Intervention into the practice of a law firm is a serious measure and the exercise of such power by the Law Society is strictly governed under the law. The circumstances upon which the Council can do so are specifically provided in s. 26A of the Legal Practitioners Ordinance (“LPO”). They include situations like breaches of the Solicitors’ Accounts Rules, suspected dishonesty, bankruptcy, incapacity by illness or age, abandonment of practice and so on. When the Council is satisfied that the severity of the situation calls for an immediate cessation of the practice to protect clients’ interests, it will have no alternative but to intervene into the practice.
During the ten-year period from 2006 to 2015, the Law Society exercised its powers to intervene into 12 law firms under s. 26A of the LPO, which was about one intervention per year on average. However, in 2016 alone, there were four interventions, and up until September 2017, there have been two interventions. It is unfortunate that in the recent two years, the Law Society found it necessary to exercise its power of intervention more frequently, but these are isolated cases and should not be taken as indicative of any general trend.
The purpose of an intervention into a practice is to close it down at once to protect clients’ interests. The practice ceases to exist from the commencement of the intervention and it can no longer act for its clients. The role of the Law Society therefore is not to step into the shoes of the firm and continue its operation, but to wind up its affairs, return files to clients or their new solicitors, preserve clients’ money that becomes vested in the Council, verify claims and distribute to the rightful owners.
The Law Society engages law firms (Intervention Agent) to do the intervention work. A Panel of Intervention Agents is maintained and renewed at regular intervals. As soon as the Council resolves to intervene into a firm, action has to be taken immediately. The appointment of an Intervention Agent will thus often be on an urgent basis. The Panel firms must have the capacity, at short notice, to have in place sufficient manpower, including both qualified and unqualified staff, to handle a large volume of work especially in the initial stage of an intervention. Further, if there is a need to take the drastic measure of intervention, the records of the practice are likely to be in disarray, incomplete or even non-existent. To be able to organise and understand the range of files handled by the intervened firm and to accord appropriate priority in dealing with them, the Panel firms not only have to be experienced in general practice, but also familiar with the provisions of the LPO, in particular on solicitors’ accounts and practice management.
The Law Society is keen to recruit more law firms to join the Panel of Intervention Agents.
However, as interventions have until recently been few and far between, not many law firms have accumulated previous experience in this type of work. Having been alerted that this may have discouraged some firms from applying to join the Panel, the Law Society will organise sharing sessions to introduce what intervention entails. Hopefully, with a fuller understanding of the scope of work, more firms will be interested when we recruit for the Panel renewal next time. The sharing sessions and recruitment for the Panel will be announced in members’ weekly Circulars in due course.