Neumans LLP v The Solicitors Regulation Authority

The intervention scheme for a solicitor’s practice under the Solicitors Act 1974 is a self-contained statutory regime. In this statutory framework, the right to a prompt merits review by the High Court under Schedule 1 paragraph 6(4) ordinarily excludes a separate common-law requirement for prior notice or consultation before intervention. On review, the court considers all relevant circumstances and proposed safeguards. Continued intervention is rational and proportionate where serious suspected dishonesty creates a continuing risk to clients or the public and proposed management changes do not reliably sever influence or provide tested oversight.

Neumans LLP appealed from Newey J’s order of 25 September 2017, which dismissed its application under the Solicitors Act 1974 to withdraw an intervention into its practice. The intervention followed evidence concerning suspected dishonesty by Mr Sheikh in connection with a substantial criminal costs claim. Mr Sheikh later resigned as a member, COLP and COFA, while Neumans proposed new management arrangements. The central issues were whether common-law procedural fairness required prior notice and consultation, and whether the intervention remained rational and proportionate. The background included an earlier Court of Appeal decision revoking the costs order: [2016] EWCA Civ 2001.

Appeal dismissed. Patten LJ delivered the leading judgment, with Hickinbottom LJ agreeing. Singh LJ agreed with the result and reasons, adding observations on procedural fairness.

1. Common law generally imposes a duty of fairness when statutory powers affect rights, including advance notice and an opportunity to respond. However, Giles v Law Society (1996) 8 Admin LR 105 was binding authority that the intervention machinery under the Solicitors Act 1974 excluded those requirements. The solicitor’s safeguard was the right to apply to the High Court under Schedule 1 paragraph 6(4). Any inadequacy in pre-intervention engagement therefore did not itself make the intervention unlawful.
2. On a paragraph 6(4) review, the court must consider the grounds for intervention, subsequent developments and proposed safeguards. It must balance protection of clients and the public against the serious consequences of intervention and decide whether continuation is rational and proportionate.
3. The intervention was proportionate. Mr Sheikh had previously controlled the firm’s finances, remained closely connected with it and was a significant source of new work. His late resignation did not reliably remove his influence. The proposed replacement COLP and COFA arrangements were insufficiently detailed, untested and unsupported by adequate evidence. The Law Society was entitled to exercise caution.
4. There was in any event no procedural unfairness on the facts. Neumans and Ms Sabir received the material relied on, made detailed representations and proposed safeguards. The Adjudication Panel was not required to issue a further minded-to letter or begin another consultation round.
5. Singh LJ observed that, in other statutory contexts, procedural fairness may depend on the facts, including the need for speed or secrecy. Nevertheless, the statutory framework and the binding decision in Giles resolved the issue here.

1. Court of Appeal (Civil Division) — On 2 March 2018, the appeal was dismissed.
2. High Court of Justice, Chancery Division — Newey J dismissed Neumans’ application to withdraw the intervention and ordered it to pay the respondent’s costs.