Owning up to mistakes

In this article, we look at what to do when mistakes are made, contrasting two case studies that give some clues as to what the best response strategies are for firms and individuals regulated by the Solicitors Regulation Authority (SRA).

SRA guidance

Like other regulators, the SRA is endeavouring to cultivate a culture of openness when things go wrong, which can, at times, be tricky to balance with the regulatory objectives of upholding standards and public confidence.

In Putting matters right when things go wrong, and own interest conflicts, the SRA sets out its expectations in the event that mistakes are made. The guidance refers to paragraph 7.11 of the Code for Solicitors and paragraph 3.5 of the Code for Firms, both of which impose the following obligation: “You are honest and open with clients if things go wrong, and if a client suffers loss or harm as a result you put matters right (if possible) and explain fully and promptly what has happened and the likely impact.”

Howell Jones (11846-2018)

For many years, a commonly held view was that “putting matters right” would likely involve the firm taking proactive steps to correct any errors made. However, that orthodoxy was challenged in the case of Howell Jones (11846-2018), where such proactivity was subject to SRA censure.

The firm had acted for a husband in divorce proceedings, and gave poor advice to the client in relation to a settlement. Having identified the error, Howell Jones proposed a solution (with the blessing of its insurer): it would continue to act and seek to overturn the settlement at its own expense. That proposal was put to the client (setting out the alternative option of suing the firm) along with an offer to refund fees already incurred, and the client agreed. The firm took legal advice from counsel, who stated that the steps outlined above extinguished any own interests conflict.

Unfortunately, relations soured between the firm and the client, and the former ended up paying costs in the litigation as well as £50,000 to the client, as ordered by the Legal Ombudsman. Finding itself in difficulty with the SRA, the firm admitted to acting where there was an own interests conflict, and an agreed outcome – a £5,000 fine and costs of £26,850 – was reached.

Best practice

Where something has gone wrong, a remedy may be straightforward (for example, rectifying a defect in title). However, where one of the options for the client to rectify the problem is to bring a claim for professional negligence against the firm or solicitor, then the firm or solicitor must cease to act. The SRA guidance explains: “In this situation you should advise the client to take legal advice. You may wish to offer to pay for this. Once the client has considered the options, having been advised, you may be able to act for the client in taking any further, remedial steps, in the matter.” Firms in the process of trying to put things right must therefore be honest about failings and vigilant to potential conflicts at all times.

Case studies

The following case studies are based on real examples from our own experiences, and show that how the individual and/or firm reacts can be a crucial part of securing the best outcome for both parties. Please note that some inconsequential details have been changed to protect client confidentiality.

Learning lessons when things go wrong

ABC LLP is a respected specialist law firm with a national reputation for dealing with a niche practice area. It recruited a new partner to join its existing team, with responsibility to supervise more junior members of staff and to conduct their own caseload. During the interview, the individual spoke about their success in the area of work the firm specialised in, and indicated that they were fully experienced.

A few months in, the file reviews undertaken as part of the firm’s standard maintenance of quality and supervision started to show cracks in the new partner’s work. The concerns were discussed informally, and the partner gave credible and reassuring answers. The firm decided to monitor the quality of their work and assess client feedback.

The new partner undertook a preliminary hearing themselves rather than instructing counsel, as would have been the norm across the firm. An adverse costs order was made against the firm as the pleadings were deemed inadequate. The judge was highly critical of the pleadings prepared by the partner.

The firm reviewed the problem file alongside other files the partner had worked on and noted there was an absence of the competence and specialisation claimed at interview. It proceeded to suspend the partner on full pay while it undertook an internal investigation. The partner was then invited to an investigatory meeting, in which they accepted exaggeration of their experience and confirmed that, rather than having dealt with fully contested cases in the niche area the firm specialised in, the cases that they had previously handled had all in fact settled, and settled for modest sums. This was a complete contradiction of the picture painted during their interview.

The client in this instance was understandably distressed and upset. The firm paid for the client to seek independent counsel to consider a potential claim of negligence against the firm as well as the substantive claim itself, to see if amended particulars of claim could be implemented within the very tight timescale directed by the judge. Counsel noted that the judge had directed the firm to submit a revised, and more specific, particulars of claim.

The firm reported matters to its insurers and the SRA, explaining that it had been misled regarding the partner’s expertise and experience. The file showed the client had also been misled as to that expertise.

Counsel’s advice was that new pleadings could, and should, be prepared without the defects noted by the tribunal judge. The firm therefore complied with the direction following the preliminary hearing.

The firm made a report to the SRA raising two points of concern. Firstly, the issue of competency and the fact that, in a known specialist area, the new partner had misled the firm in interview and had misled the client, as documented in a letter to the client. Secondly, it was concerned as to whether or not the partner had breached the SRA’s principles of honesty and integrity.

After a self-report by ABC LLP, the SRA investigated both the firm and the individual partner. In respect of the former, it investigated whether or not there were supervision failures and whether or not the firm’s systems and processes had exposed the client to unnecessary risk. The firm answered the supervision questions and demonstrated revised systems and processes to manage future risks, including the adoption of amended interview criteria to address the risk of somebody exaggerating their expertise and experience in future. After 20 months, the SRA confirmed that it would take no action against the firm, and the firm had it confirmed that its response was exemplary.

From ABC LLP’s perspective, openness, transparency and putting the client’s interests first – by meeting the costs order and securing independent counsel’s advice to ensure that the firm was not in a conflict-of-interest situation – meant that a successful outcome occurred. Demonstrating consideration of the Howell Jones own interest conflict risk, the steps to be taken within days to comply with the directions, the SRA Principles and how the client had been protected also paid dividends. Its record was extensive and clearly showed why it was taking each step, which helped evidence its thinking to the SRA.

The firm undoubtedly got very lucky: the tribunal noted the particulars of claim were poor and gave a direction that the firm could comply with, using independent counsel, and within a timeframe that meant another firm could not realistically take over the conduct of a complex claim. Another court or tribunal may not have been so forgiving in its directions.

The downfall of a promising paralegal

In a well-regarded regional firm known for its family law expertise, a young paralegal, J, was eager to make a mark and secure a training contract to qualify as a solicitor. J was assigned a relatively straightforward case involving child custody, which required filing specific documents by designated deadlines.

One afternoon, J realised they had missed a critical filing deadline that could potentially delay the proceedings. Panicked by the mistake and its implications for their career, J made the fateful decision to cover it up instead of seeking help. They misled the client about the filing date and modified the document to appear as though it had been filed on time.

As the case progressed, the opposing solicitors questioned the timeline of the filed documents. The discrepancies caught the attention of J’s supervising solicitor, who initiated a review of their files. The internal investigation revealed the truth: J had not only missed the deadline but had deliberately attempted to deceive the client and the court.

The firm acted swiftly. Following an internal investigation, J was suspended and dismissed for gross misconduct. The matter was reported to the SRA, as required by the Code of Conduct. An investigation followed, focusing on J’s dishonest actions and the firm’s supervision systems. The consequences were severe: J was effectively struck off, receiving a section 43 order – a crushing blow for someone who had aspired to be a solicitor. The firm received no penalty.

This case serves as a stark reminder to anyone working in a regulated law firm of the importance of honesty and integrity when dealing with one’s own mistakes. J’s initial error could have been addressed internally, with relatively minor repercussions. Instead, the decision to cover up the mistake rather than admit to it led to professional ruin.

The case also highlights the fact that firms have a role to play too. Not only must solicitors closely supervise their unqualified staff, but they must also make sure they are aware of the consequences of covering up mistakes. All too often we see junior members of the profession being caught out, either because they are unaware of the SRA’s reach or because they did not feel able to put their hand up. That might also say something about how firms support and mentor their less experienced lawyers.

Points to consider

Mistakes and miscommunications are part and parcel of professional life. It is therefore critical that law firms have someone to oversee such matters who is calm under pressure and who will take the right approach to whatever has happened.

In our collective experience, and based on the case studies discussed in this article, we would suggest the following approach in the event of mistakes.

• Don’t panic.
• Slow down and avoid any rushed attempts to resolve the problem.
• Act with integrity, be honest and apologise where appropriate.
• What do your policies and procedures require? Going back to your policies, controls and procedures framework can help when trying to understand the particular circumstances of the incident.
• Discuss concerns with a supervisor or your team. Talk the options through with colleagues, giving careful consideration to the SRA Codes of Conduct.
• Contact your compliance officer for legal practice. What professional obligations do they see as applying and why?
• Be vigilant at all times to the risk of own interest conflict.
• Be aware of the pressures on junior paralegals and lawyers, who are not only dealing with clients and caseloads, but who are also trying to impress their supervisors for career progression. Admitting mistakes is hard. In the moment, a cover-up can seem like the easy way out.
• Ask yourself: “Do we need to report this as a ‘circumstance’ to our insurers?” Record the decision-making process.
• Explain the position to your client, including any possible or agreed solutions with the other side (this will vary depending on the context but may be an ongoing step until matters are resolved).
• Document all internal decision-making and take external advice where necessary.
• Consider if you need to record the incident in any of the following:
  • your risk register
  • your compliance officer breach reports (whether internally or externally to the SRA)
  • your partners / member meetings to evidence supervision and future risk management
• Use the experience to help enhance risk management across the firm and for training purposes.