Unregulated paralegal firm “conducted litigation” in possession claim

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Cavanagh: Fully satisfied Ms Doble did not know she was conducting litigation

A CILEX member running an unregulated business conducted litigation in breach of the Legal Services Act 2007 when she acted on a possession claim, the High Court has ruled.

This was despite her not going on the record or corresponding with the court on headed notepaper.

Conducting a reserved legal activity without authorisation is a criminal offence and, when litigation is involved, contempt of court as well under the Act. But Mr Justice Cavanagh held that Sarah Doble did not know, and could not reasonably have been expected to know, that she was committing it – a statutory defence.

Under the 2007 Act, the conduct of litigation includes functions which are “ancillary to the commencement, prosecution, and defence of proceedings before any court in England and Wales”.

Baxter v Doble & Anor [2023] EWHC 486 (KB) was an application by the defendant in the possession proceedings to commit Ms Doble and her Somerset-based business, Sarah Doble Associates, for contempt of court by conducting the reserved legal activity of conducting litigation for her client, James Persey.

The judge conducted a detailed examination of the statutory provisions and case law, and concluded that Ms Doble and the firm had indeed conducted litigation.

He said: “[They] did everything for Mr Persey in relation to the proceedings that a solicitor or other authorised person would have done.

“They gave full-service assistance to Mr Persey, including drafting all of the documents required to comply with formal requirements, giving instructions to counsel, making a payment to court, corresponding with the other side, and ensuring that all procedural steps complied with the CPR.

“Someone must have conducted this litigation, and it would be wholly artificial to say that Mr Persey did it himself, albeit with support and guidance from the respondents. This would be to understate their involvement. They conducted the litigation for him.”

The only difference from what a solicitor or other authorised person would have done was that Ms Doble did not formally go on the record or use her firm’s notepaper for covering letters when dealing with the court.

“In my judgment, it would be wrong, and wholly contrary to the statutory purpose as expressed in section 1 of the 2007 Act, for these matters to take activities outside the meaning and scope of the conduct of litigation. This would be to prioritise form over substance.

“It would mean that the question whether someone was conducting litigation would depend on an arid technicality.

“Indeed, to treat this as the only thing that matters would be to provide an incentive for those who were not authorised persons to conceal their involvement from the court, which cannot be right.”

Ms Doble refers to herself as a graduate member of CILEX. After some years working as a paralegal for a firm of solicitors, she set up her business in 2014, advising and assisting landlords who were having difficulties with tenants.

The judge recorded: “She felt that there was a gap in the market, because she thought that law firms did not value this area of work and because she would be able to offer services to clients at a lower cost than would be charged by law firms.

“A client offered to provide her with seed-money, and she set up her own business. It was immediately successful.”

The judge described the issues raised by the case as “potentially of general public importance”. He explained: “There are a number of other businesses which follow a similar operating model to that followed by the respondents. Some of these assist landlords, and some operate in other spheres, such as taxation.

“[Counsel for the claimant] describe those who are unauthorised to carry out reserved legal activities but who run a business giving assistance to litigants in the courts as ‘a new legal profession’.”

The court invited the Law Society, Legal Ombudsman and CILEX Regulation to make representations as a result.

Cavanagh J said it was clear that Ms Doble was “experienced and efficient and carried out her work with complete honesty” – and Ms Doble helped Mr Persey to win his case.

She was, however, given a formal warning by CILEX Regulation in 2017 over conducting litigation because of her then practice of writing to the court under cover of her letterhead. She changed this and was then advised by a specialist regulatory solicitor that she was working within the law.

The judge was “fully satisfied” that Ms Doble did not know, “and did not believe for a moment”, that she was committing the offence, as per the statutory defence.

She was an “entirely truthful witness” and it was clear from her evidence that she thought the changes made following the disciplinary proceedings ensured neither she nor the business were conducting litigation.

She reassessed the position in early 2019, following the Court of Appeal decision in Ndobe – about an unregulated business serving a claim.

Ms Doble could also not reasonably have been expected to know they were conducting litigation, first because the law on what amounted to the conduct of litigation was “unclear”, and second because she had “acted in accordance with what she reasonably understood the law to be”.

Cavanagh J said: “Whilst it is true that CILEX Regulation did not specifically and positively assert that the revised business model did not amount to the conduct of litigation, Ms Doble was justified in drawing that inference.

“The regulator knew the changes that she had made and expressed itself to be satisfied with them. Moreover, she had taken advice from a specialist regulatory lawyer and had complied with his advice.”

Cavanagh J added that, even if he had found Ms Doble to be in contempt, he would in the circumstances have been “extremely reluctant to contemplate committing her to prison for contempt” – the claimant had argued for a short suspended term.