Solicitors Regulation Authority Limited v Dentons UK and Middle East LLP

Whether a breach of professional conduct standards requires proof of seriousness, culpability and reprehensibility depends on the wording and context of the particular rule. There is no universal threshold of professional misconduct.

Where Principle 7 and Outcome 7.5 require compliance with legal and regulatory obligations, breach is established by proving non-compliance with the relevant obligation. A breach of regulation 14 of the Money Laundering Regulations 2007 therefore established breach of those standards without a further seriousness or culpability requirement. Inadvertence, good faith and effective systems may mitigate sanction, but do not negate the breach.

The Solicitors Regulation Authority appealed under section 49 of the Solicitors Act 1974 against the Solicitors Disciplinary Tribunal’s decision of 11 March 2024. The Tribunal found that Dentons had failed adequately to establish a politically exposed client’s source of wealth, contrary to regulation 14 of the Money Laundering Regulations 2007.

It nevertheless dismissed allegations that Dentons had breached Principles 6, 7 and 8 of the SRA Principles 2011 and Outcome 7.5 of the SRA Code of Conduct 2011, holding that the breach was not serious, culpable and reprehensible so as to amount to professional misconduct. The central issue was whether that additional requirement applied to Principle 7 and Outcome 7.5.

1. Appeal allowed. The Tribunal’s decision was quashed in its entirety and the matter was remitted to a freshly constituted panel.

2. An appeal under section 49 of the Solicitors Act 1974 proceeds by review unless a rehearing is in the interests of justice. The question under CPR 52.21 is whether the Tribunal’s decision was wrong or unjust because of serious procedural or other irregularity. Particular caution is required before interfering with factual findings or evaluative judgments of a specialist tribunal.

3. Following Solicitors Regulation Authority v Leigh Day and Beckwith v Solicitors Regulation Authority, seriousness, culpability and reprehensibility are not universally required for breach of the SRA’s Principles and Outcomes. They arise only where inherent in the wording and context of the particular rule.

4. The natural and ordinary meaning of Principle 7 and Outcome 7.5 requires compliance with legal and regulatory obligations, including anti-money-laundering legislation. The only relevant question was whether Dentons had complied with regulation 14(4)(b) and (c) of the Money Laundering Regulations 2007. Once the Tribunal found that Dentons had failed adequately to establish source of wealth, breach of Principle 7 and Outcome 7.5 followed.

5. The MLRs 2007 impose a strict-liability standard in disciplinary proceedings, although they do not create an offence of strict liability. Inadvertence, good faith, non-systemic failure and effective AML controls were relevant to mitigation and sanction, but could not justify dismissal of the allegations.

6. The position differed for Principles 6 and 8, whose wording and content inherently permitted consideration of seriousness, culpability and reprehensibility. Those issues had not been argued on the appeal and, if pursued, required determination by the new panel. The Tribunal’s alternative reliance on insufficient gravity, including In the matter of Pabla and Others, disclosed no legal foundation.

• High Court (Administrative Court) — appeal allowed against the Solicitors Disciplinary Tribunal’s decision of 11 March 2024. The decision was quashed in its entirety and remitted to a freshly constituted panel.
• Solicitors Disciplinary Tribunal — found a breach of regulation 14 of the Money Laundering Regulations 2007, but dismissed the related allegations under the SRA Principles 2011 and SRA Code of Conduct 2011 and made no order as to costs.