The last decade has seen a steady increase in strategic litigation, with individuals and organisations seeking to use legal cases to drive change in relation to a host of social issues. As noted in our guide to using the law to create change, these kind of challenges can be a powerful tool in a not-for-profit’s campaigning arsenal.
While strategic challenges are often the most striking example, non-profits use the law in myriad ways to advance their objects – for example, conducting case work for individuals, providing template legal documents to help people challenge decisions by public authorities, providing legal support to activists, monitoring and reporting on unlawful practices, participating in public inquiries, and advising public and private bodies on their legal duties.
Engaging in legal activities – particularly if your organisation employs lawyers to undertake them – can trigger significant regulatory considerations. In this blog, we highlight some of the key issues that not-for-profits should consider if they are working in this space.
Legal services regulation – do you need to be registered with a regulator?
The Legal Services Act (LSA) 2007 is the key legislation governing people, and organisations, undertaking ‘legal activities’. Additional requirements are imposed on solicitors and barristers by a matrix of rules set by their respective regulators, the Solicitors Regulation Authority (SRA) and the Bar Standards Board (BSB).
The LSA 2007 distinguishes between ‘reserved legal activities’ (such as conducting litigation, or appearing in court) and ‘non-reserved legal activities’ (such as providing legal advice).
Only an ‘authorised person’ (such as a qualified lawyer, or a regulated law firm) can carry out reserved legal activities, subject to certain narrow exemptions. Not-for-profits will want to get this right: it is a criminal offence for a person to carry out a reserved legal activity if they are not entitled to do so.
Regulation of the organisation
Not-for-profits working in this space should note that if:
- an individual carries on a reserved legal activity as an employee of a company; and
- providing that legal activity to the public (or a section of it) is part of the company’s business,
the company itself will be deemed to be carrying on that reserved legal activity. Therefore, both the employee, and the employer, need to be an ‘authorised person’.
Most non-profits in the legal space are not authorised persons (e.g. regulated law firms), which on its face means they fall short of this requirement.
Helpfully, however, there is currently a ‘transitional protection’ in place that allows not-for-profits, community interest companies and independent trade unions to carry out reserved legal activities despite not being ‘authorised persons’.[1] It is, however, important to note that the provision was intended as a transitional measure – though it has been in force for 15 years – and could be ended by the Lord Chancellor. There are also significant limits on how this protection applies in practice – please get in touch with Bates Wells’ Public and Regulatory team to discuss further.
Regulation of the individual
Even where the transitional protection is validly relied on by the organisation, any lawyers it employs also need to be aware of their regulatory obligations as individuals, particularly when working for a ‘non-authorised body’, which can lead to some restrictions on how they can practice.
Any non-authorised persons employed by such organisations (for example, non-lawyers) will not be entitled to carry out any reserved legal activities. There are also complex requirements regarding what solicitors and barristers without valid practising certificates are able to do and how they are able to describe themselves. For example, it is a criminal offence to falsely give the impression that you are entitled to carry on a reserved legal activity if you are not so entitled.
Charity law and regulation – furthering your charitable purposes
A further regulatory consideration for charities is ensuring that their activities further their charitable purposes. Under English and Welsh law, a charity must exist for one or more recognised purposes (e.g. the advancement of health or the relief of poverty). Everything a charity does must further its own specific charitable purposes in some way (not just any charitable purpose).
A charity considering strategic litigation, or other legal activities such as casework or providing legal advice, should therefore consider whether its objects are broad enough to accommodate them (failing which it may need to seek to amend them, which would generally require the consent of the Charity Commission).
Charities have to particularly be careful when mounting a public campaign for change, including using strategic litigation. While charities do, in fact, have considerable flexibility to engage in good faith campaigning and political activity to further their purposes, the Charity Commission is keen that they carefully scrutinise the benefits and risks of doing so including in relation to their reputation. Trustees should be bold enough to take the decision which they think most appropriately furthers their charity’s objects. They should make the decision on this basis, not on the basis of their own views about whether or not it is a “good cause” – but by the same token should not be held back by a general reluctance to engage in controversial issues, or because of a particular narrow conception of charity.
The Charity Commission has also published extensive guidance for charity trustees to consider when thinking about taking or defending legal action. This includes guidance on when a charity can take or defend legal action, trustees’ decision making process and managing the costs of legal action. On costs, charities – and other non-profits – might think about what the financial risks of strategic litigation might be, and how to manage these, including by using crowd-funding, insurance policies, litigation funding or cost-capping orders. Find out more about funding strategic litigation at our upcoming webinar.
Bates Wells is the UK’s leading charity law firm and the first in the country to certify as a B Corp. We use our values as a compass to guide us in working for impactful clients making a difference to social and environmental issues. We have excellent credentials for strategic litigation and advising not-for-profit organisations on the issues that emerge when such organisations carry out legal activities. If you or your organisation would like to discuss any of these issues, please contact Natasha Davies, Helen Fry, or Suhan Rajkumar.