CILEX Members Contemplating Legal Action Over Royal Charter Changes

A group called the ‘CILEX Action Group’ has stated that it may take legal action against CILEX if its charter and bye-laws are changed without the approval of members. This follows a declaration of no confidence by the group (which includes the former president of CILEX, Stephen Gowland) in November 2023 in the regulator’s executive and board in relation to the planned takeover by the SRA of the regulation of legal executives. The group made a number of requests for a special general meeting to discuss their concerns over the pending SRA takeover.

Request For A Special General Meeting Refused

Following the submission of the letter by the CILEX Action Group in late 2023 requesting an SGM to discuss their concerns, CILEX’s president, Emma Davies, stated:

“CILEX received a notice from a small group of CILEX members requesting a special general meeting to allow for a vote on regulatory matters. When CILEX checked the validity of the list of names supplied against the bye-law requirements, a number of those listed were identified as not meeting the eligibility requirement as a result of their membership status”. She went on to say, “Furthermore, to fulfil the request would have placed CILEX in breach of the LSB Internal Governance Rules and Legal Services Act 2007 requirements to maintain separation of representative and regulatory functions. The request was therefore legitimately rejected”.

This is one of three attempts by the group to request a special general meeting to bring a vote on the plan for CILEX’s regulatory function to be taken over by the SRA. The group has proposed a number of amendments in relation to CILEX’s charter, bye-laws and standing orders. This includes the full publication of board meeting minutes within a month of the meeting and new clauses in relation to votes of no confidence.

CILEX stated its intention to continue publishing the results of the SRA/CILEX consultation process.

A Breach Of The Royal Charter?

In January 2024, the board of CILEX met to consider two ‘special resolutions’:

1. Further information received from the Solicitors Regulation Authority on the regulator’s proposed approach to regulating CILEX members and agree on the next steps and

2. Resolve to adopt revisions to the CILEX charter and bye-laws to implement the outcomes of CILEX’s consultation on enhancing public trust and confidence.

According to the group, one of these revisions was to increase the number of CILEX members necessary to call a special general meeting from 50 to 10%, equating to around 700 members. Speaking on behalf of the CILEX action group, former CILEX president, Mr Gowland said:

“This is clearly an attempt by CILEX to restrict the ability of members to hold CILEX to account and is something that CILEX should be ashamed of”. He went on to explain that the actions of CILEX may be a breach of its Royal Charter; “As you have not allowed fellows to speak on the issues which you are to vote on tomorrow, any application to make changes to the charter and byelaws to the Privy Council and the Legal Services Board will be void ab initio, and therefore vehemently resisted. Further, if the Royal Charter is breached, all directors will be both collectively and individually liable for this breach”.

Mr Gowland urged CILEX board members to hold off from adopting any resolutions to ensure that the Royal Charter is not breached and that they may consider legal action if they do: “If CILEX does proceed to make changes without complying with the rules governing the Chartered Institute, we will be forced to seek legal advice on taking matters further which we hope to avoid”.

What Was CILEX’s Response?

CILEX has refuted the notion that it may be in breach of its Royal Charter. In a statement to the Law Gazette, CILEX wrote: “A small group of CILEX members have contacted CILEX under a misunderstanding as to the status and nature of the CILEX board meeting being held [today]. CILEX has responded to those members to correct that misunderstanding and to reassure them that CILEX remains in compliance with its charter and byelaws”.

CILEX holds the view that its charter and bye-laws remain subject to internal board consideration, and they intend to make an announcement once the next steps of the SRA takeover have been confirmed.

Final Words

Clearly, the CILEX Action Group is determined not to make it easy for the proposed changes to go ahead. It will be interesting to see what happens next and the ultimate outcome of the 2023 consultation on the takeover of CILEX by the SRA. We will keep you updated on any announcements by CILEX and the response of the action group, including whether they will take legal action as they have threatened.

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