23 August 2013

Regulation of private investigators

The regulation of private investigators should raise industry standards, says Bryan Shacklady, but solicitors must remain vigilant

Solicitors often need access to information that they cannot obtain themselves. A solicitor in this position will often turn to a private investigator. However, recent news reports highlight both the risks that already exist in the industry and the challenges that will accompany forthcoming regulation.

The Home Affairs Select Committee has disclosed that law firms featured among the clients of four private investigators jailed for illegally obtaining private information. Keith Vaz MP, chairman of the Home Affairs Select Committee, has made it clear that he wishes to name the law firms who instructed the rogue investigators when the committee publishes its report. The reputational consequences for the firms concerned may be significant.

Solicitors can seek to protect themselves and their firms by taking simple steps.

- Solicitors should ask how information will be obtained and ensure they are satisfied with the answers.

- It should be made clear in writing that the private investigator will not engage in any illegal activities such as phone hacking or actions that would contravene the Bribery Act 2010.

- Solicitors should consider whether, if the likely source of any information to be gathered had to be revealed in court, it would cause them, their firm or their client any embarrassment or liability.

- Solicitors should also consider whether, though they may be satisfied as to the conduct of their own matter, there is a risk that the private investigator may be engaging in unlawful or potentially embarrassing conduct in relation to other clients. Such conduct might have a knock on effect on the reputation of anyone instructing that private investigator, even if the instructing party is not involved.

- Particular care should be taken when dealing with matters involving foreign jurisdictions. Solicitors need to be satisfied that any activities carried out on their behalf by private investigators are not only legal in England and Wales, but also in the foreign jurisdiction. Investigations involving foreign jurisdictions may also provide a greater risk of breaching the provisions of the Bribery Act 2010.

These are all precautions that solicitors should be taking, not only to avoid incurring criminal and civil liability, but also to avoid being at risk of disciplinary proceedings by the SRA.

The future

No doubt encouraged by the news cycle, the Home Secretary announced in response to the Home Affairs Select Committee that private investigators will be required to be licensed by the Security Industry Authority from 2014. Working as an unlicensed private investigator will attract a fine of up to £5,000 or up to six months in prison.

The proposed regime is likely to exclude from its ambit investigative activities carried out by solicitors, accountants and, as extensively reported, journalists. This will come as a relief to professionals, since it is common for law firms or accountancy firms to be engaged to carry out independent investigations of certain matters. It is also common for litigators (particularly those practising in the areas of fraud and family law) to carry out certain investigative activities that would otherwise be caught by the new regime. However, firms will need to ensure that those who are not exempted professionals are registered under the new regime if they carry out investigative activities.

Although the proposed regime ought to raise standards, those administering and those affected by the regime will need to be aware that the new rules may bring new risks of their own if not properly managed and implemented:

- Regulation may lead to a false sense of security. It will not obviate the need to continue taking the basic common sense precautions outlined above.

- Faced with solicitors wanting to practise within the letter and spirit of the regime, less scrupulous clients may choose to obtain information directly from non-licensed investigators. Solicitors will need to be increasingly vigilant about using information without knowing its provenance and to carefully consider the implications of doing so, which could include criminal liability and severe reputational damage.

- Rogue private investigators may move offshore, where some activities could be carried out away from the jurisdiction of the Security Industry Authority. It will be safest to use onshore private investigators where possible.

- Unless the spirit of the new regime is backed up with effective enforcement, legitimate private investigators operating within the regime may face unfair competition from those not operating within the rules. This may ultimately reduce the quality of private investigators available to solicitors.

Solicitors should pay close attention to their relationships with private investigators. This will be no less important when the new regime comes into force.


First published in Solicitors Journal, 23 August 2013.



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