Neutral Citation Number: [2002] EWCA Civ 1194
ON APPEAL FROM THE LAW SOCIETY
Royal Courts of Justice
Strand
London WC2A 2LL

Monday 25 July 2002

B E F O R E

THE MASTER OF THE ROLLS
(LORD PHILLIPS)
- - - - - - - - - -

IN THE MATTER OF THE SOLICITOR'S ACT 1974

RE A SOLICITOR

NO 8 of 2002
(ALAN BURDETT)

- - - - - - - - - -
(Computer Aided Transcription of the Palantype Notes of
Smith Bernal Reporting, 190 Fleet Street
London EC4A 2AG
Tel:    020 7421 4040  Fax:  020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - -
MR ALAN NEWMAN QC (instructed by Messrs Michael Wood & Co, Preston) appeared on behalf of the Appellant.

MR ANDREW MILLER  (Instructed by the OSS, Leamington Spa, CV32 5AE) appeared on behalf of the Law Society.
- - - - - - - - - -
JUDGMENT

1.	LORD PHILLIPS, MR:There are before me two appeals by Mr Burdett against decisions of the Law Society in relation to his Practising Certificate. The first is a decision that his Practising Certificate should be subject to a condition that he may only practice in approved employment or partnership. If that appeal does not succeed, then there is a further appeal against the Law Society's refusal to approve a new partnership between Mr Burdett and two of his former employees, Mr Brunning and Mr Thompson as complying with the conditions imposed. That decision was taken very recently, but I will consider the appeal that Mr Burdett wishes to make against that decision should his primary appeal not succeed, because both matters turn, to a degree, on the same background facts. The Law Society recognises this and has agreed that I should take this course. 
2.	Mr Burdett is now aged 43. He joined the firm of Michael Wood & Co in Preston in 1994 as a trainee. He was made a partner as soon as he qualified as a solicitor in 1995. His only partner was Mr Wood who founded the firm in 1989. Since Mr Burdett joined the firm, some employed solicitors have left it and gone elsewhere. With effect from 1 July 2002 Mr Wood retired from the firm and a partnership agreement was made “in embryo” between Mr Burdett and the only two employed solicitors then with the firm, Mr Brunning and Mr Thompson. Mr Brunning had worked at the firm for three years before qualifying in April 1998. Mr Thompson trained with the firm and qualified in October 2001. 
3.	During the course of the 1990s both Mr Burdett and Mr Wood were subject to various investigations in relation to actual or potential disciplinary proceedings by the Law Society. The most high profile of these investigations occurred following an edition of the programme World in Action in 1998 in which Mr Wood was shown, so it is alleged, encouraging a client to give a misleading account of her medical condition. Following that programme, Mr Wood was referred to the Solicitors' Disciplinary Tribunal in August 1999. There is no suggestion that Mr Burdett had any involvement in that matter. That was one of a number of matters which has led to the breakdown of the partnership between Mr Wood and Mr Burdett. 
4.	Since 1997 Mr Burdett has himself been the subject of various Law Society investigations. In July 1997 an Investigation Accountant's report revealed a cash shortage in a bank account for which, in November 1997, Mr Wood and Mr Burdett were both severely rebuked by the Law Society; in January 1998 Mr Burdett was rebuked for failing to respond to correspondence and for failing to forward a client's file to the client; in July 1999 a further Investigation Accountant's report revealed another cash shortage; and on 13 October 1999 the Law Society resolved to refer the conduct of both partners to the Solicitors' Disciplinary Tribunal. Since that date, Mr Miller, who appears for the Law Society, informs me that the papers have been with a solicitor on the Law Society's panel. It is a lamentable fact that no reference has yet been made to the Disciplinary Tribunal. The explanation - but it is no excuse - for this is that there have been ongoing investigations by the OSS into the affairs of this firm. I now understand that it may be considered that the first matter which arose in October 1999 is too stale to proceed with. This is a manifestly unsatisfactory state of affairs. 
5.	The Law Society proposed to issue Mr Burdett's Practising Certificate for the year 1999/2000, subject to the condition that he should provide the Law Society with half-yearly rather than annual accounts. Since 1995, on eight occasions, the partnership accounts have been filed late. Mr Burdett was never issued with a certificate for 1999/2000 or for any subsequent year because from that date the partnership was indebted to the Solicitors' Indemnity Fund. It is still indebted to the sum of £2,500 which there is every reason to think will be discharged next month. A post-dated cheque has been issued for that sum. The result of this indebtedness is that it has not been possible to issue a certificate to Mr Burdett and he has “held over”, continuing to practise under the certificate for 1998/1999. 
6.	On 20 July 2001, Mr Lane, of the Forensic Investigation Unit, issued a report on the firm. This report disclosed further financial and book-keeping irregularities. Two of these are particularly significant. The first was that a file was found containing 72 cheques drawn on the office account, but never sent out, totalling £10,000, in respect of which transfers had been made from the client account to the office account. That transaction was patently irregular because monies are not to be drawn from a client's account except for disbursements that have been made on behalf of the client from the office account. The other irregularity was a series of payments that had been put through the books of the solicitors but which did not relate to any recorded business of those solicitors, totalling in all over £2 million. In the light of these matters, the recommendation made by Mr Miller was that the Law Society should intervene in the firm's business as there were grounds to suspect dishonesty. 
7.	On 9 October 2001 these findings were referred to adjudication. Mr Burdett, Mr Wood and various employees made various representations to the Adjudicator. Mr Burdett said that, so far as the cheques drawn but not presented on the office account, that was nothing to do with him, that was Mr Wood's responsibility. He suggested that Mr Wood had deliberately sought to “frame him” in relation to that matter. In the course of his response, Mr Burdett made a number of further allegations against Mr Wood. He said he was no longer fit to be a solicitor. He said that, having joined the firm as a trainee solicitor, it had become increasingly obvious to him that Mr Wood was incompetent and dishonest. By the middle of August 2000 he was at the end of his tether having tried and failed to make Mr Wood realise his limitations. He approached him with a satisfactory proposal to terminate the partnership. He accused Mr Wood of mendacity in relation to information submitted to the Inland Revenue, and he said that he had told Mr Lane that he believed that Mr Wood was in the process of submitting a fraudulent mortgage application. 
8.	So far as the monies put through the account unrelated to any apparent business carried on by the solicitors, Mr Burdett accepted, and certainly accepted today, that he was responsible for those matters. They were transactions effected on behalf of business clients that were not colourable, but he accepted that, having regard among other things to the Money Laundering Regulations 1993, they were irregular. He said they would not be repeated. 
9.	On 31 October 2001, the Adjudicator determined that the FIU report should be referred to the Solicitors' Disciplinary Tribunal on the ground that the two partners had failed to give a sufficient and satisfactory explanation of the matters raised in it. It was also decided that, in the light of section 25 of the Consumer Credit Act, the findings were sufficiently serious to warrant referring the firm to the Director of Fair Trading for consideration as to whether the partners should be excluded from the Group Consumer Credit Licence issued to the Law Society. No reference has yet been made to the Disciplinary Tribunal. 
10.	The Forensic Investigation Unit commenced a further investigation on 13 November 2001 and a further report was issued on 31 May 2002. No copy of that report has yet been provided to Mr Burdett, nor is it before me. I do have correspondence in relation to the matters to which that report relates, which appears to show that, since Mr Lane's previous investigation, there has been at least one similar irregularity when a sum was put through the books of the firm in the sum of £20,000.
11.	As a result of the decision of 31 October 2001 the Law Society imposed conditions on the Practising Certificates of Mr Burdett and Mr Wood. By a letter dated 18 December 2001, an OSS case worker informed Mr Burdett that she had recommended the immediate imposition of the condition on his Practising Certificate against which Mr Burdett now appeals. The case worker opined, in the light of those matters, that it was desirable that both Mr Burdett and Mr Wood should receive “a high level of supervision and support”. 
12.	Mr Burdett made representations in relation to that recommendation which repeated his previous position that the matters complained of should properly be laid at the door of Mr Wood. Notwithstanding that, the recommendation was accepted on 22 February 2002. In addition to accepting the points made by the case worker, the Adjudicator made the further point that it was neither necessary nor appropriate to apportion blame between the partners in making the decision: 
“It is not part of my function to pre-judge matters which are to be tried in the Solicitors' Disciplinary Tribunal, but I have to have regard to the fact that both are facing a number of separate applications to the Tribunal. A Practising Certificate condition is not a sanction and, that being so, it is not necessary or appropriate for me to seek to apportion him or seek to blame or make distinctions between the partners in respect of matters of conduct. I do however have to consider, in the light of powers given to the Law Society by Parliament, whether it is in the interests of the public or the profession to impose conditions on the Practising Certificates held by Mr Wood and Mr Burdett, and if so, which conditions best serve those interests.” 
13.	The conditions which were imposed were to take effect three months from the date of the letter of notification on 1 June 2002. 
14.	On 25 March 2002 Mr Burdett sought a review of the decision. By letter of 13 June 2002 he was informed that the Panel upheld the original decision, but extended the date from which it was to take effect until 1 July 2002. Mr Burdett then appealed to me. 
15.	On 1 July 2002 Mr Burdett, represented by Mr Newman, applied to me seeking an extension of the date for compliance with the condition until determination of that appeal. On that occasion I was told of the events that had taken place in relation to the partnership and of the fact that two new partners had been appointed. At that time there was a possibility that the Law Society would be satisfied with the new partnership and approve Mr Burdett continuing to practise in that new partnership. Accordingly, I granted an extension of time for compliance with the condition until the substantive appeal came before me, directing that that should take place in the near future, as indeed it has. 
16.	Since the matter was last before me, Mr Burdett made an application that the practice, now incorporating his partners, Mr Brunning and Mr Thompson, should be approved by the Law Society as complying with the condition. Had that approval been given, I apprehend that there would have been no pressing of the appeal against the condition itself. 
17.	The Adjudicator considering that application made a draft recommendation in the alternative. It was either, 
“(1) to refuse to grant Mr Burdett approval of the newly constituted partnership”, 
	giving as reasons:
“In the light of the fact that the two proposed partners are newly admitted to the Roll, and in particular Mr Thompson was admitted in 2001, and therefore is not qualified to supervise an office, I am not satisfied that Mr Burdett, being the senior solicitor, having been admitted for longer than both of his proposed partners, would be adequately supervised to ensure the protection of the public and the reputation of the profession.
OR:
2. To RESOLVE to grant Mr Burdett approval of his proposed equity partnership with Mr A Brunning and Mr D Thompson, subject to the following further conditions that;
(i) Mr Wood has no involvement in the proposed partnership whatsoever; 
(ii) Mr Burdett is closely supervised by Mr A Brunning and Mr D Thompson; 
(iii) This office in informed immediately by the partners of any change in the composition of the partnership, for example, partners joining/leaving the partnership, a new office being opened or closed;
(iv) The partners notify the Office in writing immediately that the office commences and provide details of the Office(s) from which and the name under which the partnership practises; 
(v) This approval is reviewable at the Office's discretion, at any times it sees fit.”
18.	The reasons for this alternative were:
“I note that Mr Brunning and Mr Thompson are relatively newly admitted solicitors, however, I also note that they have had business experience outside the Legal Profession. I am satisfied that, further to the additional safeguards above, the interests of the public and profession will not be prejudiced in any way by the approval of the above partnership.”
19.	Those conditions were indeed alternatives because, if one considers the second alternative, the conditions suggested are not appropriate but illusory. Conditions imposed on the certificate should be conditions with which the holder of the certificate must comply. Most of these conditions are required to be complied with by the putative partners. They really add little of substance to a simple requirement of supervision and are certainly not conditions that can be policed. 
20.	An office note was attached to this recommendation saying that:
“Regulatory checks are attached in relation to Mr Brunning and Mr Thompson. The Adjudicator will note that both Mr Thompson and Mr Brunning had no previous findings and history or matters outstanding with this Office. However, the Office is concerned in the light of the fact that Mr Brunning is a relatively new entrant to the profession, (Ad 1998), and that Mr Thompson was only admitted in 2001. The Adjudicator will note that both the proposed partners have had business experience outside the Legal Profession, however, the Office is not aware that the proposed partners have had any management experience.
The Office is, however, concerned that it can be difficult for former employees to conduct themselves effectively when they become partners of their former employers. If this happened in this case, the Office is concerned that Mr Burdett may not be afforded the adequate amount of supervision for the purposes of the provisions on his Practising Certificate, if this partnership arrangement were to be approved. Accordingly, because the application may be viewed as a case that could go either way, the Office has prepared alternative draft recommendations.”
21.	These draft recommendations were shown to Mr Burdett; no doubt he showed them to Mr Brunning and Mr Thompson. All three made representations to the Law Society in support of the application. However, on 23 July 2001 the Adjudicator refused to grant Mr Burdett approval of the partnership, giving the following reasons:
“In the light of the fact that two proposed partners are newly admitted to the Roll, and in particular Mr Thompson was admitted in 2001, and therefore is not qualified to supervise an office, I am not satisfied that Mr Burdett, being the senior solicitor, having been admitted for longer than both of his proposed partners, would be adequately supervised in this arrangement.
This decision does not reflect in any way upon the competence or capabilities or either Mr Brunning or Mr Thompson, but it is taken in recognition of the very real concern that led to the Committee decision to impose a condition of approved partnership.
In the absence of any substantial experience of professional practice, there is no evidence upon which to conclude that Mr Brunning and/or Mr Thompson will be able to provide effective supervision of Mr Burdett, whilst at the same time ensuring compliance with all their own professional and practice management responsibilities that they will assume on becoming partners.
Accordingly, given the Law Society's overriding duty to ensure the protection of the public and the reputation of the profession, the application for approval is refused.”
22.	Mr Newman attacked both the imposition of a condition at all and the refusal to approve the partnership. He submitted that my task is to achieve a balance between protecting the public pending the hearing before the Solicitors' Disciplinary Tribunal, and permitting Mr Burdett, who should be presumed to be innocent until proved to the contrary, to continue with his career. He submitted that the Law Society had the balance wrong because of the comment that it was not appropriate to differentiate between the two partners. 
23.	I accept the submission that the charges against Mr Wood contain an additional charge of mortgage fraud in which Mr Burdett is not involved. Looking at the matter globally, the charges made against Mr Wood are more serious than those made against Mr Burdett. I believe what the Adjudicator intended to convey was that he could not prejudge the result of the hearing before the Disciplinary Tribunal, but is entitled to have regard to the outstanding charges in considering whether action is necessary to protect the public and the reputation of the profession. That, in my judgment, is plainly correct, otherwise, as he pointed out, the more serious the charge, the less would be the ability of the Law Society to take interim measures to protect the public. 
24.	At the forefront of Mr Burdett's case is the submission that the Adjudicator proceeded on the basis that there was no management experience on the part of the two partners whereas, when their letters were considered, it was, and should have been, apparent, that they had adequate previous management experience to make them suitable persons to supervise Mr Burdett. 
25.	Mr Brunning is 42 years old. Before joining Michael Wood & Co in 1995, he had served an apprenticeship as an engineer in a company which built printing presses. He studied for an ONC in mechanical engineering but due to the recession in the early 1980s he was made redundant in 1981. He then set up business in the retail clothes sector. He said that he clearly had experience in managing a business (although on a relatively small scale) which employed staff who required man-management, dealing with clients and the purchases of stock and materials. His change of professional course occurred as a result of the further recession in the early 1990s. In his lengthy letter he pointed out that, with his previous experience and his maturity, which included the responsibility of raising a family of four daughters, he was well qualified to supervise Mr Burdett and there could not be any question of Mr Burdett overriding him through any lack of maturity on his part. 
26.	Mr Thompson is 32 years of age. Before he came to the law he worked in journalism rising to the post of news editor at the Southport Globe with management responsibility for a staff of six, which included the need to meet strict deadlines. His subsequent career in journalism ended when he worked for the Derby Evening Telegraph with sole responsibility for a large region of the city as well as organising fund raising events with town centre managers. He also indicated that there would be no question of Mr Burdett overriding him. 
27.	In resisting both appeals, Mr Miller placed emphasis on the seriousness of the matters that are about to be referred to the Solicitors' Disciplinary Tribunal, which may prove to include a breach of the Money Laundering Regulations and significant accountancy irregularities. As to the question whether the two new solicitors would provide adequate supervision, he submitted that they could not. There were still outstanding negotiations with Mr Wood as to his interest in the business which had to be concluded. In these, Mr Burdett would inevitably take the lead, and the future of the other two partners would very largely in his hands. He also submitted that the supervision would be unsatisfactory because the legal experience of these two partners was exclusively in the firm of Michael Wood & Co, a partnership which, as the events I have described show, was in many respects an unsatisfactory training ground. He drew my attention to an authority which is in no way on all fours with this case in support of the submission that it was likely to be unsatisfactory to have those who had been employed by a solicitor then supervising that solicitor. 
28.	In my judgment there is force in these submissions. There are a number of unsatisfactory features of this partnership, quite apart from the matters raised by the Forensic Investigation Unit. There is the fact that Mr Burdett remained in partnership with Mr Wood for a very lengthy period, notwithstanding that he considered Mr Wood to be incompetent. He has made it plain that he appreciated that well in advance of August 2000, and he subsequently made allegations that he considered that Mr Wood was guilty of dishonesty. The new partnership has only recently been set up in what seems to me to be a brinkmanship operation in the light of the lengthy history of these proceedings. 
29.	The two new partners are of limited experience. One has been in practice for four years and is, under the Law Society Regulations, entitled to conduct his own practice without any supervision; the other has only just qualified. But, quite part from this, it seems to me to be manifestly unsatisfactory that two solicitors who have just been appointed partners from this very firm should be entrusted with the supervision of Mr Burdett. 
30.	I conclude that the Adjudicator was fully entitled to reach the view that that state of affairs would not be in the interests of the public nor of the reputation of the Law Society. For that reason, I would dismiss these two appeals. 
31.	MR MILLER: My Lord, may I address you on costs. I would seek that costs follow the event. I have provided my learned friend with a schedule and I will put my cost,s if you were minded to make a fixed costs order, at the inclusive order of £1,060. 
32.	LORD PHILLIPS, MR: I do not think that could be challenged. 
33.	MR NEWMAN: I do not challenge that. There is one other matter I was discussing with Mr Miller, in case your Lordship should come to this conclusion. Would your Lordship grant an extension of the existing arrangements for a further period of time to allow the matter to be unscrambled? My learned friend has no objection to 28 days.
34.	LORD PHILLIPS, MR: That seems reasonable subject to the previous condition that, obviously, your client is not to take on any new business. He should remain in the partnership for 28 days for the exclusive purpose of bringing this arrangement to an end. 
35.	MR NEWMAN: I was asking for a little longer period than that. We are talking in the scale of years so far as disciplinary hearings are concerned. I am not asking for a substantial length of time but, maybe, if you would allow until mid-September. 
36.	MR MILLER: I am without instruction, but as such I find it clearly hard to resist. 
37.	LORD PHILLIPS, MR: Let us say middle of September. We are entering the holiday period - 15 September. 
38.	MR NEWMAN: I am grateful, my Lord.