Staff Due Diligence

To be able to practise as a solicitor is not a right, but a privilege. As a member of the profession, we are respected as trusted advisers and we play a key role in the administration of justice as Officers of the Court.

Along with the privilege of practice comes many responsibilities and potential pitfalls. We owe our clients a duty to serve them ethically, competently, conscientiously, diligently, promptly and efficiently. Solicitors’ work covers a wide range and unqualified staff are commonly engaged to support the work of a legal practice. However, a partner is primarily responsible for the proper supervision of his staff and he cannot escape responsibility for work carried out during the course of his practice by leaving it to his staff.

As part of risk management, a solicitor should exercise due care in the recruitment of staff for his practice. A firm can suffer irreparable harm to their reputation if they maintain slipshod hiring practices. The Legal Practitioners Ordinance (Cap. 159) (“Ordinance”) has dedicated the entire s. 53 to the prohibition of law firms knowingly employing certain categories of people, unless it obtains the Law Society’s written permission.

The prohibited categories include any person who (1) is disqualified from practising as a solicitor or a foreign lawyer by reason of having been struck off the roll of solicitors, deregistered, suspended from practice or declared an undischarged bankrupt; (2) is the subject of an order made by a Solicitors Disciplinary Tribunal whereby the employment of such person by any solicitor or foreign lawyer is prohibited; or (3) has been convicted of a criminal offence involving dishonesty.

The legislative intent is clear. The section serves to ensure that law firms properly review the suitability of their potential employees and give a role to the Law Society as the professional regulatory body in deciding whether a person who has a particular background is fit to be employed in a legal practice entrusted with handling clients’ money and properties.

Law firms are therefore reminded to carry out proper due diligence on their job applicants pursuant to s. 53 of the Ordinance. For instance, with respect to s. 53(3), law firms should specifically ask their job applicants to disclose whether they have been previously convicted of any offence involving dishonesty and then seek the Law Society’s permission prior to employing any applicant who has such a previous conviction.

Section 2(1) of the Rehabilitation of Offenders Ordinance (Cap. 297) (“ROO”) provides that criminal convictions are treated as “spent” under specified circumstances. An interesting issue relates to the interplay between s. 53(3) of the Ordinance and s. 3 of the ROO on whether a conviction can be claimed to be spent under the ROO so that a person is not obliged to disclose it even when asked upon or under an obligation to disclose his previous convictions.

Section 3(1)(c) of ROO provides that “nothing in [s.] 2 shall affect” the operation of any law under which the individual is “subject to any disqualification, disability, prohibition or other penalty”. Section 53(3) of the Ordinance has been held to constitute a “disqualification or prohibition” for the purpose of s. 3(1)(c) of ROO as regards that individual. Hence, the ROO does not give a job applicant the right to refuse to disclose his previous conviction on the ground that it has been spent.

Other provisions relating to the control of unqualified staff include, for example, the prohibition against profit sharing by solicitors with people other than practising solicitors subject to some exceptions (r. 4 of the Solicitors’ Practice Rules (Cap. 159 Sub. Leg.) (“Practice Rules”)), the ratio of solicitors to unqualified staff to be maintained in a legal practice and the prohibition of unqualified staff working in more than one law firm at the same time (r. 4B of the Practice Rules).

It is incumbent on the sole principal or partners of a law firm to ensure compliance with these regulations and in particular, the prohibitions set out in s. 53 of the Ordinance during their recruitment process. Just as customer due diligence is important in the Anti-Money Laundering context, staff due diligence is equally important for risk management purposes of a legal practice.

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Secretary-General, Law Society of Hong Kong