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REGULATION FOR LITIGATORS

WRITTEN BY JAYNE WILLETTS, SOLICITOR ADVOCATE, JAYNE WILLETTS & CO SOLICITORS.

There was a time when if a client wished to conceal certain incriminating litigator’s duty to act in the best interests of their client was regarded as paramount, subject of course to the duty not to mislead the court. Today others to mislead is very wide-ranging and contrary things are quite different. The duty to act in the best interests of a client is now demoted to number 7 - bottom of the list of the SRA Principles 2019. At number 1 is the duty to act “in a way that upholds the constitutional principles of the rule of law and the proper administration of justice”.

This change of emphasis corresponds with the SRA’s move to ethical and principles-based regulation as opposed to a rules-based regime. The rules applicable to litigators begin with the SRA Principles, above. If our duty to act in the best interests of our client conflicts with our duty to the court then the duty to the court would take precedence. For example, documents from disclosure, the solicitor should advise the client of their obligations to the court and if the client refused to comply then the solicitor would have no option other than to cease acting.

The duty not to mislead the court is now included within Rule 1.4 (Code for Individuals & Code for Firms) and is no longer part of the specific section of the Code relevant to litigation. Rule 1.4 is a more general rule prohibiting misleading clients, the courts, or others “either by your own acts or omissions or allowing or being complicit in the acts or omissions of others (including your client)”. The duty not to allow the most important being Principle 1, as referred to

to the original judgment of Lord Diplock in Saif Ali v Sydney Mitchell [1980] AC 198 in which he stated that an advocate could passively stand by as long as he did not actively mislead the court.

The specific section of the Code for Individuals that relates to litigation is at Section 2 and is headed “Dispute resolution and proceedings before courts,

tribunals and inquiries”. Exactly the same rules apply within the Code for Firms. There are seven rules within this section, most of which have applied previously in the same or similar guise. At Rule 2.4 you are required “to only make assertions or put forward submissions to the court or others which you know to be properly arguable”. Do beware of any novel or even specious arguments that your client has dreamt up in the bath and which they want you to run up the flagpole. Also note that the duty is not just limited to making assertions to the court but also extends to making statements to “others”, care is needed if making elaborate, but ultimately unarguable, statements to the opposing lawyer at the outset of litigation. There is an obvious tension here between balancing your duty to the client to pursue all avenues on their behalf with the duty imposed by Rule 2.4. demonstrates the duties of a litigator. Mr Brett was the in-house lawyer for The Times newspaper group and was defending an application for an injunction. He knew that a Times journalist had obtained information about the identity of a policeman blogger by hacking an email account.

Nonetheless, he allowed the journalist to submit a statement which suggested that the journalist had only obtained the information through legitimate means. He compounded this by failing to instruct Leading Counsel for The Times that the hacking had taken place. Mr Brett did nothing to correct the incorrect information and, in doing so, misled the court and the opposing lawyers. He explained that he had a dilemma between his duty to the court and his undertaking to the journalist not to disclose confidential information. Mr Brett was suspended by the SDT for 6 months but then appealed to the Administrative Court which allowed his appeal in part by substituting “knowingly” for “recklessly” in relation Other areas of particular risk are without notice applications where there is a duty to ensure that there is full and frank disclosure to the court. Disclosure is another potential pitfall, especially with an uncooperative client. You should also remember that you have a continuing obligation to the court. If you have inadvertently misled the court you must correct the mistake. That obligation not to mislead the court continues for the duration of the case.

The SRA Risk Outlook paper on balancing duties in litigation is worth mentioning as it highlights specific concerns such as predatory or aggressive litigation which it considers might constitute a breach of the rules.

And finally, bear in mind that litigation is the only practice area which is subject to a statutory obligation under the Legal Services Act 2007. At Section 1 (3) (d) as one of the five statutory professional principles, litigators are required to “comply with their duty to the court to act with independence in the interests of justice”.

The SDT emphasised the duty of independence in SRA v Paul Simms 2020 “A solicitor is independent of his client and having regard to his wider responsibilities and the need to maintain the profession’s reputation, must and should on occasion be prepared to say to the client “what you seek to do may be legal but I am not prepared to help you do it”

The difficulties for litigators of balancing duties to the court and to the client should not be underestimated. A culture within litigation departments of discussing and sharing such practical experiences is recommended so as to avoid the unwarranted interest of our regulator.

Jayne is also a director of Infolegal Ltd www.infolegal.co.uk which provides compliance services to law firms

OPINION

With society in lockdown, we are adapting to use virtual connections more than ever before. Our conferences in boardrooms have become telephone calls from our kitchens, team meetings have become invaded with children and pets, and after work drinks have become quizzes on Zoom.

In some ways, being out of the office has disconnected us, and we all miss saying hello in the lift or catching up whilst making a coffee. However, in other ways, we have never been so in touch.

Social Networks such as Twitter, Instagram, LinkedIn and TikTok are flooded with colleagues challenging each other to run or dance for charity on the weekend, to dressup at home, and to share stories of how we are all coping indoors. We are bakers, teachers, runners and office builders and we are sharing each of these experiences through our screens.

Whilst social media has been thriving for years, it is in these last few months we have really begun to appreciate what it can do for the better. It has become a support system. I find myself liking and commenting on colleagues’ and friends’ posts more than usual; checking-in and making sure they are doing ok at home. Previously, we have been warned away from screen-time and made aware of the negative impact it can have on our mental health. Whilst these risks remain, I have seen a change in how social media is being used. Newsfeeds are no longer showingoff what holidays we are on or what restaurants we are going to, but instead a reminder that we are all in this together, even when apart.

Different law firms are being united through online events and virtual challenges. Different departments are encouraging each other’s successes and creativity. Different ideas are coming forward to figure out how we can make this work.

As it becomes more difficult to distinguish our home lives from our work lives, we are sharing the two. Telling colleagues about details of our homes which we never shared before, and seeing into our family members’ working day routine.

Whilst this cross-over is temporary and we will one day return to the office, a change in our ways will definitely last. I hope we continue to share and encourage through social media, and recognise the good it can bring when used correctly.

Our networks have no limit when we adapt and recognise it is all still possible, just in a different way.

This time has allowed us to stop the commutes. It has helped us to appreciate our homes and communities. Yet it has also shown us how to share our experiences in new ways. Whilst I cannot wait to go to a coffee shop or to see my colleagues in person, I know we have become more connected in other ways. Socialising through screens has never been so positive, and we may have changed the future on building virtual connections for good.

Article written by Grace Mullis, Trainee Solicitor at Irwin Mitchell LLP. Grace is currently in her second seat in Medical Negligence and Abuse Law. Grace is a founding member of the firm’s Social Media Group which aims to develop relationships with colleagues, clients and the wider community through Twitter, Facebook and LinkedIn. See what they’ve been up to by following @ Community_IM and @GraceMullis_ IM on Twitter.

THE IMPORTANCE OF SECURE REMOTE WORKING:

OVERCOMING CYBER SECURITY CHALLENGES DURING THE COVID19 CRISIS AND BEYOND

In recent years, there has been an increased demand for remote working in the legal industry. Although law firms are known for spending long hours in the office and the need for frequent faceto-face meetings, there has still been a desire to adapt to modern day working practices. However, prior to the pandemic, many firms were reluctant to implement widespread remote working strategies. This is largely due to the cultural and technological implications of a home working transition. Nevertheless, when the government announced lockdown plans back in March, law firms were forced to quickly overcome these home working obstacles. Ready or not, they were faced with a sudden remote working test run.

In a rush to maintain ‘business as usual’ during lockdown, many firms focussed on maintaining user connectivity. However, effective remote working not only depends on having access to company resources but also that critical data, systems and the corporate network are fortified from advanced cyber-threats. While many legal firms have been able to successfully telecommute during the pandemic, there is a concern that there is a lack of security measures to protect client data.

ARE YOU CONFIDENT THAT YOUR REMOTE USERS ARE

SECURE? Outdated security infrastructures simply cannot accommodate remote working. For instance, employees who are accustomed to office-based working, will no longer be protected by the network-based security measures. By trading robust onsite security controls for an unprotected home Wi-Fi, corporate devices are exposed to Internet-threats which cannot be detected or blocked by the onsite firewall.

Although digital transformation plans will always introduce some element of cyber-risk, before the pandemic, law firms had the luxury of taking time to carefully consider the implications of new working practices. However, due to the scale and speed of this change, many legal firms have unknowingly introduced critical vulnerabilities into their systems. Unfortunately, hackers are aware of this sudden spike in lax security measures and are keen to exploit them.

THE COVID19 THREAT LANDSCAPE As data controllers, legal firms process and store large volumes of confidential client data. This commercially sensitive information makes them an attractive target for malicious attacks. It can be used to pressure firms into paying large ransoms or to sell on the dark web. Unsurprisingly, cyber-breaches can have an irreparable impact on legal firms. It can not only damage reputation and client relationships, it can also lead to loss of revenue and critical data.

A recent study conducted by a BlueVoyant discovered that legal firms face thousands of daily cyber-threats. Admittedly, there has always been a high volume of attacks targeting the legal industry. However, as the pandemic has forced these targeted company’s into widespread remote working, cybercriminals are eager to exploit firms while their guard is down.

These bad actors are using sophisticated, multi-faceted methods in order to exploit network vulnerabilities. Earlier this year, cybercriminals launched a devastating attack on the law firm Grubman Shire Meiselas & Sacks. The hacking group stole 756 gigabytes of sensitive data which included emails, contracts, nondisclosure agreements, phone numbers and email addresses. They then threatened to release sensitive client information into the public domain unless they received a ransom of £35 million.

As this influx of advanced threats continues to rise, more and more firms will fall victim to data breaches. Unfortunately, this rise in targeted attacks during lockdown is compounded by the lack of security controls in place to protect remote users. A remote working strategy should not be implemented as a short-term solution. In order to safeguard client data, it is important to develop a ‘bullet-proof’ security strategy which minimises the risks of this new way of working. As lockdown begins to lift across the globe, law firms need to act swiftly in order to remain cyber resilient. This should involve eliminating security gaps, increasing user visibility, deploying advanced security solutions and proactively identifying critical vulnerabilities.

REGISTER FOR THE WEBINAR On the 8th July at 11:00am Equilibrium Security Services and Birmingham Law Society are hosting an informative webinar which will explore the risks of remote working during the Covid19 crisis and beyond. This virtual event will address: The Cyber Security pain points which are keeping IT Managers up at night, common security weaknesses which are putting firms at risk of attack and how legal firms can strengthen their overall security posture. Please head to our website to register.

*As a follow up to this session, we will provide a complimentary ‘Security Review’ for all attendees. Our security experts will provide up to 4 hours of free consultancy to conduct a gap analysis of systems, policies and security controls. This will help to identify weaknesses in your security armour which could be exposing your business to cyber-threats.

OPINION DIVERSITY DOES NOT EQUATE TO EQUALITY.

The death of George Floyd in America, immediately triggered flashbacks of the brutal murder of Stephen Lawrence a black, British teenager, who was killed in cold blood whilst he waited for a bus in London on the 22nd April 1993 writes Shaid Parveen.

The only motive for the murder was the colour of his skin. The failure by the police to act led to an enquiry where Lord McPherson defined Institutional racism as "The collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture, or ethnic origin.

It can be seen or detected in processes, attitudes and behaviour which amount to discrimination through prejudice, ignorance, thoughtlessness and racist stereotyping which disadvantage minority ethnic people."

If we really want to challenge racism we need to accept that it exists in society and, at the very least, possibly in our workplaces. While this will no doubt be an uncomfortable feeling, we must remind ourselves one person’s discomfort can lead to another person’s isolation.

There is no doubt that there is diversity within the legal profession, as the proportion of Black, Asian and Minority Ethnic (BAME) lawyers working in law firms is 21% in comparison to the 13% of the workforce in England, Scotland and Wales who are BAME. In Birmingham, the BAME working population in Birmingham is some 25% as opposed to 13%, so one would hope to see a higher proportion of BAME lawyers in the city.

Figures from the SRA state that in firms of 10 to 50 partners, the representation of BAME partners is only 10%, an indication that, despite gaining entry into the profession, there are barriers to progression within firms.

So here is your moment to reflect. Sit back for a moment and undertake a review of racial equality in your firm. How many BAME members of staff do you see? Are they represented throughout your organisation, if not why not? Is it right? If it is not right what can be done to improve things?

As Solicitors, there is a positive duty to act in a way that encourages equality, diversity and inclusion (SRA, Principle 6). Therefore, being non-racist and passive in your rejection of racism is not sufficient. Organisations need to adopt an anti-racist policy to actively address racism in the workplace.

In order to discuss how this can be achieved, firms are encouraged to have a conversation around race.

However, action is also required. As a legal community we need to share good practice. We would invite you to forward details of initiatives within your firm which seeks to address racial equality in the law. In addition any ideas or expressions of interest in BLS holding future events/discussions concerning race and diversity are also welcome.

FINANCING LAW FIRMS AMIDST THE PANDEMIC

BY ROBERT HANNA, MD AUGUSTA The impact of coronavirus has put many Law Firms under tremendous pressure. Lockdown has adversely affected all sectors of the economy and professional services is particularly exposed. Many law firms have found that clients are seeking to protect their own cash by delaying payments, or deferring projects. As a result, income for most lawyers will be down. And with high fixed costs of well-paid staff and prime location rents, there is often significant overhead which cannot sustainably be reduced. As many firms are lightly capitalised, the need for alternative sources of funding which have short term benefit but do not hamper the firm in the long term has never been greater.

Of the myriad finance options out there, five are likely to be under active consideration by law firm leaders: working capital optimisation; bank overdraft facilities, internal funds (partner calls); government coronavirus support; and litigation finance for cases or portfolios. Each has benefits and costs. Some of these levers will be more familiar to management teams than others. 1) WORKING CAPITAL. Managing LockUp is familiar to many law firm partners. Timely issuance of bills and chasing payments are established disciplines. The challenge today is that clients who themselves are under pressure are pushing back on paying bills already issued. Partners may, therefore, be reticent to chase unpaid bills let alone issue new ones to avoid damaging relationships. Some firms may look to use a factoring company to provide immediate cash flow, but this may suggest the firm is distressed. Others may seek to delay payments to their own suppliers, but this risks reputational damage. A balance must be found to secure cash today without causing longer-term damage.

2) BANK OVERDRAFTS. Many firms will have established credit facilities with one or more lender. Where good relationships exist, and covenants allow, it may be possible to seek an extension of agreed facilities in the short term. Whilst base rates have fallen, banks will apply risk-based pricing to any new facilities granted, which may mean costs are prohibitive. Firms will also need to consider the long-term impact of liabilities taken onto their balance sheets – debts will one day need to be repaid. For many firms, bank facilities will be low down the list of preference but may be the default choice where limited knowledge of alternatives exists.

3) PARTNER FINANCE. Often seen as a last resort, seeking funding from partners remains an option for many. For some firms, this may be in the form of delaying or reducing partner distributions. This will probably be unpalatable but is usually speedy to implement. Other firms may look to tap partners to inject further equity. This is likely to be particularly difficult in current circumstances due to the personal impact it will have on colleagues in both short and long term. Partner finance is politically unpopular but is likely to be on the agenda of many management teams who have not yet explored other options.

4) GOVERNMENT SUPPORT. This is a rapidly evolving area with numerous options, the benefits and costs of which are now becoming clear. Facilities include grants for ‘furloughed’ and sick staff wages, deferred VAT bills, loans for SMEs and debt facilities for larger businesses backed by the Bank of England. Law firm leaders should explore all options but be aware that these facilities are unlikely to be long-lasting, nor cover the full extent of lost income.

5) LITIGATION FINANCE. A perhaps unfamiliar option, here clients or the firm take funding from a third party to cover legal bills. Funding can be structured so that it is non-recourse so is neither on the client’s nor the firm’s balance sheets. This method guarantees payments to firms in the short term and may add a competitive edge in winning work today and for the future. There are few downsides for the law firm providing they ensure a reputable funder is introduced to their client, to protect valuable relationships. Firms may seek to introduce such funding on a case by case basis or engage firm wide on a portfolio of cases.

Law firm leaders are undoubtedly considering all the options available to them. Whilst familiar levers will initially rise to the top of the list, thought should be given to those that firms may not yet have fully engaged with. Litigation funding is likely to be one of these. And with such funders in the UK having raised significant sums in recent years, support is likely to be available at both the speed and quantum that firms need, to both shore up for today and ensure the firm is on a solid footing for tomorrow. When considering all the options for immediate cash needs, leaders should keep an eye on longer term impact, in both financial and reputational terms.

augustaventures.com

LAST WORD

CORONAVIRUS DISRUPTION AND PEAK HOLIDAY SEASON OUTSOURCED CASHIERING SUPPORT

At no time ever is the subject of business interruption more relevant than during the coronavirus pandemic and summer break. COVID-19 lockdown has been characterised by disrupted working practices for the majority of law firms. Peak holiday seasons are symbolised by people taking a short respite from work to enjoy some much-needed relaxation and fun with family and friends writes Quill Managing Director, Julian Bryan.

Both of these scenarios cause obvious problems for employers. With several key staff absent simultaneously, departments become short staffed or, worst case scenario, unmanned altogether. For smaller businesses particularly, the latter is an all-too-real possibility. Holiday leave and additional absences such as sick leave, furloughing and shielding obligations mean that companies struggle to maintain normal operations with a skeleton staffing structure. This can compromise important complianceorientated functions, cashiering included. There are certain routine procedures which simply can’t wait for staff to resume working. That’s because firms have compliance-centric accounting timescales to meet – regular bank reconciliations, money movements between office and client accounts, and VAT return submissions amongst them – and depend upon a constant cash flow. Missed compliance deadlines, late bill production and delayed credit control driven by staff absence can impact compliance and cash flow, thereby accruing financial (and regulatory) penalties and sending bank accounts into the red. What’s more, without the key staff in place, there’s limited access to the right reports to accurately monitor financial status, and a sudden glut of transactions in the return-to-work and post-holiday season catch up distorts forecasting and business planning. A solution to this age-old business continuity problem comes in the form of outsourced support as these services are provided with guaranteed cashier support round the clock. This continuous service provision removes concerns about staff cover arrangements which are both a real hassle to organise and can be costly to pay for on top of existing salary overheads. Instead, there’s complete peace of mind that a named cashier is keeping accounts in order, to a high standard, in line with the SRA Accounts Rules and other regulatory guidelines. And, if the cashier’s absent, an assigned

deputy picks up the workload. From a holidaying perspective, an extra complication is that management teams often want an overview of their practice’s financial position whilst they’re on annual leave. With many service providers, that’s achievable too as access is granted to the supporting cloudhosted legal accounting software. These internet-based systems give secure, remote access capabilities so that accounts data can be safely observed from afar, including the back garden, beach or poolside.

By utilising outsourced cashiering support during these periods, compliance deadlines can be met and finances kept current because VAT returns are filed on time, accounts anomalies remedied as they arise, fee earner activity and disbursements billed upon request, and invoices paid when demanded.

Although thus far we’ve described permanent cashiering cover, another related way to avoid unexpected and holiday-time chaos is temporary support organised for a fixed term. Typically, it can be extremely difficult to cover for sudden staff absenteeism of any type. Thankfully, with temporary cashiering cover, both scheduled and unscheduled non-attendance can be catered for adequately.

Extended leaves of absence are seriously disruptive for legal practices and threaten their very survival should any breaches occur because of it. It’s reassuring to know, then, that emergency cashiering assistance can be instructed to overcome staffing challenges. Offloading the back-office cashiering function for a specified (or indefinite) duration is a viable and affordable option.

Where Quill’s concerned, our service is fully flexible, adapting to the changing needs of clients, to be scaled up or down according to requirements. In our experience, clients are so pleased with cover provided, they often try to make some subtle staffing adjustments to make things permanent thereafter.

Julian Bryan joined Quill as Managing Director in 2012 and was also the Chair of the Legal Software Suppliers Association from 2016 to 2019. Quill has been the UK’s largest supplier of outsourced legal cashiering services, and a leading provider of legal accounting and case management software to the legal profession for over 40 years.