Lawyers Covered - February 2026

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered! Welcome to our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

Mazur Monday

The Court of Appeal hearing of the appeal in Mazur was set to begin in at 2pm on Monday 23 February 2026, and the court took the unusual step of locking down the live feed of the hearing.

Rather than broadcasting the appeal on its YouTube channel in the usual way, the court ordered on the Friday before the hearing that only those with written permission from the court could view the proceedings. Applicants were required to confirm that they would be geographically located within the jurisdiction of England and Wales whilst watching, and provide reasons why they want to watch the proceedings – and explain why it would be in the interests of justice to do so.

The measures, which were made of the Court of Appeal's own volition, were explained by the court as necessary to manage the great public interest, including interest from media representatives and members of the public.

Meanwhile, CILEX, which is intervening in the proceedings, has shared its skeleton argument with the Law Gazette, who reported that CILEX intends to argue that Parliament never intended the Legal Services Act to alter the settled position that solicitors could conduct litigation through unauthorised but supervised staff. The Law Society and the SRA, who are both opposing the appeal, will make their submissions on Wednesday afternoon, with the Legal Services Board and Julia Mazur also making submissions before CILEX responds on Thursday afternoon.

Court rejects prolific fare dodger’s bid to derail prosecutions using Mazur argument

The uncertainty caused by the decision in Mazur continues to swirl as our Court systems starts to see the decision being deployed in an attempt to strike out claims before they have really started.

Prolific fare dodger, Charles Brohiri, sought to argue that 39 of his 113 offences should be dismissed in full as they had been commenced by 'lay prosecutors' in contradiction of the decision of Mazur, which held that the conduct of litigation is a reserved legal activity. A lay prosecutor is someone who does not hold a formal law degree or legal qualification but initiates or presents criminal cases.

The Judge ruled that Mazur had no relevance in this case as a lay prosecutor could commence proceedings as an exempt person under the Legal Services Act 2007, here, because they were an employee of Govia. The Judge also ruled that it was clearly not the intention of parliament to nullify this type of prosecution and that, in any event, the Court had granted rights of audience through practice and conventions for those individuals.

Whilst the judgment handed down is currently awaiting appeal, it is expected (and hoped) that as the decision is considered further by the Courts and Judges, clarity will be provided on the legal position for firms and individuals alike.  

Ministry of Justice's proposal to fund justice system from interest on solicitor's client accounts

The Government is consulting on a proposed 'Interest on Lawyers' Client Account Scheme' (the Scheme), through which it says the legal sector would contribute to ensuring the long-term sustainability of the justice system.   

The Scheme, which is said to be similar to models used in several other overseas jurisdictions, would apply to all regulated legal services providers and would require providers to remit to government 75% (but potentially up to 100%) of the total interest generated on pooled client accounts, and 50% of interest generated on individual client accounts. 

Under the Scheme:

1. Client money is deposited in an account meeting the Scheme's core requirements, including paying a rate of interest comparable to other interest-bearing accounts offered.
2. Interest is generated daily and credited to the account periodically.
3. A proportion of that interest is transferred to the Scheme administrator periodically.
4. Interest remaining is left in the account to be managed as usual by the provider, subject to rules on interest set by regulators.

Opening the consultation, Lord Chancellor David Lamy said that 'law firms thrive when the system is strong, so it follows that they should contribute to strengthening justice'. The consultation refers to other jurisdictions with similar schemes as examples, such an Australian scheme that funds the regulation of the profession and provides grants. However, the government's proposals would fund the MoJ's central account but would not allocate funds to specific projects.

There are concerns that many firms are dependent on client account interest and would fail without this income. A Solicitors Regulation Authority consultation on consumer protection found that 5-10% of UK law firms would experience 'financial failure or serious financial consequences' without the income from client account interest if they do not raise fees. The majority will be smaller high street firms which makes the possible consequence of fees rising detrimental to access to justice.

Further criticism has highlighted potential loopholes that firms could pursue, such as negotiating better conditions with their banks (such as lower interest on borrowings) in return for not earning interest on their client accounts.

The consultation seeks information from legal services providers as to how they currently treat client account interest, and views on what impact that the Scheme may have.  The closing date for responses is 9 February 2026.

"No win, you could still incur some charges, and if you do win, there will be fees, disbursements and possibly more that you will need to pay for"

This description is not quite as 'catchy' as the well-known 'no win, no fee' reference that is made to conditional fee agreements. However, this may be more akin to the transparency that the government is calling for in respect of these fee agreements. 

The Justice Minister is calling on the SRA and Financial Conduct Authority for tighter regulations on conditional fee agreements. Their aim is to avoid consumers being exposed to potentially unexpected fees as a result of poorly explained agreements.

Both regulators are alive to the issues and are already taking steps to improve the position for consumers. On 28 January 2026, the SRA issued a warning notice in respect of "'no win, no fee' and other fee arrangements in high-volume consumer claims". The SRA say that this is in "response to evidence of widespread poor practice in the sector, which is putting the public at significant risk". The warning notice reiterates the potential enforcement action that may be taken against firms if there is a failure to adhere to the relevant principles. We can expect to see the SRA apply a firm approach when investigating and dealing with issues that now arise. Firms would be wise to take heed of this warning and ensure that they fully comply with their obligations when entering into these agreements. Transparency for the consumer is key!

Could you be liable for AI-use (or failing to use AI)?

The UK Jurisdiction Taskforce (UKJT) has published a consultation on its draft Legal Statement on Liability for AI Harms under private law in England and Wales.

In the Legal Statement, AI is defined as "a technology that is autonomous", given that there is no one universal, or legal, definition.

The Statement emphasises that AI has no legal personality and liability must be attached to legal persons in the private law of England and Wales i.e. the laws of contract, tort and statutory product liability.

Professionals including lawyers, accountants, architects and clinicians who owe contractual and tortious duties to their clients to exercise reasonable care and skill, must be cautious when using AI in the course of their work to avoid liability.

Breaches of these professional duties may occur if a professional fails to conduct proper due diligence on AI systems, or uses a tool without a sufficient high-level understanding of the tool's operations and limitations. Professionals must ensure transparency with clients in respect of significant AI use, and not mishandle confidential or privileged information, for example, by inputting sensitive information into an AI chat tool that is not secure. A lack of human oversight over the outputs of AI systems generally, and failure to 'fact-check' AI-generated content, particularly in the context of high-stakes decisions (for example in clinical, litigation and transactional settings), is likely to constitute a breach of professional duties. A client relying on an AI-generated statement shared by a professional could amount to negligent misrepresentation, if the statement is in fact false and the client suffers some detriment as a result.  

Alternatively, failing to use AI, if appropriate, in circumstances where it is increasingly becoming standard practice could also be negligent.

The Statement makes clear that professionals should ensure appropriate AI use, rather than avoiding its use entirely.  Firms should familiarise themselves with the statement to ensure that they understand their exposure to liability for AI-related harms. 

SRA reveals its plans to shape up following LSB sanction

The SRA has published an implementation plan to respond to the binding directions made by the LSB to the Law Society. The Legal Services Act 2007 gives the LSB powers to sanction a regulator that it is concerned is failing to meet the required standard, including by issuing binding directions or, in extreme cases, by intervening into or ordering the cancellation of its approval as a regulator. The LSB exercised these powers in May 2025, issuing binding directions requiring the SRA to improve the way it identifies and responds to risk. The LSB's actions arose from an independent report it commissioned, which led it to conclude that the SRA's conduct has had, or is likely to have, an adverse impact on its regulatory objectives.

The SRA's response confirms that it will review the current regulatory rules relating to governance, risk management, authorisation, client money protection, authorisation, client money protection, the oversight of firm sales, mergers and acquisitions, and pre-intervention process. The SRA intends to make improvements to record keeping, training and guidance, consumer impact assessments, periodic reviews, and data and market intelligence.

The SRA implementation plan will likely have a big impact on firms with changes expected to the regulations regarding:

• How the SRA deals with firms with financial instability.
• How the SRA controls and checks the way firms handle client money.
• The circumstances when firms must notify the SRA of a significant change to their profile due to sales, mergers and acquisitions.
• The circumstances in which individuals can hold more than one role in a firm e.g. compliance officer, MLCO, owner etc.

The SRA will submit an application to the LSB for any proposed changes to the regulations by the end of May 2026. It is unclear, at present, the precise changes the SRA intends to make but firms should expect changes to the rules on individuals' roles in law firms (with potential changes to individuals who currently hold those roles), the reporting of firms' finances (including client accounts) and, the rules on sales, mergers and acquisitions. The proposed changes are likely to lead to increased SRA scrutiny of firms, including individuals with significant control, particularly in relation to operational and financial decisions about how the firm is run, with a view to protecting consumers and the public from any potential resulting harm. It is important firms stay informed of the proposed changes to ensure firms comply with their regulatory duties.

The SRA's full implementation plan can be found here. 

To disclose or not to disclose – where do firms stand on instant messages?

In the current day, more and more lawyers are communicating with their clients via instant messaging software such as WhatsApp. But should those messages be disclosed to the Court within the matter file?

The Court has considered whether such messages could be disclosable in the case of MacInnes & another v DWF Law LLP [2025] EWHC 3252 (SCCO). The case concerns a costs assessment in an arbitration matter in which the Defendant was ordered to provide a 'complete digital copy' of their file. The Claimant alleged that the Defendant had failed to comply with the order by failing to disclose a series of WhatsApp messages. The Defendant refuted this, claiming WhatsApp and MS Teams messages did not form part of the file, were not saved to the file and so were not disclosable.

The Judge held that where a firm decides to use WhatsApp in place of communication via a letter, call or email, they should have a means of recording and evidencing that correspondence. The Judge noted that, on that basis, the messages could form part of a required disclosure. The Judge decided that the key was whether the firm charged for the work. In this case, as the Defendant had recorded the messages as fee earning time, the messages should have been disclosed, and they were found in breach of the order.

It is important that firms which conduct business through messaging services like WhatsApp have robust policies and procedures, and where fees are being charged to the client for that time, those messages must be saved to their file in order to avoid opening themselves up to litigation or regulatory risks. 

Independent Investigation into the Law Society of Singapore for allegations of workplace issues

The Law Society of Singapore (LSOS) has commissioned an independent investigation into its workplace culture and governance following allegations of a myriad of internal workplace issues which surfaced in an online Reddit post in September last year, and which are reported to have precipitated the departure of close to one-third of its 70-strong workforce over the course of 2025.

Established as a statutory body under the Legal Profession Act in 1967, LSOS occupies a critical position within Singapore's legal ecosystem, performing a dual representative and regulatory function. At its core, and consistent with the role performed by most bar associations around the world, LSOS supports and represents its approximately 6,400 members – comprising locally qualified advocates and solicitors, as well as foreign qualified lawyers – through professional development and training, advocacy on issues impacting the interests of legal professionals and the provision of practical resources / mentorship programmes.

Concurrently, LSOS also performs an important outward-facing regulatory role directed at maintaining public confidence in the legal profession, including by investigating allegations of misconduct, enforcing professional standards and, where necessary, initiating disciplinary proceedings against contravening individuals and firms.

Against this backdrop, it is perhaps slightly ironic that the body tasked with monitoring behaviour and enforcing standards across the legal profession in Singapore has itself become the subject of widespread public scrutiny and criticism following the online post, which attracted significant attention due to its scathing allegations concerning LSOS's workplace culture and governance, and which specifically raised concerns regarding:

• The poor treatment of staff, including allegations of bullying, burnout, and inadequate grievance processes to appropriately investigate claims of sexual harassment;
• Governance and leadership oversight, including decision-making transparency and accountability within senior management; and
• Financial controls and expenditure oversight, particularly in relation to overseas travel and approval thresholds.

Late last year, the audit committee of LSOS reportedly commissioned local Singaporean law firm TSMP Law Corporation to conduct an official probe into the veracity of the allegations. While no official report has been submitted by TSMP as of early 2026, we expect it to only be a matter of time before details of the findings hit the public domain, spurred by the Ministry of Law's recent comments that it looks forward to a full and thorough investigation being carried out 'as expeditiously as possible.'

With thanks to additional contributors: Sally Lord and Aimee Talbot

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.

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