The Law Society v Elsdon & Ors

An intervention into a solicitor’s practice may continue where the original statutory grounds were supported by the information available when the intervention was authorised, and the present evidence shows that reinstatement would create unacceptable risks to clients. The court must balance the risks of reinstatement against the consequences of continuing the intervention. It need not decide whether the solicitor has in fact acted dishonestly where dishonesty is relevant only to that protective assessment. Clear and cogent evidence may establish good reason to suspect dishonesty, including conduct involving persistent overcharging, improper withdrawals from client account and failures to comply with professional obligations.

The Law Society sought to maintain interventions by the Solicitors Regulation Authority into the practice of Michael Elsdon and Sai-Donne Limited. The interventions were based on suspected dishonesty, breaches of regulatory requirements and the need to protect clients and trust beneficiaries.

The case concerned conduct in several estates and other client matters, including substantial reductions on assessment of fees, withdrawals from client account, alleged overcharging and failures to cooperate with regulators. The defendants applied for withdrawal of the intervention notices. The central issue was whether the notices should be withdrawn on the material before the court at the hearing.

1. The original intervention decision. The original decision could be challenged if the statutory grounds were not made out on the information available when the decision was taken. Here, the grounds recorded by the Adjudication Panel had an evidential foundation and were capable of justifying intervention.
2. Applicable approach. The question at the hearing was whether the intervention should now be withdrawn. Applying Sheikh v Law Society [2006] EWCA Civ 1577, the court had to weigh the risks of reinstating the solicitor against the potentially catastrophic consequences, inconvenience and harm caused by continuing the intervention. The court was required to consider the Law Society’s views as the statutory regulator.
3. Dishonesty. It was inappropriate to make a finding that Mr Elsdon was honest or dishonest. The evidence nevertheless gave good reason to suspect dishonesty by the ordinary standards of reasonable and honest people, together with awareness that the conduct was dishonest by those standards. The judge regarded the conduct concerning Mrs Lilley’s estate as clear and cogent evidence of dishonesty.
4. Regulatory breaches and protection. The conduct indicated breaches of the SRA Principles, relevant Outcomes and the Accounts Rules, including rule 20. The matters included substantial overcharging, retaining money said to be payable to third parties, charging beneficiaries for costs incurred in representing the executor personally, improper assertions of liens and inadequate cooperation with regulators and the Legal Ombudsman.
5. Outcome. The risks of withdrawal outweighed the risks of continuation. On the material before the court, Mr Elsdon and Sai-Donne could not safely be trusted with the administration of estates or other work. The intervention notices were therefore continued and withdrawal was not directed.