are dealt with by the committee relate generally only to sole practitioners. If a client suffers loss as the result of dishonesty by a partner, the client is recompensed by the Solicitors Indemnity Fund under which partners are insured against the dishonesty of fellow partners.

In the event of dishonesty by a sole practitioner, the client is protected by the Solicitors Compensation Fund, which is a last resort discretionary fund maintained under Section 36 of the Solicitors Act 1974. This provides that “where the Council is satisfied that a person has suffered or is likely to suffer loss in consequence of dishonesty on the part of the solicitor… or in consequence of failure to account by a solicitor, in each case in connection with that solicitor's practice, the Law Society may make a grant for the purpose of relieving that loss or hardship”.

These discretionary statutory powers have been delegated by the council to the Adjudication and Appeals committee, and grants were authorised in 1994 in excess of u20 million.

The sums paid out by the compensation fund and by the Solicitors Indemnity Fund because of dishonesty have risen alarmingly in recent years. I hope that all members of the profession realise that it is in their own interests, as well in the interests of clients, that solicitors should report to the SCB any suspicions they have of dishonesty by another member of the profession.

It is obvious from the above that most matters dealt with by the Adjudication and Appeals Committee resulting in interventions or payments from the compensation fund relate to practices of sole practitioners.

In contrast, the committee's policy when dealing with other matters of conduct, for example, breaches of undertaking and conflicts of interest, is to treat all solicitors in exactly the same way, whether they are sole practitioners or partners in large and famous firms.

The most serious sanction that can be imposed by the committee is to refer the conduct of a solicitor to the Solicitors Disciplinary Tribunal which alone has the power to suspend or strike off a solicitor.

During 1994, 2,111 decisions were handed down by the tribunal of which only 54 related to sole practitioners. Of these, 23 were suspended, 16 were struck off and 15 were fined.

These figures indicate not only the fair approach adopted by the committee in remitting solicitors to the tribunal but also show that the committee's decisions were justified by the subsequent tribunal decisions.

The SCB will never be popular, and neither it nor the Adjudication and Appeals Com- mittee claims to be infallible. Nevertheless, I believe all members of the profession should be proud of the protection afforded to the public by the SCB, the Solicitors Compensation Fund and the Solicitors Indemnity Fund.

The profession is ill-served by continual complaints by members of the profession about the SCB, when the amount of money it costs and the need for its existence are within the control of the profession. If dishonesty and inadequate professional services can be eradicated or materially reduced, the need for the Solicitors Complaints Bureau will also diminish.

Chris Heaps is chairman of the Law Society Adjudication and Appeals Committee.