Whod be a COLP The role of the
Who’d be a COLP? The role of the COLP and self-reporting Ben Hubble QC
Pre 25 November 2019 Reporting Obligations "You report to the SRA promptly, serious misconduct by any person or firm authorised by the SRA or any employee, manager or owner of any such firm (taking into account, where necessary, your duty of confidentiality to your client) [Outcome 10. 4]" Additional reporting obligations arose under Rule 8. 5 of the SRA Authorisation Rules whereby the COLP had an obligation to report "material breaches". The SRA's post-consultation findings published in January 2019 stated: "it became clear that understanding of when this duty is triggered can differ. In particular, we identified that some consider that they should not report concerns to us until they have conclusively determined both the relevant facts and that these comprise serious misconduct. Others refer issues to us at an early stage. We wanted to make sure that there is greater understanding of the obligations, so all solicitors and firms have a clear and consistent view as to what we expect of them, and of what, and when, they should report…. " The proposed amendments were described as reflecting a consistent use in the standards and regulations of the term: "serious breach" to describe "conduct or behaviour which represents a concern to us, and in respect of which we may take regulatory action. "
Reporting obligations under the November 2019 Code Solicitors/firms are obliged "to report to us [the SRA]…any facts or matters that you reasonably believe are capable of amounting to a serious breach of regulatory arrangements by any person regulated by us or by another approved regulated (including you)" [paragraph 7. 7. Code for Individuals; 3. 9 Code for Firms]. That obligation is discharged by reporting to the COLP but the obligation to report remains if there is any reason to believe that the COLP will not fulfil his or her duties. The introduction to the [new] Code states: "a serious failure to meet our standards or a serious breach of our regulatory requirements may result in our taking regulatory action against you. A failure or breach may be serious either in isolation or because it comprises a persistent or concerning pattern of behaviour. "
What does “serious breach” mean? The post – consultation findings of the SRA stated: "we do not consider it desirable to define the term "serious breach" in the Codes, as we are concerned that any attempt to crystallise this is an exhaustive way in a rule, will risk proving inflexible and becoming outdated. However, the wording itself clearly, seeks to express that a mere breach is not in and of itself reportable: it must be "serious". “ “we do not want to receive reports or allegations that are unmeritorious or frivolous…. We do want to receive reports where it is possible that a serious breach of our standards or regulations has occurred and where we may wish to take regulatory action…we require reporting of facts or matters which could comprise a serious breach, rather than allegations identifying specific and conclusively determined breaches. " "This is not to suggest that firms shouldn't investigate matters nor that compliance officers shouldn't exercise their judgment in deciding whether a potential breach has occurred – indeed we want to encourage firms to resolve and remedy issues locally where they can…. these matters should be for the professional judgment of the decision maker. And that this should combine a subjective element (what they believe) with an objective element…"
When and what to report? The Guidance on Reporting and Notification Obligations (25. 11. 19): “Failure to make reports promptly can also lead to further harm or loss and carries a risk that regulatory action will be taken against you for not giving us the information that we need in a timely manner … …you do not need to provide us with a fully documented report or set of allegations…. what we need to understand is the nature of your concerns and the likely availability of any key evidence. Where you become aware of an issue, we recognise that you may well wish to investigate the nature of any concerns to understand whether they are serious and whether the evidence is sufficient to give you reason to believe that they will result in a finding. We do not expect you simply to pass on any concerns that are raised with you without question and expect you to consider the matter and be able to justify your decision. . . If you become aware of an issue which has not been reported as it should have been, or the relevant events are aged or historic in nature, then you should still report this to us as soon as possible. You may wish to set out any explanation for why a report was not made earlier … You should be prepared to evidence to us how you have reached your decision whether to report (or not) to us and any related issues that have influenced your decision"
Non-Disclosure Agreements
Most firms have advised on agreements with NDAs We recognise that NDAs, including with employees, can legitimately be used to protect commercial interests and confidentiality and in some circumstances, to protect reputation. Such agreements can operate to the mutual benefit of both parties. This warning notice, and the Handbook, should not be taken to prohibit the use of NDAs. However. . SRA Warning Notice: “Use of non-disclosure agreements” 12 March 2018
Key points from the Warning Notice & Guidance ‘… each party would have to withdraw their respective allegations … and agree not to repeat them …’; NDAs are not themselves inappropriate or unlawful: see the Court of Appeal’s judgment in ABC & Ors v TGM Ltd [2018] EWCA Civ 2329 at 61 -64; But the parties cannot seek to ‘settle’ or inhibit SRA reports, complaints or any form of regulatory/criminal investigations: 1) The SRA Warning Notice: No party can be fettered in their dealings with SRA (or other regulatory body or criminal authority); 2) Outcome 10. 7: ‘you do not attempt to prevent anyone from providing information to the SRA or the Legal Ombudsman’; 3) Non Indicative Behaviour 10. 11: ‘entering into an agreement which would attempt to preclude the SRA or the Legal Ombudsman from investigating any actual or potential complaint or allegation of professional misconduct’;
What should a COLP do? Does a COLP need to proactively investigate whether the firm’s precedent NDA conformed with the Warning Notice? What does the COLP need to do if a complaint is raised? How does the COLP decide if particular terms of a NDA amount to serious misconduct in circumstances where tension between Court of Appeal and Warning Notice? How does the COLP protect the confidentiality and privilege of the (former) client who obtained the NDA?
4 NEW SQUARE LINCOLN’S INN LONDON WC 2 A 3 RJ WWW. 4 NEWSQUARE. COM T: +44 20 7822 2000 DX: LDE 1041 E: CLERKS@4 NEWSQUARE. COM
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