When can a dishonest professional receive a lesser sanction of suspension?
15 Nov 2018
Solicitors Regulation Authority v James, MacGregor and Naylor  EWHC 3058 (Admin) — read judgment here.
In three appeals, the Divisional Court considered the circumstances in which a solicitor might avoid being struck off the Roll after findings of dishonesty in disciplinary proceedings. In short, if you are a dishonest solicitor, striking off will be hard to avoid. The impact on other regulated professions is up for grabs.
In three separate cases the Solicitors Regulation Authority (the ‘SRA’) appealed against the sanction decision of the Solicitors Disciplinary Tribunal (the ‘SDT’). In each case the SDT made findings of dishonesty against a solicitor but then found exceptional circumstances that justified a lesser sanction of suspension rather than striking off. In fact, in all three cases the suspension imposed was itself suspended. The SRA argued that there were no exceptional circumstances and the sanctions were unduly lenient.
Ms James’ Case
Ms James was an employed solicitor specialising in clinical negligence litigation. She let work on a file lapse and then made misleading statements to the client and firm about the progress on the file. She also wrote and back-dated a number of letters to further the misleading impression she had been progressing the case, when she had not.
The SDT found she had been dishonest in relation to both the misleading statements and the back-dated letters, applying the test of dishonesty, as clarified by the Supreme Court in Ivey v Genting Casinos Ltd  UKSC 67.
When considering sanction, the SDT found that the root cause of her misconduct was a combination of the culture and pressures at her employing firm and her own mental ill-health, arising from those work pressures and difficult personal circumstances. It also considered the fact that she had worked without further incident in the three years since the dishonesty and had demonstrated insight into her conduct. For all these reasons, the SDT decided there were exceptional circumstances so that she should not be struck off.
Mrs MacGregor’s Case
Mrs MacGregor was a managing partner and compliance officer (‘CO’) in a solicitors’ firm. She became aware that another partner, Mrs A, was over-claiming expenses from the Legal Aid Agency and had embarked on a scheme to conceal these improper claims. She appreciated that, as CO, she had a duty to report this to the SRA but she did not as she feared for the health of Mrs A. For a few days she became involved in covering up the misconduct. Mrs MacGregor eventually reported the matter to the SRA.
The SDT found she had been dishonest in assisting Mrs A to cross-check invoices for the false claims. It found her only motivation had been to protect Mrs A. In considering if there were exceptional circumstances justifying a sanction less than striking off, the SDT said that Mrs MacGregor had been under a very high level of pressure both at work and at home, and found there were exceptional circumstances. She was suspended.
Mr Naylor’s Case
Mr Naylor was an associate solicitor at a firm. He sent a number of emails to a client giving the misleading impression that certain applications to the FCA had been submitted. They had not. He admitted this at a meeting with his employers and was reported to the SRA. He was seen by a psychiatrist who said, at the material time, he had been suffering from an adjustment disorder as a reaction to severe stress. This stress came from his work. The SDT found he had been dishonest but also found that his mental ill-health was an exceptional circumstance to justify suspension rather than striking off.
The SRA appealed each of these decisions on sanction.
The Court undertook an extremely helpful review of the authorities on the approach to disciplinary sanctions in cases of dishonesty by solicitors. It is worth noting that most of the authorities relied on came from the solicitors’ disciplinary world, although there was some cross-over into the field of healthcare discipline. The impact this judgment will and should have on bodies such as the Medical Practitioners’ Tribunal Service (‘MPTS’) will no doubt be up for argument in the coming months.
The SDT Guidance Note on Sanctions states, citing SRA v Sharma  EWHC 2022 (Admin):
The most serious misconduct involves dishonesty, whether or not leading to criminal proceedings and criminal penalties. A finding that an allegation of dishonesty has been proved will almost invariably lead to striking off, save in exceptional circumstances.
This Court also referred to the classic judgment in Bolton v Law Society  EWCA Civ 32 in which Sir Thomas Bingham MR stated that the almost invariable sanction for dishonesty was striking off the Roll of solicitors. The purpose of the sanction was not just punishment and deterrence but most fundamentally:
… to maintain the reputation of the solicitors’ profession as one in which every member, of whatever standing, may be trusted to the ends of the earth. To maintain this reputation and sustain public confidence in the integrity of the profession it is often necessary that those guilty of serious lapses are not only expelled but denied re-admission” .
In Sharma Coulson J had summarised the principles relating to dishonesty and exceptional circumstances as follows :
- Save in exceptional circumstances, a finding of dishonesty will lead to the solicitor being struck off;
- There will be a small residual category where striking off will be a disproportionate sanction in all the circumstances;
- In deciding this, relevant factors will include the nature, scope and extent of the dishonesty itself; whether it was momentary or over a lengthy period of time; whether it was a benefit to the solicitor; and whether it had an adverse effect on others.
In Sharma Dove J also explained that
at the heart of any assessment of exceptional circumstances, and the factor which is bound to carry the most significant weight in that assessment, is an understanding of the degree of culpability and the extent of the dishonesty which occurred … it will have a very important bearing upon the assessment of the impact on the reputation of the profession … identified [in Bolton] as the bedrock of the tribunal’s jurisdiction .
The Court’s approach in these appeals, seen very clearly in its application of the law to the facts, was that in determining whether exceptional circumstances exist, the focus must be on the nature and extent of the dishonesty and the degree of culpability.
By contrast, whilst personal mitigation might be relevant to the overall assessment of whether there are exceptional circumstances, this should be approached with caution. This is because sanctions in professional disciplinary proceedings are not primarily punitive. Rather they aim to protect the profession’s reputation. Personal mitigation is less relevant to this aim.
In each of the three cases, the Court found the SDT erred in principle and was wrong to find there were exceptional circumstances to justify suspensions. It gave three reasons:
- As explained above, the most significant factor in assessing an argument on exceptional circumstances is an evaluation of the nature and extent of the dishonesty. Flaux LJ stated “the exceptional circumstances must relate in some way to the dishonesty” . The Court did accept that this evaluation can and will include matters of personal mitigation such as mental health and workplace stresses but that mitigation must simply be a factor in the balancing exercise. In each case it found the SDT had failed to properly engage in that balancing exercise and had placed too much weight on the personal mitigation.
- In the Court’s judgment mental health issues suffered by a solicitor as a consequence of work or other matters could not, without more, amount to exceptional circumstances where the SDT has found dishonesty. By definition, the Ivey test of dishonesty required findings about the actual state of mind of the solicitors. In each case, despite the mental health issues, the solicitors had known the difference between honesty and dishonesty .
- The Court relied on a finding made by Rupert Jackson LJ in Wingate and Evans v SRA  EWCA Civ 366 at , that pressure of work or working conditions cannot ever justify dishonesty by a solicitor. The rationale in this reason is similar to the second reason.
Two points for discussion jump out.
First, although mental ill-health and significant work stresses did not amount to exceptional circumstances in these cases, the Court did not give any real guidance on what would.
Exceptional circumstances should primarily relate to the act(s) of dishonesty and the culpability. For example, a single dishonest act might be less culpable than repeated dishonesty, but does this feature properly fit the label exceptional circumstances? Would a dishonest act entirely motivated by the physical or mental well-being of another be exceptional circumstances? Possibly, but in Mrs MacGregor’s case she said she had acted for out of concern for Mrs A’s mental health.
Secondly, after a finding of dishonesty in a professional discipline hearing, sanction usually becomes a hard-fought battle of submissions. Different disciplinary tribunals will have different sanctions guidance. The parties and tribunal will need to carefully examine the relevant guidance.
The SDT’s guidance starkly stated that a dishonesty finding would almost invariably lead to striking off, except in exceptional cases. But this is not uniform language across other disciplinary tribunals. For example, the current Medical Practitioners Tribunal Service (MPTS) sanctions guidance (February 2018) states that dishonesty, especially where persistent or covered up, may indicate erasure is appropriate (§109). Elsewhere it states that dishonesty, if persistent and/ or covered up, is likely to result in erasure (§128). It does not say erasure almost invariably follows and has no ‘test’ of exceptional circumstances.
The Court itself recognised that
the broad discretion as to sanction afforded to the [MPTS] is not circumscribed by the limitation of “exceptional circumstances” in determining whether a lesser sanction than striking off is appropriate .
Nevertheless, professionals may see regulators using this case to try to persuade tribunals to take an even stricter line when it comes to the consequences of dishonesty.
Leanne Woods is a barrister at One Crown Office Row.