Finland and Sweden report on fourth anti-money laundering directive (2015/849) impact

The implementation of the fourth anti-money laundering directive (2015/849) is one of the common themes this year, and how it impacts each bar. Both Finland and Sweden report, for instance, that the proposed sanctions regime of their governments under the national implementing provisions will take away the sanctioning of lawyers in some respects from the bar’s own disciplinary process, and that they have intervened strongly to try to maintain their bar’s independence.

The refugee crisis is another common topic. A number of the bars have been participating in the ‘European Lawyers in Lesvos’ project run by the Council of Bars and Law Societies of Europe (CCBE) and the German Bar Association (DAV). The project’s main aim is to send European lawyers to the island of Lesvos to support Greek lawyers in the provision of legal assistance to migrants requiring international protection.

Respecting Legal Professional Privilege

The Law Society has urged the government to ensure that the application of powers to snoop on communications respects legal professional privilege.

Commenting on a consultation on codes of practice under the Investigatory Powers Act 2016, Society president Robert Bourns said: ‘Legal professional privilege is the cornerstone of the trusting relationship between a solicitor and their client and intrinsic to the administration of justice, which is why we have fought and will continue to fight to ensure that the law provides appropriate protections.’

Chancery Lane has also published a practice note to ensure solicitors understand legal professional privilege – increasingly being seen as an ‘inconvenience’, the Society said. While LPP is vigorously protected by the courts and reflected in a range of legal provisions, proposals to combat crime, increase consumer choice and improve regulation all threaten to undermine its protections.

Bourns said: ‘This growing trend to see LPP as something of an “inconvenience” to be surrendered is a critical threat to the ability of clients to work openly and honestly with their solicitor, which is why the Law Society has responded so firmly in each case.

‘While we have had considerable success working with government to find ways to meet its public policy objectives while protecting LPP, such as with amendments to the Investigatory Powers Bill, we cannot do this alone.’

Legal professional privilege protects all communications between a solicitor or barrister and their clients from being revealed without the client’s permission.

The practice note states that the fact that LPP is a right can be overlooked. ‘It is a right, not of lawyers or the legal profession, but of our clients – whether individuals or corporates,’ it says.

Applying LPP to communications made in connection with internal investigations by corporations and regulated firms ‘requires care’.

LPP does not arise in relation to assistance with a crime, fraud or equivalent conduct (the ‘iniquity exception’).

Bourns said: ‘The whole solicitor profession must make sure it understands LPP, that clients understand LPP and the rights it gives them, that solicitors uphold it in their work and must be beyond reproach in their application of it if the justice system is to function properly.’

New discount rate for personal injury claims announced

New discount rate for personal injury claims announced

From: Ministry of Justice 27 February 2017

The Lord Chancellor has today announced changes to personal injury compensation payments.

When victims of life-changing injuries accept lump sum compensation payments, the actual amount they receive is adjusted according to the interest they can expect to earn by investing it.

In finalising the compensation amount, courts apply a calculation called the Discount Rate – with the percentage linked in law to returns on the lowest risk investments, typically Index Linked Gilts.

Today’s decision by Elizabeth Truss to lower the Discount Rate from 2.5% to minus 0.75% was made in accordance with the law and in her capacity as independent Lord Chancellor.

The law makes clear that claimants must be treated as risk averse investors, reflecting the fact that they are financially dependent on this lump sum, often for long periods or the duration of their life.

Compensation awards using the rate should put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs.

Lord Chancellor and Justice Secretary Elizabeth Truss said:

The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants.

I am clear that this is the only legally acceptable rate I can set.

The Discount Rate has been unchanged since 2001.

Today’s decision, as well as seeing compensation payments rise, is also likely to have a significant impact on the insurance industry and a knock-on effect on public services with large personal injury liabilities – particularly the NHS.

But in the announcement to the London Stock Exchange this morning, four key pledges were made:

  • the government has committed to ensuring that the NHS Litigation Authority has appropriate funding to cover changes to hospitals’ clinical negligence costs
  • the Department of Health will work closely with GPs and Medical Defence Organisations to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of NHS
  • the government will launch a consultation in the coming weeks to consider whether there is a better or fairer framework for claimants and defendants, with the government bringing forward any necessary legislation at an early stage
  • Chancellor of the Exchequer Philip Hammond will meet representatives of the insurance industry to assess the impact of the rate adjustment

The consultation, which will be launched before Easter, will consider options for reform – including whether the rate should in future be set by an independent body; whether more frequent reviews would improve predictability and certainty for all parties; and whether the methodology is appropriate for the future.

The new discount rate will come into effect on 20 March 2017, following amendments to current legislation.

Electronic signatures for LR forms

Solicitors could no longer be asked to witness signatures on Land Registry forms if proposals for electronic signatures are adopted.

In a long-awaited step towards electronic conveyancing, the registry has opened a consultation on amending rules to allow documents to be signed online by the government’s Gov.UK.Verify process. Law Society president Robert Bourns described the move as a ‘positive step’, saying the Society had backed the use of electronic signatures last year with the publication of a practice note for commercial transactions.

‘We are considering the proposals in the rules consultation, and awaiting further important details on exactly how the proposed system will work,’ he said. ‘Our focus will be to ensure that they are practical and effective, and most importantly provide appropriate identity and security measures.’

LSB revises its diversity guidance

Wednesday, 15 February 2017

LSB revises its diversity guidance

The Legal Services Board (LSB) today issues its revised statutory guidance for regulators on diversity. The changes introduced place a focus on improved outcomes, ensuring all regulators take their work in this area beyond data collection.

The revised guidance allows regulators freedom to deliver their own, targeted approaches to improve diversity in their respective professions, whilst also making sure that much needed progress will be made across the sector.

Legal Services Board Chief Executive, Neil Buckley, said:

“Diversity is a key issue on which the LSB places great significance. We believe that a more diverse profession will support the delivery of legal services and encourage innovation in the sector.

Our new guidance gives regulators greater flexibility and will help the sector find new ways of developing the diversity of the workforce and assist in collecting and using the valuable data gathered in the last five years. The guidance will support the excellent work some regulators are already doing in this area, and encourage those still developing their approach to continue to work towards a more diverse profession.

We will be reviewing the progress made by regulators in August 2017 and expect the regulators to have started to use the greater flexibility offered by this guidance to make positive strides to address this issue.”

LSB to examine SRA governance and TLS

Legal Services Board  to examine SRA governance and The Law Society see letter to Paul Tenant OBE Interim CEO from LSB

LSB letter to TLS 17 Feb 2017

Call to give SRA power to strike off solicitors

Call to give SRA power to strike off solicitors

Posted By Neil Rose 

Disciplinary cases involving solicitors are now akin to High Court trials and there needs to be a major overhaul that would make the Solicitors Regulation Authority (SRA) responsible for handing out all sanctions, including strike-offs, a former prosecutor has said.

Iain Miller said the Solicitors Disciplinary Tribunal (SDT) should turn into an appellate body for those unhappy with SRA decisions.

Mr Miller, a partner at City firm Kingsley Napley who acted for the SRA for many years but now advises law firms, said the “current long-winded system of disciplining solicitors is inefficient and costly and must not be allowed to survive much longer”.

At the moment, the SRA can only rebuke solicitors and fine them up to £2,000 – for any more severe sanction, it has to refer them to the SDT. Mr Miller said this “flies in the face of more streamlined regimes”.

He pointed to the high-profile case involving Phil Shiner, which ran for more than two years with costs expected to hit £500,000. If Mr Shiner is unable to pay, then the costs will be borne by the wider profession.

Mr Miller said: “Doubtless those involved in investigating, preparing, presenting and determining the Shiner case did so with skill and diligence. However, the system means that it simply could not have been done quicker or at less cost. The problem is a structural one and that must change.

“Under the current model, once the SRA receives a complaint, it must investigate, seek a response from the subject, decide whether to refer the matter to the SDT, prepare its application, deal with any interlocutory applications and directions, and then wait for a listing slot. Hearings are akin to High Court trials.

“While a process in which the initial decision is taken by a disciplinary tribunal is common within a professional regulatory scheme, it is less common in the financial and services sectors. There is no legal requirement to have such a disciplinary tribunal process.”

He said an alternative model would be to allow the SRA to take the initial enforcement steps subject to appeal to a tribunal. That is the model applied to alternative business structures, he pointed out, where the SRA is able to fine up to £250m, subject to a review by the tribunal.

The SRA has been pushing for an increase in its disciplinary powers for some years.

Law Society of England and Wales has appointed Paul Tennant OBE as interim chief executive.

Robert Bourns, Law Society president, said: “I am delighted to be working with Paul Tennant whilst we finalise arrangements for recruiting a permanent chief executive for the organisation.

“Paul has been chief executive of a large and complex housing organisation but also has a clear understanding of non-executive leadership roles, having been president of the Chartered Institute of Housing. This perspective will be helpful as we consider future ways of working.

“We have a clear business plan for the year focused on understanding and serving our members, transforming our IT and improving our efficiency and Paul will be working with our executive team to deliver our plans.

“Meanwhile, my focus will be on ensuring we represent the profession effectively through a period of significant change and working with council colleagues and others to progress our governance review.

“We have appointed the Good Governance Institute to help us with the governance review and have also brought member perspectives on to our review working group.

“I will say more about the recruitment of a permanent chief executive in due course and in the meantime thank Catherine Dixon for her hard and effective work with the Society.”

Paul Tennant said: “I am looking forward to working with the president, council and staff at the Law Society for the next few months.”