November 21, 2018

Mental health issues are not “exceptional circumstances” in solicitor dishonesty cases

The High Court's recent decision in the linked appeals SRA v James & Others [2018] EWHC 3058 (Admin) reminded us once again that dishonest conduct by a solicitor will almost invariably result in striking off, even in the cruellest of circumstances.

The decision

The High Court has ruled on the appeals by the SRA against suspended sentences being imposed on three solicitors found to be dishonest:

  • Sorani James actively misled her client and her firm about the conduct of a file for a period of 17 months. The Solicitors Disciplinary Tribunal (SDT) found that Ms James was a victim of her firm's "bad, ineffective and inappropriate management" and accepted her evidence that she was terrified at work and suffering from physical and mental symptoms of stress and anxiety. The SDT found that "the root cause of [Ms James's] misconduct…was the combination of the culture of the Firm in terms of pressures placed on junior solicitors and her mental ill-health arising from the pressures of work allied with difficult personal circumstances….[Ms James] had an egg-shell skull personality at the time of these events." By the time of her SDT hearing three years had passed and Ms James was working without any problems as a solicitor in a supportive environment. The SDT imposed a period of suspension (itself to be suspended) and a Restriction Order to ensure that Ms James could only work under supervision.
  • Esteddar MacGregor was the COLP and salaried partner of a sole practitioner's firm. She discovered that the firm had overcharged the Legal Aid Agency in respect of travel expenses and time incurred by interpreters and that her sole principal, Mrs Abey, was taking active steps to conceal this fraud. Instead of reporting this misconduct immediately, Mrs MacGregor helped Mrs Abey for several days before withdrawing and reporting the misconduct some 8-9 months later. The SDT found that Mrs MacGregor had been solely motivated by her desire to protect Mrs Abey who was in poor health; in fact Mrs Abey collapsed when she was eventually reported to the SRA. Mrs MacGregor was found to be under a very high level of pressure at work and at home at the time of her misconduct. She was an anxious person and medical evidence suggested that she may react in a particular way to certain triggers, which included a fear of someone she cared about dying. The SDT imposed a suspended period of suspension and a Restriction Order.
  • Peter Naylor was a corporate law associate instructed to facilitate the restructuring of three companies. He had a recent medical history of stress-related symptoms and depression and, following a period of severe over work, had told his firm that he felt "broken" and unable to cope.His work pressures were not relieved and he missed the deadline for making certain necessary applications for his client. He thereafter sent the client five emails giving the false impression that the applications had been made. When the file was transferred to another associate Mr Naylor's misconduct was identified and the position rectified. The only loss suffered by the client was the cost of preparing a further set of accounts for its three companies. Medical evidence before the SDT suggested that at the time of his misconduct Mr Naylor was suffering from an adjustment disorder as a reaction to severe stress and had a lifelong history of poor responses to stress. However, he had a previously unblemished career and references speaking highly of him.The SDT imposed a two year period of suspension, suspended for two years, plus a Restriction Order.

The SRA appealed these decisions.  It contended that the SDT had not followed its own Guidance Notes on Sanctions (5th edition December 2016) which state that"…A finding that an allegation of dishonesty has been proved will almost invariably lead to striking off, save in exceptional circumstances." The SRA asserted that none of these sets of circumstances were sufficiently exceptional to merit the imposition of a lesser sanction than striking off. 

The High Court agreed with the SRA, for three key reasons:

  1. The most significant factor to be considered by the SDT in such circumstances must be the extent and impact of the dishonesty.Maintaining public confidence in the solicitors' profession is paramount.
  2. Mental health issues such as work-related stress and depression will not – without more – amount to the exceptional circumstances needed to avoid striking off, particularly in cases of prolonged or repeated misconduct.In order to qualify, the impairment would probably have to result in the sufferer being unable to distinguish right from wrong, or to cause a one-off "moment of madness".
  3. Pressure of work and extreme working conditions are not exceptional circumstances.Even in the case of Ms James, who was found to have been working in a "toxic" environment, the Court held that this was a matter of personal mitigation which should not be accorded the same weight as the nature and extent of her dishonesty.

In all three cases the SDT's decisions were overturned and Ms James, Mrs MacGregor and Mr Naylor have been struck off.

Reaction and implications

The decisions have been met with concern by members of the profession and legal commentators. It is the permanence of the sanction which causes such concern: although it is possible for a former solicitor to be restored to the register it is highly unlikely where a finding of dishonesty is made.  Striking off for dishonesty is a professional life sentence.

The burden on the individual solicitor does not seem likely to lighten any time soon.  As we reported in August, the SDT is proposing to amend the burden of proof in SDT proceedings to the civil standard ("on the balance of probabilities") rather than the current, criminal, standard ("beyond reasonable doubt").  Most other professions now adopt the civil standard.  The Law Society opposes the proposed change on that basis that prosecution success rates are already extremely high and the consequences for the individual solicitor are severe, but it may well be passed.  In addition, there are still no Fitness to Practice rules in place for the legal profession even though the power to introduce these was granted to the SRA by the Legal Services Act 2007.

In these circumstances, the need to support young lawyers becomes ever more important.  Mental health issues are rife in the legal profession and often not talked about. Even where, as Mr Naylor did, a solicitor lets his firm know that he is struggling, action is not always taken.  Times have changed, and it is no longer acceptable for a firm to leave its lawyers to "sink or swim". 

Law firms have historically tended towards a culture where it is common to feel the pressures of financial targets and client demands, and it can often feel difficult for lawyers to own up to something less than perfection.   Add to this the modern practice of law, and changes to working practices - such as access to email via smart phones and the ability to work remotely - and these can leave lawyers feeling the need always to be switched on and never able to leave the demands of work behind. 

Failing to address these issues can give rise to both ethical and risk issues.  The consequences of burn-out can be very serious not just for the individual but also the law firm.     In addition to the PI claims which will arise from mistakes made by an over-burdened solicitor, the firm may face employment law claims from the individual in question.   It is also possible that firms themselves could face regulatory sanctions: although it appears that the SRA does not intend to take action against the firms involved in these cases, it could consider regulatory enforcement in a future case, for example for breaches of the obligations currently contained in Chapter 7 of the Code of Conduct1 .

We are now starting to see welcome reports of law firms taking initiatives in this area, with training and education programmes on resilience, and attempts to create a culture that is more open and supportive, but with LawCare (a charity supporting mental health and wellbeing) reporting at the start of the year that it received a record number of calls to its helpline in 2017, clearly this needs to remain an area of increased focus and investment of time and resource by all firms. 

[1]Or, following incoming changes to the Handbook, contained in the Code of Conduct for Firms