SUMMARY
Once again a large part of the meeting was taken up by discussing matters in Part 2 relating to setting the business plan and budget for 2008. There was also a debate on the pursuit of excellence looking at setting policy in respect of accreditation scheme and other matters.
The Council discussed whether or not the SRA should be involved in accreditation and what type of accreditation should be proposed. It was argued that accreditation should add value not increase the barriers to practising solicitors.
Although the Council remain concerned about the granting of the Bostalls waiver and the difficulties this will cause in attempting to regulate a firm via it’s employees the SRA Board are unmoved.
The LCS face increasing difficulties with regard to mineworkers compensation cases. It is possible that they may have to write a letter (to be dictated by the Commissioner) to up to a thousand complainants who did not receive compensation for distress and inconvenience.
The Management Board have decided to continue the scheme to advance compensation payments ordered against a firm who are currently refusing to pay. As a result of an increase in complaints following the Rother Valley Pilot the Society’s exposure (should the money fail to be recovered from the firm) has increased from £100K to £400K.

Council Motion in respect of the unrest in Kenya

The following was carried unanimously.

‘In the light of the violence and unrest that have been caused by the disputed result of the recent presidential elections in Kenya, the Law Society Council :-

• Supports the Law Society of Kenya’s call for all parties involved in Kenya’s elections to adhere to international legal standards and domestic constitutional provisions which protect the rule of the law;

• Offers its support to the Law Society of Kenya in its call for the peaceful resolution of the current political situation in Kenya and for the use of legal assistance, in conjunction with other s in the international legal community;

• Supports the stance taken at the weekend by the European’s Union’s Development Commissioner, Louis Michel, when he called for peace and urged both sides to stop exacerbating tensions.’

Report of the Chair of the Solicitors Regulation Authority Board

Referral arrangements

In December the Board met to conduct its promised 12 month review of referral arrangements.

The SRA Board felt that compliance with the rules were extremely disappointing although it was accepted that the samples were small and that because of the targeted nature of the monitoring, problems had been uncovered in areas where they had been expected.

The SRA Board agreed that the focus should remain on education (of both the profession and the consumer) and on monitoring and also to make it easier for solicitors to comply.

The SRA Board also wish to make it more straightforward to take disciplinary action against those who did not. They considered the possibility of removing the right to enter into referral arrangements from solicitors who had failed to comply with the Code. The SRA Board was not generally in favour of pursuing the question of criminal offences.

The SRA Board specifically agreed the following:-

i) that a return to a complete ban was not feasible at the moment;
ii) that further consideration should be given to whether the rules and guidance needed greater clarity;
iii) that consideration should be given to establishing a mechanism whereby solicitors might be approved or accredited for the purposes of entering into referral arrangements;
iv) that consideration should be given to requiring solicitors to make annual reports on referral arrangements;
v) that consideration should be given to producing model agreements;
vi) that targeting and monitoring should be increased with one aim of achieving a critical mass of data;
vii) that an information campaign should be devised, aimed at educating the public on referral arrangements;
viii) that the question of seeking criminal sanctions should not be pursued;
ix) that, depending upon the circumstances, solicitors might be precluded from recovering costs or expected to repay deductions as part of the determination of complaints or investigations.

It was agreed that there would be further review in 12 months.

Residual client account balances

The SRA Board is preparing draft rules which will impose a specific obligation on solicitors to return surplus client funds once they are no longer needed and require solicitors to keep a client informed about funds which have been retained after the end of the matter. The draft rules will also allow for the withdrawal from client account to residual client account balances of £50 or less without prior SRA approval and provide full checks on compliance by the reporting accountants.

“Speccing”

Speccing is where solicitors agree to indemnify their clients in respect of any costs order that may be made against the client, usually in conjunction with a conditional fee agreement. The main issue is whether offering such an indemnity amounts to effecting and carrying out a contract of insurance for the purposes of the Financial Services and Markets Act 2000. The SRA will be preparing some questions and answers highlighting the potential problems in using this method of funding litigation very shortly.

Bostalls Waiver

Written question from David Morgan Council Member

Does the waiver for Bostalls mean that the rules do not apply? In granting such a waiver, do we make special arrangements to monitor compliance, and do we charge people for the costs of the compliance?

SRA response

Solicitors employed by Bostalls are allowed to operate a commercial telephone advice service under rule 13 (in house practice). The waiver acts as a small extension to rule 13 and permits them to do slightly more than this e.g. get details of the charge and other background information from the police and negotiate a caution rather than the client being charged. In all other respects, the solicitors have to comply with the Code of Conduct and this is reinforced in the terms of the waiver. In relation to the monitoring of the service, we have no power to monitor Bostalls –the LSC do that to check compliance with the terms of the contract and that KPIs etc are being met. We can, however, monitor the solicitors and could do our own checks on whether they are complying with the rules, in particular rule 5 under which they are responsible for supervising the non-qualified advisers.

With regard to the response given to the Bostalls waiver, it was asked whether or not there had been a risk assessment of matters which may not have come to the SRAs attention by relying upon regulating the employees of the organisation rather than the organisation itself and if so could this be disclosed to Council.

Also, whether or not the SRA had risk assessed what could and could not be dealt with by regulating employees and if this could also be disclosed to Council. Also, how they will identify solicitors and within the organisation as at present it was not clear.

Peter Williamson asked that the question will be submitted in writing and he would respond.

SRA and BME solicitors

On the 18th October Keith Vaz MP met with Anthony Townsend, the Chief Executive of the SRA following a request from Keith Vaz to discuss unexplained discrepancies in the involvement of BME solicitors in some areas of the SRAs compliance activities.

In response, the Board have agreed to set up a working group chaired by a Board member, Penny Owston together with representatives of the BME practitioner groups to finalise a programme of work. This group has not yet met and the programme of work is not entirely clear at this stage but it will include statistical analysis and cold case review.

The SRA have provided a schedule setting our statistical data relating to regulation by racial group and a copy of this paper is available on request.

The working group will also consider the report of Chief Superintendent Ali Dizaei who is President of the National Black Police Association (NBPA) the SRA is continuing to examine its management information to try to understand the causes for the unexplained discrepancies. It will be seeking external advice but no appointment has yet been made.

“CCBE State” – Consequential Change in Definition in the Code of Conduct.

On 20th August 2007 the statutes of the CCBE (Council of Bars and Law Societies of Europe) were amended to introduce a new change of membership. Up until 20th August 2007, the CCBE had to two classes of members:

• legal professions that that were full members of the CCBE; and
• legal professions that were observer members of the CCBE

Accordingly, rule 24.01 of the Solicitors’ Code of Conduct 2007 defines ‘CCBE state’ as ‘any state whose legal profession is a full member or an observer member of the CCBE’.

However, the former category of observer members of the CCBE has been divided as two separate categories:-

• associate members (currently the legal profession of Croatia and Turkey)
• observer member (currently the legal professions of Macedonia, Montenegro, Serbia and Ukraine).

Accordingly, rule 24 of the Solicitors’ Code of Conduct 2007 now needs to be amended to refer to ‘any state whose legal profession is a full member, an associate member, or an associate member or an observer member of the CCBE’.
Council passed the rule change unanimously.

The Diploma In Local Government Law & Practice

In December 1983 the Law Society Council approved the creation of a Diploma in Local Government Law and Practice to be awarded by the Law Society to solicitors (and more recently barristers) who passed the prescribed assessment requirements and had two years experience of working in local government as a trainee and/or post qualifications. The Council made the Diploma in Local government Law and Practice Regulations in 1984 to facilitate the administration of the diploma and to provide for a supervisory board.

This was set up as a result of the local government law option being dropped from Law Society finals in 1979 and at that time there continued to be a demand for a qualification in local government law.

Since its inception about 590 candidates have completed the course with its uptake currently running at about 35 a year. At present there are estimated to be around 4000 solicitors working in local government. The diploma is administered by the College of Law and run on a distance learning basis. The finances administered by the College of Law under the supervision of the Board any profit is shared between the college and the SRA.

However, the SRA indicated that they did not believe that the Diploma in Local Government Law and Practice was a matter which should fall within the remit of the SRA and Council were asked to ratify the decision of SRA Board that the Diploma should be transferred to the representational side of the Law Society from 1st January 2008.
This was agreed.

Report Of The Chair Of The Board Of The Legal Complaints Service (LCS)

The LCS Board reported that the timeliness targets covering cases 12 months old and those closed within 3 months are on schedule and are expected to be met. There is currently an underspend shown on the budget but ultimately there will be an overspend, this is primarily due to the need for additional resources to fund the action plan put in place to recover momentum following the floods and achieve an increase in performance levels.

On questioning, it was reported that 2 complete working days were lost as the floods occurred on a Friday and the work was carried on as normal by Tuesday, the delay being caused by the waiting for the power to be returned to the site.

There has been an improvement in the quality target but an increase in the number of referrals to the Legal Services Ombudsman. Each customer is given a feedback form to measure customer satisfaction and the LCS currently achieve a 40% return.

Visualfiles has been temporarily closed down and therefore the vehicle for developing the LCS data collection system has not yet started.

There will be amendments to the current Customer Complaint Form and Customer Feedback Form to include additional categories which need to be captured in relation to disability data.

A question was put regarding mineworkers’ compensation which hitherto has been treated as a special case in that normal rules were relaxed and the Rother Valley pilot began which sought to generate complaints. It was asked whether or not there were plans to roll out the Rother Valley pilot elsewhere and whether or not these complaints would continue to have an enhanced status.

Professor Saggar indicated that the pilot (phase 1) had demonstrated that there was a hidden consumer detriment. Phase 1 had provided quite persuasive evidence and was well worth the exercise. However it could not be rolled out everywhere as it would be an atrocious drain on resources.

In phase II, there was a move now to stop treating mineworkers’ compensation cases as a special case and to allow unheard, un-dealt with cases to be dealt with through Rule 2 so there would be some hope of getting closure on these complaints. This would allow the firms concerned to deal with outstanding cases.

Journalists and MPs still tended to think of mineworkers’ compensation as a special case. However Professor Saggar realised that there needed to be certainty for the profession and an end in sight to these cases.

In response to a further question from a Council Member who had recently visited the LCS concerning the dedicated team which seemed to have been set up to handle mineworkers’ compensation cases. Professor Saggar indicated that it was not entirely correct to say there was a dedicated team as there was in fact a dedicated parliamentary team and they dealt mostly with miners’ compensation cases.

Politically it was not possible to wind it back right now. The additional team consists of approximately 20 people who are temporarily budgeted for March but not for the whole of next year and they had been put in place to deal with the Rother Valley pilot. However, the complaints handling team are now looking at bringing closure for miners and their families.

The team may need to be kept at full strength as the Commissioner had set targets to be delivered by March ’08. The Commisioner has been critical of the payments to some complainants. This might require the LCS to write to the complainants on up to a thousand files to see if they want to reopen their cases. The letter will be dictated by the Commissioner. It concerns a majority of cases where the complainants didn’t get a payment for distress and convenience. Professor Saggar reported that some wanted the money for distress and inconvenience and pursued it but some had been asked and said they didn’t want it.

The LCS are still not getting endorsement from the Commissioner despite all the money and effort that has gone into handling mineworker’s complaint scheme. Some firms are still not dealing with complaints. He felt that essentially, the LCS are being asked to pay for the delay caused by these firms which is outside of their control. The Legal Services Complaints Commissioner is quite adamant about this.

The LCS would now like to reintroduce a time limit and to put these complaints through the normal complaints procedure and they are currently discussing this with the Government. In response to a question regarding a comment that it was not necessary for the LCS to time record because the LCS did not charge fees. It was asked that Deborah Evans clarify and confirm that the LCS does not charge fees. Deborah Evans confirmed that this would be incorrect in respect of cases upheld on adjudication which is approximately 5% of the caseload. In these cases fees would be charged.

Governance Review:- Update

Council size and composition
Council members will be consulted shortly on the size and composition of Council.

Board Chair Compensation

The Management Board is not bringing recommendations to the Council at this stage.

The operating manual and working methods

There had been a plan to remove some matters from general regulations and to replace the outdated Council member handbook. However this was withdrawn from the debate following the identification of drafting mistakes within the documents before Council.

The future structure of the Regulatory Function–whether by a Regulatory Company or Board

The Regulatory Affairs Board discussed the principles which should govern detailed arrangements for the relationship between the Society and it regulatory arms. As the Legal Services Bill has received Royal Assent the legislative basis for the relationship is now confirmed.

Chief Executive’s Report

Legal Aid Update

Judicial Review
The Legal Services Commission is still maintaining that the effort of the Judicial Review does not impact on the new fixed and graduated fees brought in from October/January. It is the Law Society’s position that the new fee schemes have fallen. Negotiations are being attempted to overcome this but it may be necessary for the Law Society to litigate further to resolve the issue.

So far as the General Criminal Contract is concerned, as this is only a six month contract, it had intended to concentrate the Law Society’s efforts on getting the replacement contract right. The LSC has accepted the offer to work collaboratively with them on the new contract.

VAT on the General Criminal Contract
There is a significant drafting error in the General Criminal Contract that provision purporting to allow firms to claim VAT on top of the fees set out is less clear than it should be. More seriously, the hourly rates and the standard fees for the Magistrates Court work are all exclusive of VAT, while the LSC is maintaining that the fixed fees for the police station are inclusive of VAT. The Society wrote to the LSC on 9th January proposing a sensible way forward that would address both these points.

CDS Direct
The Society remains concerned about the police are incorrectly interpreting how CDS Direct is intended to operate. There appears to be a widespread misconception that if the suspect is asking for legal aid they are only entitled to the duty solicitor rather than their own solicitor.

Attempts are being made to monitor the impact of the scheme and to ensure any such misconceptions are corrected promptly. Concerns about the scheme are being raised with the Parliamentary Committee considering the changes to the Codes of Practice under the Police and Criminal Evidence Act needed to bring in this scheme.

Best Value Tendering
The LSC issued its consultation on best value tendering on 19th December with a deadline for responses of 3rd March. A request for an extension has been rejected. The Society is seeking professional legal commentary and economic evidence to inform the response as well as soliciting views from the profession through the practitioner groups, regional managers and a survey on the Law Society website.

Criminal Justice and Immigration Bill – Designated Caseworkers (DCWs)
As per the House of Commons research paper 07/65 on the Bill has indicated the Law Society have put forward a second reading briefing regarding concern as to the proposed extension of the role of designated caseworkers to include work such as the prosecution of summary trials and the proposal to remove the ability of the Court of Appeal to refuse to uphold convictions based on an abuse of the investigation or prosecution process. Further lobbying will continue.

Miners Compensation Cases
It was decided in the summer that the Society should offer ex-gratia advances of compensation to complainants in the miners’ compensation cases where solicitors firms decline to comply with the LCS decisions. Complainants are then asked to assign the benefit of the award to the Society in exchange for an advanced payment of the sum concerned. The SRA continues to pursue the firm concerned to the SDT and the intention is that the Society will recover the amount advanced if and when the SDT confirmed that the firm is liable to pay. A total of 44 clients have so far been paid £34,000.

Following the Rother Valley pilot, there are now just over 400 complaints awaiting adjudication. The consequence of this is that the Society’s potential total exposure is significantly larger than the original estimate perhaps amounting to as much as £400,000 if the Society could not eventually recover the sum. The Management Board agreed to continue to offer ex-gratia advances on the current basis.

Report of the Chair of the Legal Affairs and Policy Board – Linda Lee

Review of Committee Structure

The meeting with the Committee Chairs took place on 10th December 2007.

It was clear that there are on-going problems relating to policy support to committees and needs to be resolved as soon as possible.

Meetings have taken place with the staff who are reviewing the system urgently to try and ensure that effective and efficient support is delivered within the current framework.

It was also clear that there are difficulties regarding communication between the Society and the committees, staff and the committees, committees and the profession and between committees themselves. Further work is being taken forward to address this. It was also agreed that it would be sensible and fair to have public acknowledgement of the work of the committees. For example Practice Directions will acknowledge the work of the specialist committee who carried out the work.

There was considerable support from Committee Chairs for a review of the committee structure and the role of the committees and looking at possible new models for the committees. A grid has been developed to evaluate the effectiveness of committees and there will be further refinement to the original draft.

The committee chairs have been asked to continue to assist in this process and it is likely that further meetings will take place with Committee Chairs over the coming months as new models are developed and considered.

It was also clear that there needs to be a process by which underperforming committee members can be removed from committees in the rare event that this proves necessary as part of the support required for Committee Chairs.

The Board’s Work Plan

Papers will be coming to the Board in January identifying the work to be undertaken to meet the Board’s work plan. A review of the issues surrounding commoditisation has also been added to the work plan as it is envisaged that this will have even greater impact on the profession in the future. The Board will also be reviewing the business plan for the directorate submitted to Council in December.

Legal Aid

This is a fast moving area and Richard Miller and his team, together with the legal team, did a considerable amount of work over Christmas period following the Legal Services Commission notification that they intend to terminate the civil legal aid contract. There are a number of matters which need to be discussed by the Board and the steer given by Council on policy will guide the Board in reaching its decisions on broad policy issues in the following areas:

1. Single fee for Crown Court litigation and advocacy.
2. Best value tendering.
3. A proposal by the Legal Services Commission to rule out a series of seminars on peer review in conjunction with the Law Society.

Technical issues will continue to be dealt with at committee level.

Cost Advisory Committee
Fraser Whitehead has been appointed by the Council to the Cost Advisory Committee and provided an initial report on the three major areas of work identified namely:

• advocacy fees for the fast track
• inter-partes hourly rates
• PI fast track proposals.

Lawyers are to be surveyed on what might be a fair rate of pay in terms of hourly rates. Fraser has been contacted by a number of organisations representing litigators and he has agreed to keep in contact with them.

Report of the Chair of Membership Board – Kevin Martin

The Board reported that it had developed a number of positive relationships between the Law Society and local Law Society. The role of Regional Managers in working closely with local Law Societies has helped develop this new relationship and the Board approved a protocol on effective joint working between the national and local law societies.

A new editor has been appointed to the Gazette, Paul Rogerson and the Board have approved new plans to redevelop and redesign the Gazette online and in hard copy.

Report of the Chair of the Regulatory Affairs Board – Helen Davies

The Board’s Education & Training Committee met and has appointed following a tender process, Kim Economides and Justine Rogers to work on a project to review ethics and integrity issues within the profession. The Board has responded to a number of consultations from the SRN and examined the wider regulatory issues and developments in the UK and the application and better regulation principles to the work of SRA.

Report of the Chair of the Management Board – Philip Hamer

The Management Accounts showed a significant surplus at the end of September which was due in part to a delay in undertaking planned activities, particularly on IT.

The Society is pressing the SRA for details of when it will apply to court over payments from the statutory trust accounts to the compensation fund. 98% of overpayments to the compensation fund in 2006-2007 had been repaid at the beginning of November. The Board approved work to refurbish the Council Chamber but rejected proposed external redecoration of 113 and 114 Chancery Lane in view of budgetary pressures.

The Board has decided to halt work on the LCS Visualfiles project until a review has taken place by the IT Director of the project.

The Board Chairs answered questions on the papers submitted to Council. (Thanks to Michael Franks for the notes taken in this session).

Concerns were raised regarding the detailed work plans for the new Boards they were currently still in draft form and whilst it was understandable that it took time to start from scratch it was agreed that this must be a priority.

It was suggested that the Membership Board should develop a protocol for working with local law societies and Kevin Martin agreed that this could be looked at.

Helen Davis was asked what steps had been taken to put forward the Society’s views on referral fees and she reported that it was on the agenda.

Higher Courts Exemption Information

The Higher Courts Exemption Information is on the website click here