The decision in SRA v Howell Jones LLP Case No. 11846-2018 has caused some consternation in the profession. Readers of our January 2019 issue will recall that a firm which attempted to put things right for a client following a mistake was fined £5,000 for an own-interest conflict, despite having (a) exercised professional judgment and (b) secured independent legal advice for the client by instructing counsel.
The SRA published guidance on 25 November 2019, Putting matters right when things go wrong, and own interest conflicts, in an attempt to resolve the tension created by the decision with the provisions of rule 7.11 of the SRA Code for Solicitors etc./rule 3.5 of the Code for Firms, which require that ‘if a client suffers loss or harm as a result you put matters right’.
The guidance is problematic however. While it appears to suggest that the issue involves the exercise of professional judgment, and that where one of the options for the client is to bring a claim against the firm, ‘you should advise the client to take independent legal advice’. This fails to address the fact that Howell Jones LLP did both. It also omits to state the need to ensure that where a client does need independent legal advice, it is not enough simply to advise the client on this, but the client actually has to take such advice: see SRA v Evans and Whiteley 11907-2018.
Further difficulties arise when one considers the examples. The guidance suggests that ‘the consequences of a defect in title may be put right through purchasing a title indemnity policy’, but does not consider the need to address adequacy of policy limits, defining the insured risk, and the solvency of the insurer.
Nor does the guidance address the situation where it may be positively in the client’s interests for the same firm to continue acting – as in the case of Hartley v Birmingham City Council [1992] 1 WLR 968 which we cited in our January 2019 issue.
For our US readers, this is a prime illustration that waivers do not resolve conflicts under the SRA Codes of Conduct.
Finally on this topic, we mentioned the case of Glencairn IP Holdings Ltd v Product Specialities Inc (t/a Final Touch) [2019] EWHC 1733 (IPEC), dealing with information barriers, in our September 2019 issue. We understand that an appeal is due to be heard in March 2020.
Links to the guidance and cases referred to above can be found on www.legalrisk.co.uk/conflicts.
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