1. Introduction

There have been a significant number of summaries and overviews of the decision resulting from the Appeal of Mazur & Stuart v. Charles Russell Speechleys LLP and whilst this article addresses the principal issues, its purpose is to assist Firms in analysing the problems and identifying potential solutions.

The difficulty with a solutions-driven article is that whilst it is quite clear what the issues are, their impact, both in terms of regulatory action and the delivery of regulated legal services (not just litigation) and who can perform them, is not entirely clear.  There is, however, much content that can be found to guide Firms in the right direction. This article aims to assist in that task.

The definitions of “supporting litigation” and “conducting litigation” also require greater clarification, alongside the application of the Exemptions under the Legal Services Act 2007 for non-litigation services and who can perform them.

The Solicitors Regulation Authority do not appear to be in any particular hurry to issue a statement of what they intend to do for Firms that may or have breached the Legal Services Act 2007, resting with the comments of the Chief Executive of the SRA, Paul Philip. He is reported to have attributed the mistakenly given advice (that employees were permitted to undertake reserved legal activities) given to a Firm in December 2024 to a case worker who had consulted the in-house legal team. He further advised that enquiries are ongoing to clarify whether the incorrect advice was given to anyone else. An update is awaited.

So far, there has not been any definitive guidance from CILEx on their position, although the Law Society Gazette has highlighted a change on the CILEx website – https://www.lawgazette.co.uk/news/legal-executives-given-wrong-advice-about-litigation-rights/5124598.article. Members of CILEx await guidance on the reserved tasks they can perform without extending their Practice Rights to include Litigation and/or advocacy, and/or becoming an Authorised Person for reserved legal activities. The CILEx website does, however, make it clear, in relation to litigation, that “The Legal Services Act 2007 makes no provision for unauthorised people to carry out litigation under supervision. Therefore, without being authorised to conduct litigation, members can only support authorised individuals to conduct litigation, rather than conducting litigation themselves under supervision of an authorised person”.

For ease of reference, readers may find the following links useful:

• Legal Services Act 2007 – Section 12 – Reserved Legal Activity – https://www.legislation.gov.uk/ukpga/2007/29/section/12
• Legal Services Act 2007 – Schedule 2 – Reserved Legal Services scope – https://www.legislation.gov.uk/ukpga/2007/29/schedule/2
• Legal Services Act 2007 – Schedule 3 – Reserved Legal Services Exemptions- https://www.legislation.gov.uk/ukpga/2007/29/schedule/3
• Legal Services Board – Reserved Legal Services FAQs – https://legalservicesboard.org.uk/enquiries/frequently-asked-questions/reserved-legal-activities
• CILEx – Guidance on Reserved Legal Services – https://www.cilex.org.uk/membership/practice_advice/reserved_legal_activities/authorised_member/

2. The Decision

The case itself was a costs matter with the appeal against a County Court Costs Order where the earlier ruling had allowed costs claimed for an unqualified member of staff who had conducted the litigation.

In the Appeal to the High Court, it was stated that unqualified staff (non-solicitors and those exempt under Schedule 3 of the Legal Services Act 2007, such as paralegals), cannot “conduct litigation”, even under the supervision of a solicitor and even if employed by a Firm that is authorised. The High Court confirmed that unqualified staff can support solicitors and other authorised personnel, but cannot conduct the reserved activity of litigation. 

Mr Justice Sheldon ruled that:

• Unauthorised employees may support an authorised litigator.
• They may not themselves conduct litigation, even if closely supervised.
• The correct focus is on who is legally entitled to carry out the reserved activity, not whether the employer is regulated.

The High Court then proceeded to overturn the costs order of some £10,653, on the basis that the unauthorised person should not have been in conduct of the litigation.

The result of the High Court has therefore made the position clear that reserved activities must be conducted by authorised persons and failure to do so will have both regulatory and costs consequences.

3. The Reality

The ramifications across the industry have been significant, with non-authorised staff starting to panic about their positions in Authorised Firms and the managers of Authorised Firms raising concerns that their past conduct has put them in breach of the Legal Service Act 2007 and ongoing activity will maintain and continue the breach. This, in turn, may result in unwanted SRA attention.

Firms who have litigated via non-authorised persons will also be concerned about recoverability of costs on past cases, putting pressure on Firms’ financial stability.

We have also seen concerns raised about the affordability of legal services now that fewer people can conduct certain services, and the inevitable increase in fees alongside a potential skills gap in terms of having sufficient staff to perform the work. Is access to justice going to take another hit?

This decision is much more than simply setting the record straight. Careers and livelihoods are at stake as Firms start to navigate through what they have done and what they will do.

There will be little comfort for Firms that the SRA may have erred in previous guidance on this issue, or that there are highly likely to be multiple Firms that have non-authorised staff conducting reserved legal services. There may be many Firms facing down their regulator on this issue, but is there any safety in numbers?

The questions we are being asked, to name a few, are:

1. Is a Firm now expected to self-report to the SRA? After all, a breach of the Legal Services Act 2007 is a criminal act, carrying penalties of up to 2 years in prison and a fine. Section 14 of the Act specifically makes it a criminal offence for someone to carry out a reserved legal activity if they are not entitled to do so.
2. Is a Firm required to report other Firms where it is known that they have non-authorised staff conducting reserved legal services?
3. Are the Courts going to start reporting Firms when they realise that they have non-authorised staff conducting reserved legal services?
4. Do Firms now face regulatory action by the SRA, and how serious will that be? Will and can the SRA allow dispensation for a breach which has been widespread and on the face of it, where they themselves were not clear on what was and is allowed?
5. Will a Firm be expected to write off costs on all matters where a non-authorised person has been conducting litigation, or at least the part of the costs that related to that person? By claiming such costs, is there an ongoing breach for knowingly claiming costs which have now been ruled as irrecoverable?
6. Can a Firm expect retrospective claims to repay costs where cases have involved non-authorised persons conducting litigation?
7. How do we restructure and where does “support” end and “conduct” start?
8. Do qualified CILEx staff need to seek Litigation and Advocacy Rights and how quickly can they achieve this?
9. How does a person become an “exempt person” under Schedule 3 of the Legal Services Act 2007, and how long does that take?

All valid questions, and for many Firms, this has created an extremely worrying time for both the managers of such firms and the staff who occupy roles where they have been or could be conducting reserved legal services.

The answers to these questions are not easy to find but one thing is clear; with the SRA now acknowledging that such activity is a breach, Firms must act now to stop the breach. It will be hoped that a pragmatic approach will be taken, and Firms will not face retrospective penalties and sanctions. However, that is not guaranteed. It is more of a guarantee that Firms who do not take action now are likely to lose such a defence if it is made available to them!

4. Practical Steps

So, what can we guide Firms to do now when there is so much uncertainty and so many questions, where it is difficult to find the answers?

We know that the SRA will say that Firms have a duty to comply with ALL legislation and regulation, and we know they will advise Firms to make their decisions on an ‘outcomes-focused basis’. However, we currently face the position of knowing there is a breach if a Firm continues to operate as they have been with non-authorised staff in conduct of reserved legal activity, so change is not coming, it is upon us.

The best guidance we can currently provide is:

1. Identification – Understand what is determined as “reserved legal services” and identify which of those activities the Firm performs. Ensure staff understand whether they are performing reserved work:
   1. Right of Audience – The right to speak on a person’s behalf in court.Conduct of Litigation – Issuing, prosecuting, and defending legal proceedings.Reserved Instrument Activities – includes preparing transfers or charges of land, making applications to land registries, and preparing other instruments relating to property or court proceedings.Probate Activities – preparing probate papers for applications to found or oppose a Grant of Probate or Letters of Administration.Notarial Activities – Actions performed by a Notary Public.
   1. Administration of Oaths – Taking declarations for official documents before a lawyer.
2. Exemptions – Understand the exemptions under Schedule 3 of the Legal Services Act and when and how they apply.  https://www.legislation.gov.uk/ukpga/2007/29/schedule/3
3. Authorised Persons – Look at your case handlers; are they authorised persons or not?
   1. If not, immediately re-allocate the matters to someone who is and ensure that the conduct of the case rests with an authorised person. The non-authorised person does not need to abandon ALL work, but must move into a support position only and only perform support tasks.
   1. If they are an authorised person – confirm the position and continue as before. It is easy to confirm this for a Solicitor, but a CILEx qualified person will need to have the appropriate Litigation Rights or be exempt, and proof will need to be provided and retained.
4. Define “Litigation” – Land on a definition of litigation and identify cases which fall within the definition. Issuing court proceedings is clearly litigation, but consider, for example, court of protection work, which require,s in most instances, some level of court work and applications to the Court. When a person’s affairs are decided by a Court, this is going to be considered litigation, as will any issues which are contested.
5. Other Definitions – appreciate which tasks in the other reserved legal services areas are only to be conducted by an authorised person. Reserved legal services, as noted above, are wider than just litigation. All tasks must be identified in all service lines.
6. Assess Steps – When all litigation and non-litigation tasks have been identified, break down all steps between:
   • Support – through setting out the steps of a matter from instruction to resolution, identify which tasks sit under the definition of “support”.
   • Conduct – In a similar way to establishing which tasks fall under the definition of support, establish which will fall under the definition of “conduct”.
7. Assessment Impact – Undertake an impact assessment on your business to establish the affected services, departments, people, clients and matters. Establish the scale of the problem and allocate the resources to identify your gaps and decide how you will plug them.
8. Financial Review – review live cases and potentially closed cases to consider where WIP and bills include time that is now deemed irrecoverable. Assess the financial impact on the Firm.  The inevitable arguments on costs are going to impact the Firm’s cash flow as payment is likely to slow down. How will this affect your Firm?
9. Job Roles, Profiles and Objectives – Consider the job roles in the Firm and re-write profiles and objectives as appropriate to ensure it is clear which tasks unauthorised persons can perform and those which must be passed to an authorised person to complete. Firms will need to consider financial targets and how they are impacted on the work performed and how this in turn will impact upon the Firm’s finances.
10. Restructure – Depending on the number of affected people, departments may need to be restructured, and new roles created. This will particularly apply if a Firm has a high number of non-authorised staff or has a department led by a non-authorised person. This does not necessarily mean redundancy or recruitment, but a diversion of tasks to ensure the right people are handling the right tasks.  Be aware that there is a general shortage of skilled staff in the market and this may frustrate restructures.  Review and update the Firm’s business plan and strategy in line with the restructure.  Firms will also need to consider the impact that any restructure has on employees’ rights under Employment Law, around consultation, redundancies, contractual changes to terms and conditions, potential TUPE implications, etc. and seek appropriate advice from employment law advisors.
11. Allocate Tasks – Clearly allocate tasks to those in support roles and those in conduct roles. Establish clear boundaries and make it very clear that support staff must NOT perform any of the conduct tasks under any circumstances. Supervisors must be clear on which tasks fall into which categories.  Produce written confirmation of this to all affected staff and retain evidence that this has been provided to them.
12. Policy – Deliver a Reserved and Unreserved Legal Services Policy that sets out your findings and guidance. (If you are part of the RACO Compliance Service, this will be provided for you). You have to protect your firm from breaches past and future.
13. Supervision – Update your Supervision Policy and train supervisors on how to interact with those in support roles and ensure those who are in supervisory positions are policing the reserved legal services tasks to ensure they are being conducted by the correct level of person.  This could be done through day-to-day supervision and by performing regular file reviews.  Ensure all staff are clear that any breach of the Firm’s requirements will be dealt with under its Disciplinary Policy.
14. Workflows – if your case management system has workflow technology to drive tasks and case handling, it should be possible to program this to direct reserved activity to appropriate people and support tasks to appropriate people. This will minimise the risk of errors.
15. Time Recording Training – Ensure all fee earners understand the changes to the time recording requirements.  Ensure hourly rates for “support” are clearly defined, and those for “conduct” are clearly defined. Be clear on which rates apply to which tasks and which people. Change and update your time recording training and brief your staff.
16. Preparation – Prepare your staff for the inevitable costs arguments that will ensue. Make it clear who has conduct of litigation tasks and which are support tasks, and ensure the correct time is claimed to avoid being accused of artificially inflating bills as this could land a firm in further regulatory deep water.
17. Review Client Care – Establish if your client care letters and charging rates need to be updated and apply the updates to ensure costs are properly set out, are transparent and recoverable where appropriate. This may include making amendments to your costs information on your website, published in accordance with the Transparency Rules.
18. Communicate – Update those impacted and tell them what is happening. Open and honest communication will be appreciated by all affected people, be that clients, staff, supervisors or managers.  You may not be able to offer the reassurance they need, but you can prepare them and support them. You will gain respect for taking action, whatever that may be.
19. Support Staff – Consider your staff’s welfare. For a number of people, they face an uncertain future for a set of events which is not of their creation, and they face a situation they cannot control. Reassure where you can, but be honest. False hope in terms of the future will not help, but honesty and transparency will help your staff understand what you are doing and how you will support them moving forward. Ensure they know that they are supported, and your Firm will do what it can for them, despite not being able to offer guarantees to all at this stage.
20. Applications – If you have staff who need to perform reserved legal work, engage with the process for them to obtain a higher status, either through CILEx https://www.cilex.org.uk/membership/practice_advice/practice_rights/ or through the exempt person route under Schedule 3 of the Legal Services Act 2007.  The quicker this action is taken, the quicker tasks can be re-allocated. Guidance is provided in this link – https://legalservicesboard.org.uk/enquiries/frequently-asked-questions/reserved-legal-activities.
21. Speak to Us – If you have any questions about the issues raised in this article or wish to discuss strategy with one of our experienced staff, contact us and we can support and assist you. We work with Firms of all types, assisting with compliance and strategic development.

5. Next Steps

We will continue to consider, research, and seek to provide Firms with more practical guidance to protect themselves and their staff.

For those Firms that utilise our services for regulation and compliance, we will engage directly. For those who are not, you can make contact with us, and we will assist where we can, or you can watch for updates as we issue them.

The seriousness of the issues raised by this case and the overall impact on staff and Firms is significant, and any support we can offer, we hope, will be welcome.

6. Get in touch

To ask any questions about the Regulation and Compliance Office and how we can support your Law Firm, please call us on 0203 985 8550, complete the online enquiry form, or email us info@regulationandcomplianceoffice.co.uk