Posted by Dave Seager, consulting adviser to Legal Futures Associate SIFA Professional
Seager: Firms need to make positive referrals to uphold their duties
My inspiration for this month’s blog was a recent Legal Futures article entitled ‘Lawyers and law firms need to talk much more about integrity’.
The piece was prompted by the thoughts of Professor Steven Vaughan’s thoughts on integrity, how the Solicitors Regulation Authority’s (SRA) core principle is considered by lawyers and, indeed, whether enough consideration is given to ‘integrity’ when acting for clients.
It was this question, posed by the academic, who is based at the UCL Faculty of Law, that resonated: “Are you – a solicitor or a law firm – sure you are acting for the ‘right’ reasons, and can you thoughtfully articulate what those reasons are? Are you as a solicitor being supported by your firm to engage in this form of moral deliberation?”
Considering this probing question took me back to my own conversations with the regulator in the lead up to the introduction of the Standards & Regulations in 2019, and on how the reduced seven principles and new code of conduct for firms might impact third-party referral.
There were two telling responses from the SRA at the time, when I was inquiring about solicitors’ referral to financial planners in the new regime, both of which link back to the question above.
The firm code of conduct places the onus firmly on the management and, specifically, the COLP to put in place structures and processes to ensure that individual solicitors are complying with the seven principles.
When it comes to third-party referral to a financial planning professional, for example, this must mean that there are appropriate third parties approved by the management/COLP. This ties in with the part of Professor Vaughan’s question, as to whether individual lawyers are supported by their firm, to engage in moral deliberation.
This is because, by undertaking a thorough due diligence process into approved financial planning firms, the moral deliberation has effectively been done in advance.
Indeed, as Crispin Passmore, then an SRA director and one of the architects of the 2019 simplified rules, said to me a few weeks before they came into force – “How can you demonstrate that a referral to a third party is in a client’s best interests without first conducting due diligence on that third party?”
My second pertinent conversation with the SRA was prompted by SIFA Professional members asking questions on the same subject. Our financial planners were often being told by solicitor connections that, whilst there may be rules that highlighted the need for a referral, they did not actually need to make one.
The senior individual with whom I discussed this objection was genuinely bemused and responded with his own question – “If, as a solicitor, in the process of advising a client, recognise that that client needs complementary financial advice, and I do not make the referral, how can I be acting with integrity and in the client’s bests interests?”
Simply telling a client they need to seek financial advice or offering them the business cards of three financial planners you know is NOT a referral.
I have no double standards here as I will always tell SIFA Professional firms that it is not enough simply to tell a client they discover does not have a lasting power of attorney and will that they should put them in place. I would expect our members to positively make an introduction to a trusted solicitor; this will underpin their advice and keep the financial plan on track should the unexpected occur.
As Professor Vaughan suggests, the professional principle of integrity is a powerful reminder and signifier of the special and responsible role of the solicitor, and that simply doing what the client wants is not the be all and end all.
What I take from this is that being a transactional order taker, and fulfilling a service or function well, is not always enough.
In the context of providing a service where the legal element is only part of the professional advice a client needs, then integrity, as the SRA suggested, should mean that the solicitor, supported by their firm are able to make a positive external referral.
The integrity principle in the SRA code, according to Professor Vaughan, is above all else a moral reminder to do the right thing by your client.
Where the client needs ancillary professional advice but has come to you first, then doing the right thing must mean being in an informed and confident position to make that referral.
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