UK: Law Society Interventions Revisited

Last Updated: 16 April 2003

Two earlier e-bulletins considered conflicting first instance judgments relating to whether the intervention powers conferred upon the Law Society (the Society) under the Solicitors Act 1974 infringed Article 1 of the First Protocol to the European Convention on Human Rights. These judgments were Holder v Law Society (email bulletin dated 16 August 2002) and Wright & Others v Law Society (email bulletin dated 30 October 2002).

The Court of Appeal has recently given judgment in Holder v Law Society, clarifying the position in respect of this issue.


The Society exercised its statutory intervention powers in order to vest Mr Holder’s practice monies into its control and require him to deliver practice documents to its agent, on the basis of serious breaches of the Solicitors’ Accounts Rules and dishonesty. The Society appealed against the decision of Peter Smith J, who had directed that Mr Holder’s claim for a withdrawal of the Society’s Notice of Intervention should go to trial.

One of the issues in dispute was whether the intervention involved an interference with Mr Holder’s peaceful enjoyment of his possessions under Article 1 of the First Protocol to the European Convention on Human Rights. Article 1 of the First Protocol establishes the right to the peaceful enjoyment of one’s possessions, except in the public interest and subject to conditions provided for by law and the general principles of international law.

Application of the public interest test

The Court of Appeal agreed with the Judge’s conclusion that, apart from issues under the Human Rights Act, the intervention of the Society was entirely justified.

In respect of the human rights issue, it was common ground that the Society’s intervention involved an interference with Mr Holder’s right to peaceful possession. The question was whether the intervention was justified in the public interest.

In the application of the public interest test, Carnwath LJ giving the leading judgment followed the principles laid down by the Strasbourg Court in Sporrong and Lonnroth v Sweden (1983) 5 EHRR 35, namely that the Court must determine whether a fair balance has been struck between the general interest of the community and the protection of the individual’s fundamental rights. He also noted the requirement that there be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions (Holy Monasteries v Greece [1994] EHRR 1).

The Court of Appeal considered that the Judge’s approach was fundamentally wrong in that it ignored the "margin of appreciation or discretion" allowed to legislators and decision-makers, which was an important factor to consider in the context of proportionality. Carnwath LJ noted that the margin of discretion arose at two stages: first, the discretion allowed to the legislature in establishing the statutory regime, and secondly, the discretion of the Society as the body entrusted with the decision in an individual case. In the former case, the only remedy for exceeding the "margin" was a declaration of incompatibility under the Human Rights Act 1998.

The Court of Appeal noted that the intervention procedure under the Act was long established, and had been reviewed by the Courts on many occasions. It had been recognised as "draconian" in some respects, but was necessary for the protection of the public interest, and the Courts had repeatedly emphasised the "balancing exercise" which it involved. The Court of Appeal could see no difference between this and the "fair balance" which Article 1 of the First Protocol required, nor any reason why the Human Rights Act should be thought to have changed the position.

The Court of Appeal held that there were no arguable grounds for thinking that the margin allowed to the legislature had been crossed. Accordingly, the Society’s actions must be judged by reference to the procedure laid down by Parliament and not to some hypothetical alternative procedure. It was not therefore necessary for the Court to consider whether or not the alternative procedure suggested by the Judge (i.e. the appointment of a receiver) was in fact available to the Society.

Carnwath LJ concluded that the fair balance requirement was met, taking into account the margin of discretion available to the Society in exercising its statutory powers, the merits of the case, and the views of the Society as the relevant professional body. On this basis, the Court allowed the Society’s appeal.

Practical Implications

The judgment of the Court of Appeal in Holder provides welcome clarification in respect of the application of the right to peaceful enjoyment of possessions in respect of the exercise of the Society’s statutory intervention powers.

In his short separate judgment, Sir Christopher Staughton stated that there would be circumstances where the Society might be found not to have complied with the Convention or the Human Rights Act, in that if an intervention was mistaken or unjustified there was at least a theoretical risk that the solicitor would suffer a substantial loss without recourse to any remedy. The Court of Appeal’s judgment thus emphasises yet again that public authorities, including regulators, should consider the proportionality of their actions carefully on a case-by-case basis when exercising powers enshrined in primary or secondary legislation. In particular, it is important to bear in mind the need to balance the rights of the affected individual with the public interest in exercising the powers.

Article by Andrew Lidbetter and Nusrat Zar

© Herbert Smith 2003

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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