At the end of last month, new rules regarding the fair treatment of colleagues were immediately introduced into the SRA Codes of Conduct for Individuals and Firms (“the New Rules”). The SRA subsequently issued updated guidance on workplace environments on 2 May 2023 (“the Updated Guidance”), to assist individuals and firms on interpreting the New Rules and applying them in practice.
In this news alert, our regulatory and professional discipline partner, Andrew Pavlovic, discusses the New Rules, the obligations on managers to challenge such behaviour and practical steps for firms to follow going forward.
THE NEW RULES
The following rules have now been introduced into the SRA Code of Conduct for Individuals and Firms respectively:
- Rule 1.5: You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them. If you are a manager you challenge behaviour that does not meet this standard.
- Rule 1.6: You treat those who work for and with you fairly and with respect, and do not bully or harass them or discriminate unfairly against them. You require your employees to meet this standard.
The New Rules are part of an on-going attempt by the SRA to tackle toxic working environments in law firms, following the issuing of their thematic review and guidance on workplace environments in February 2022. That thematic review and guidance identified a concern that regulatory misconduct was more likely to occur, or remain undetected, if an individual was working in an environment where they were afraid to speak up if they made a mistake, were subject to bullying or harassment, or were being overworked and/or inadequately supervised.
WHAT DOES UNFAIR TREATMENT MEAN IN A REGULATORY CONTEXT?
When the SRA consulted on the New Rules last year, concerns were expressed about the SRA getting involved in disputes about unfair treatment and discrimination, and in doing so becoming a quasi-employment tribunal, or giving disgruntled employees an additional opportunity to exert leverage in employment disputes.
The SRA has sought to address this concern in the Updated Guidance, which states that the SRA would not expect to get involved in employment disputes, or disagreements about role-related matters such as targets or the allocation of work, unless they raised regulatory concerns. This position is reinforced by one of the case studies accompanying the Updated Guidance, in which the SRA state that a successful employment tribunal claim would not in itself be sufficient reason to trigger a regulatory investigation.
The Updated Guidance goes on to state that the SRA’s expectations are that individuals and firms will:
- Not create or sustain a working environment which risks leading to mistakes and poor outcomes for clients, or to serious ethical concerns. For instance, when staff are placed under pressure to cover up problems.
- Maintain public confidence in the integrity of the profession and in the legal workplace as a safe and inclusive environment.
It follows that conduct which is contrary to those expectations is likely to be deemed by the SRA to be unfair. When assessing the seriousness of the conduct (bearing in mind that the SRA does not take action in respect of every breach), the Updated Guidance states that the SRA will take into account the following:
- Whether the behaviour could reasonably be seen by others as intended to bully, belittle, harass, intimidate, undermine or take advantage of colleagues.
- The respective seniority of those involved, and factors such as whether an individual has control or influence over another’s career.
- Whether individuals have specific characteristics or vulnerabilities (for instance in relation to age, sex, disability or ethnicity), particularly if this appears to have been a factor in the behaviour raised by the complainant.
Notwithstanding the attempts in the Updated Guidance to distinguish between employment and regulatory matters, there is still clearly potential for a dispute as to when conduct amounts to unfair treatment from a regulatory perspective. The recent resignation of Dominic Raab as Justice Secretary has raised the question of where the line is between robust management and abusive or intimidating behaviour, and when feedback is deemed to be provided in a way which is not constructive and amounts to personal criticism. Whilst most would consider that describing work as “utterly useless” and “woeful” clearly crosses that line, there may be other cases where feedback or criticism is more nuanced.
HOW SHOULD MANAGERS CHALLENGE BEHAVIOUR?
The obligation on managers (as defined in the SRA glossary, partners in a traditional law firm) to challenge unfair or discriminatory behaviour recognises that managers will often be the most appropriate people to challenge unfair or discriminatory treatment in firms, particularly where the conduct which needs to be challenged is the conduct of another manager.
However, the issues are far from straightforward in practice. Junior managers might find it difficult to challenge senior managers and there is potential for division or disagreement if a manager challenges or intervenes in another manager’s management of a team in circumstances where that manager considers his behaviour was entirely appropriate.
When the obligation to challenge behaviour is triggered, the Updated Guidance states that the SRA does not prescribe the way in which this should be done, indicating that action “does not necessarily need to be formal”, providing it is effective. Notwithstanding this indication, managers and firms will be keen to be able to demonstrate that they had complied with their obligations and challenged behaviour where necessary, so even informal action will need to be documented.
The Updated Guidance states that managers witnessing unfair treatment should intervene immediately, where it is feasible to do so. There is no further guidance as to the factors that managers should consider when determining whether it is “feasible” to intervene in the moment, but managers will need to consider whether there is a risk of an intervention inflaming the situation.
Where it is not considered feasible to challenge behaviour immediately, the SRA propose a number of alternative ways in which the behaviour could be challenged after the event, including:
- Raising concerns directly with the individual who has acted unfairly;
- Reporting to another senior colleague, such as the firm’s COLP, the Managing Partner or the Director responsible for HR issues
HOW DOES THE REQUIREMENT TO CHALLENGE BEHAVIOUR INTERACT WITH THE EXISTLING SELF REPORTING REGIME?
All solicitors and firms are required to promptly report to the SRA facts or matters which they reasonably believe may constitute serious breaches of the Code of Conduct. Individuals will satisfy this obligation if they report potentially serious breaches to the Compliance Officer for Legal Practice (“COLP”), on the understanding that they will report to the SRA.
Not all unfair treatment will constitute a serious breach of the rules, and accordingly there is likely to be occasions where managers are required to challenge behaviour which amounts to unfair or discriminatory treatment but is not sufficiently serious to trigger the self-reporting threshold.
Equally, there may be occasions where the conduct is serious. In those circumstances, successfully challenging the conduct will not be enough to discharge the manager’s obligations, as it will still be necessary to report the conduct to the COLP, who in turn will need to consider whether to report the conduct to the SRA.
In practice, the New Rules are likely to result in more reports being made to the COLP, either as a way for a manager to report unfair treatment after the event, or for them to consider whether the conduct is sufficiently serious to justify reporting to the SRA. Given the SRA’s guidance on self-reporting states that firms should “err on the side of caution” and report if they are in doubt as to whether or not to do so, it is reasonable to assume that more reports will be made to the SRA as well. This may settle in time, but in the short term COLPs should be prepared to receive a higher number of reports than usual.
WHAT FIRMS NEED TO DO NOW
In order to get to grips with the New Rules and Updated Guidance, firms should consider undertaking the following steps:
- Training – firms should ensure that all individuals are aware of the New Rules and Updated Guidance. Specific partner and manager training should also be considered, given the additional requirement on them to challenge behaviour.
- Policies – firms should also consider updating their policies to reflect the New Rule Change. In particular, they may wish to introduce a standardised approach to “challenging behaviour”, rather than leaving it to each partner’s discretion as to whether they report unfair treatment to the COLP, Managing Partner, HR etc. Having one point of contact for receiving reports of unfair treatment is more likely to ensure consistency in approach and avoid systemic issues being missed.
- Documenting reports of unfair treatment/challenges to unfair treatment – Rule 2.2 of the Code of Conduct for Firms provides that firms are required to keep and maintain records to demonstrate compliance with their regulatory obligations. In addition, individual managers will be keen to ensure that there is evidence of them having challenged behaviour if/when they do so. Firms will accordingly need to ensure that reports of unfair treatment are documented in a consistent and systematic way.
CM Murray LLP provide partner behavioural training to law firms and law firm partners. If you would be interested in finding out more about this training, have any questions arising from this article, or would like to discuss the New Rules/Updated Guidance in more detail, please contact Andrew Pavlovic, who specialises in professional discipline and regulatory law.
