Council Member Report - Linda Lee

Council Member’s Report, Aug.‘22

Writing this report at the end of July, with the August holidays looming, I thought you might

benefit from a summer reading list[i], to pack for the beach.

Latest Law Society guides:

Probably a good idea to sort out your personal Law Society account before you fly out as Practice Notes are accessible only by those with a Law Society account (available to anyone who signs up) and it now has to be updated to permit a twostage authentication requirement.

Register of overseas entities (ROE)

Property lawyers acting in property transactions involving overseas entities are no doubt fully prepared for the requirement to register overseas entities from 1 August 2022. Over the period to 31 January 2023 there is also work for your in-tray upon return with a requirement for retrospective registration of transactions from 1999.

However, at the time of writing neither the Department for Business, Energy and Industrial Strategy (BEIS) nor HM Land Registry had produced their technical guidance. It is hoped that this will be available shortly.

The Law Society have produced an ‘Interim note for real estate/property lawyers: New register of overseas entities (ROE)’ which gives guidance to property lawyers acting for: • overseas entities in property transactions, or • clients based in England and Wales buying or leasing property from overseas entities

It should be noted that the Republic of Ireland is an overseas jurisdiction for the ROE.

The Law Society has also prepared guidance entitled, ‘Register of overseas entities: what solicitors should know about verification’[ii] which leads to the detailed guidance, ‘Economic Crime (Transparency and Enforcement) Act 2022 – communication for solicitors when undertaking verification responsibilities’.

Solicitors are not obliged to verify an overseas entity purchasing UK property. However, it is anticipated that clients may well ask their solicitors to verify the entity. If solicitors do choose to verify but are not compliant with the law, they will leave themselves open to criminal prosecution and may be professionally negligent. Property lawyers involved in such transactions will be well advised to keep an eye on the Register of overseas entities in force on 1 August: how property lawyers can comply page[iii] on the Law Society website for the latest developments in advice and guidance.

Undertakings:

For those who prefer a lighter read, you may recall that back in August 2021, I reported on the case of Harcus Sinclair LLP & Anor v Your Lawyers Ltd[iv] which caused consternation in some circles with calls for urgent parliamentary intervention to ensure that undertakings given by incorporated law firms, particularly Limited Liability Partnerships (LLPs) and Alternative Business Structures, could also be enforced summarily by the courts.

Not surprisingly, there are no plans to legislate, but the Law Society has produced a practice note, ‘Professional undertakings’[v] which is estimated as a twenty-seven-minute read. It is a thorough review of the law and regulatory issues relating to undertakings and serves as a good reminder that the processes and systems surrounding the giving and receiving of undertakings needs to be kept under regular review. It reminders readers that even if the firm which gave the undertaking no longer exists, any individual who gave that undertaking will still be bound, a ‘must read’ for all solicitors. The position regarding undertakings given by corporate entities requires careful consideration case by case.

Consultations: ‘Increasing the use of mediation in the civil justice system’

For those who like to plan their autumn months early, this consultation[vi] was published on the 26 July 2022 and closes on 4 October. Parties will have to attend a free mediation appointment with HMCTS’ Small Claims Mediation Services before their case can progress to a hearing. It will be possible to apply for an exemption, but this is discouraged. This will apply to cases worth less than £10,000, other than in Housing disrepair and Personal Injury cases, where lower limits will apply. The intention is that it will ultimately extend the requirement to mediate to all County Court users, although it does not appear at this stage that free mediation will be available to higher value cases. A short consultation at only 26 pages with 16 pages, you may want to consider responding or alternatively looking up training courses to become a mediator!

Civil Justice Council - Costs Review

This consultation[vii] opened on 30 June 2022 but does not close until 30 September.

The Civil Justice Council is conducting a wide-ranging review of civil costs, including costs budgeting, guideline hourly rates, the wider impact of fixed recoverable costs, and the impact on costs of pre-action protocols and digitalisation.

The consultation will also consider the distinction between “party and party” costs and “solicitor and own client” costs. At present, the assessment of solicitor and own client costs is governed by section 70 of the Solicitors Act 1974 (“the Solicitors Act”) and by CPR 46.9. These provisions are due to be considered by the Court of Appeal at an adjourned hearing of the appeal against the decision in CAM Legal Services Limited v Belsner.[viii]

This concerned a low value RTA case pursued through the RTA portal which settled pre-issue. Costs recoverable from the RTA Defendant were limited to fixed costs plus disbursements. Ms Belsner had signed a conditional fee agreement

(CFA) with a 100% success fee. The costs payable by Ms Belsner were potentially greater than the sum of damages she would recover. The matter was adjourned by the Court of Appeal to hear specialist evidence on costs and is due to return to the court later this year.

Question 3.3 at Annex B asks, ‘is there a need to reform the processes of assessing costs when a claim settles before issue, including both solicitor own client costs, and party and party costs?’ The consultation also seeks views on whether the distinction between noncontentious and contentious costs should remain but with no indication of where this will ultimately lead.

SRA website

After a busy year, the SRA has wound down for the summer with the announcement that they will be commissioning research[ix] by Frontier Economics, a leading economic insight consultancy.

The aim of the research is to: better understand the size and scope of the market for unreserved legal activities – as provided by both regulated and unregulated providers

identify potential risks and opportunities the unregulated sector may present for consumers

It is hoped this will assist the SRA to, ‘develop future thinking on how best to improve access to legal services while still ensuring the proportionate levels of public protection are maintained.’

The SRA also announced[x] that its plans to increase its fining powers from £2,000 to £25,000 for solicitors, traditional firms (recognised bodies or recognised sole practices) and the individuals who work in them would take effect from 20 July 2022. This has had a mixed reception. There is the view of those who hope that the increased fining powers will ensure that cases are dealt with by the SRA, rather than be referred to the Solicitors Disciplinary Tribunal, and lead to speedy resolution and lower costs. Others question the increased power of the regulator as investigator, prosecutor and judge (and express concern that admissions may be made by the innocent because of their fear and impecuniosity) and in the case of small entities the pressure to settle in borderline situations.

In order to enable Solicitors Indemnity Fund (SIF) to stay open to new claims for a further year, until September 2023, the SRA has resolved the question of the guarantee[xi] and will not be calling on the Law Society to provide the guarantee as happened last year. The SRA is planning further engagement in coming months to determine SIFs long term future.

Finally:

You may prefer the advice of Mark Twain who said, ‘“Drag your thoughts away

from your troubles – by the ears, by the heels, or any other way you can manage it. It’s the healthiest thing a body can do.”

Reject my holiday reading list, there are lots of uplifting reading lists available online.

Happy summer!

Linda Lee

Council Member March 2022

Linda Lee has been Council Member for Leicestershire, Northamptonshire and Rutland since 2003. She is a past President of the Law Society of England and Wales and is the current Chair of the Professional Indemnity Insurance Committee and a member of the Policy and Regulatory Affairs Committee, the Regulatory Processes Committee and Access to Justice Committee.

She is current Chair of the Solicitors Assistance Scheme.

Linda is an experienced litigation solicitor and is a Consultant at Radcliffesle Brasseur where she specialises in solicitors’ disciplinary, compliance and regulatory work. She can be contacted by email at: lindakhlee@aol.com

[i] Regulatory solicitor style [ii] https://www.lawsociety.org.uk/topics/ property/register-of-overseas-entities what-solicitors-should-know-about verification

[iii] https://www.lawsociety.org.uk/topics/ property/register-of-overseas-entitiescoming-into-force-on-1-august-howproperty-lawyers-can-comply [iv] [2021] UKSC 32 [v] https://www.lawsociety.org.uk/topics regulation/professionalundertakings#sub-menu-dy13 [vi] https://consult.justice.gov.uk/disputeresolution/increasing-the-use-ofmediation

[vii] https://www.judiciary.uk/related-officesand-bodies/advisory-bodies/cjc/ working-parties/costs [viii] [2020] EWHC 2755 (QB). [ix] https://www.sra.org.uk/sra/news press/research-unregulated-legal market-provision-unreserved-legalservices

[x] https://www.sra.org.uk/sra/news/press statement-fining-powers/ [xi] https://www.sra.org.uk/sra/news/press/ sif-extension-july-2022