The SRA has updated its guidance on client confidentiality after the Legal Ombudsman (LeO) found that its investigations into allegations by third parties of poor service by law firms were being hampered by a lack of disclosure by law firms based on their duty of client confidentiality. An example of such a scenario is a complaint by a residuary beneficiary under a will about the speed of winding up the estate and distributing the deceased’s property pursuant to the terms of the will.
2. General duty of confidentiality
Paragraph 6.3 of the Code of Conduct for Solicitors, RELs and RFLs and of the Code of Conduct for Firms (collectively, the Codes) obliges solicitors, RELs, RFLs and SRA regulated bodies (collectively, law firms) to keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents. The duty exists as an obligation under both common law and data protection legislation as well as being one of the core professional principles set out in section 1(3)(e) Legal Services Act 2007 and the professional standards in the Codes.
The courts have said that the duty to preserve confidentiality is unqualified, in that it is a duty to keep the information confidential, not merely to take all reasonable steps to do so.
There are a number of exceptions to the general duty, one of which applies to third-party complaints to the LeO.
3. Third-party complaints to the LeO
The LeO has faced isolated difficulties in investigating third-party complaints against law firms: mainly complaints brought by residuary beneficiaries against law firms’ executor client(s).
The law firms have submitted that they are unable to disclose the information requested by the LeO as to do so would breach either their duty of confidentiality owed to their executor client(s) or legal professional privilege.
Two possibly competing requirements arise:
- Law firms are required by the Codes to co-operate with the LeO.
- Law firms are required by the Codes to keep the affairs of their client(s) confidential unless disclosure is required or permitted by law or the client(s) consents.
4. The SRA’s guidance
If the Leo requests information from a law firm, because they are investigating a third-party complaint against the law firm, the law firm should write to its client(s):
- Notifying them of the LeO’s request and the basis of the LeO’s stated authority to request it.
- Informing them that, unless they object, the firm will provide to the LeO the information that has been requested.
- Explaining to them that, in the event that they do object, the law firm will notify the LeO of this and will require the serving by the LeO on the firm of a notice under section 147 Legal Services Act 2007.
The SRA says that it has been advised by the LeO that a notice under section 147 overrides any duty of confidentiality that law firms may owe to their client(s), although this authority does not, of itself, extend to any material covered by legal professional privilege.
5. Our Services
At The Strategic Partner, we provide law firms with a range of services to assist in managing their business.
Our detailed firm review is an intensive piece of consultancy where we spend the necessary time with a law firm to understand how the firm operates and, through doing so, assess where a firm can make improvements or changes, resulting in improved efficiency, increased profitability and improved service, whilst ensuring all regulatory obligations are being met.
Risk Regulation & compliance Service including AML – Our Risk, Regulation and Compliance Service (including AML) has been designed to provide law firms of all sizes with a compliant environment. We provide you with policies and procedures that are bespoke to how your firm works, whilst drawing your attention to any gaps in your risk and compliance activities.
We work with firms of all sizes and types, from partnerships to ABSs, high street firms, and multinational firms. Each firm is different, and whilst there is a commonality of regulation and expected standards, it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices.
Our Risk, Compliance, AML Guidance and Register Administration Service provides law firms with a cost-effective solution to outsource the upkeep of the firm’s registers and to provide compliance guidance to the staff. Our service releases the Compliance Officers from some of the day-to-day burdens of keeping up with the regulatory requirements.
For more information about The Strategic Partner or any of our services, you can call us on 02039119710, you can email us email@example.com or visit our website to make an online enquiry here.
You can view and download the PDF version of this article here.