Before we get into this week’s compliance updates (and there are some important ones), I have a question for you.
Are you going to Legalex London on 28-29 March?
I will be giving a practical session on how to get an ABS licence, and looking at the programme, there are lots of great talks scheduled over the two days. It’s a golden L&D opportunity – think continuing competence! You could fill those training diaries in a few hours. (You have started keeping training diaries, right?).
If you do attend the exhibition, come and say hi. It would be great too see you!
Start collecting diversity data
All SRA-regulated firms will be required to report and publish diversity data in May 2017.
Why is it important?
Whilst some people may object to the intrusive nature of the mandatory survey, the regulators take diversity monitoring very seriously. Firms that fail to report diversity data in time will be an easy target for unwanted SRA scrutiny.
You should therefore start planning how you will collect, report and publish your data. There is further guidance and a template questionnaire on the SRA website.
More complaints, please!
The Legal Ombudsman (LeO) has published its strategy. It is looking not only to extend its reach to clients of unregulated legal providers, but also small and medium-sized businesses.
Worryingly. the LeO was forced to pull complaints data from its website because of concerns over accuracy.
Why is it important?
Recourse to the LeO is currently limited to clients of regulated firms, and the scheme usually only applies to individuals and ‘micro’ organisations. Depending on your point of view, this is perhaps one of the benefits of being a regulated firm. It’s certainly a differentiator from the unregulated.
The issue over inaccurate complaints data is very concerning. It also undermines the current push towards ‘transparency’ and publicly available access to law firm information. If the data cannot be trusted, what’s the point? It’s no help to the end user, and potentially damaging to firms’ hard-earned reputations.
I can’t help but think this is not going to be an isolated incident.
Transparency (again)
The ongoing war of words between the SRA and the Law Society continues to escalate. Law Society president Robert Bourns has warned that proposals forcing firms to publish prices could ‘mislead clients’. The SRA has indicated that it will push ahead, and indeed we understand that preliminary rules have already been drafted. We can expect further details in summer.
Why is it important?
Following the CMA report in December. the issue of publishing fees will not go away. Like it or not, this is the direction of travel. Expect the low hanging fruit (wills, uncontested divorce, conveyancing) to be first in the firing line. Afterwards….who knows? Hourly rates? Average total costs?
And it doesn’t stop at prices. We are also told that firms need to be more transparent about service levels and quality. Obvious metrics include complaints (the SRA already collects annual data on first tier complaints at PC renewal time) and accreditations. At their conference last year, they also raised the prospect of insurance claims.
All this data will end up in the hands of third party comparison sites. Free meerkat toy with your divorce, anyone?
Property fraud update
Law firm Mishcon de Reya, solicitors for an innocent purchaser, has been found in breach of trust (and therefore liable) in the wake of a £1m property scam perpetrated by a fraudulent seller. The seller’s solicitors, who had done their due diligence but failed to pick up on the fraud, owed no duties to the purchaser. The decision is up for appeal in October. See Mishcon’s £1m fraud bill sounds alarm bells for more details.
In a related story, three partners were rebuked by the SRA for transferring sale proceeds to a fraudster’s account. The criminals posed as the client in email correspondence and amended the banking details. Foolishly, the fee earner took instructions by email. The partners, although not involved in the transaction directly, were found to be at fault on the basis that they failed to put in place adequate fraud prevention systems.
Be on your guard conveyances, be on your guard!
Why is it important?
The Mishcon case is a real eye-opener. The firm was not negligent, but nonetheless found itself in the position of underwriting the ‘fraudulent seller’ risk. A remedy against the (insured) firm was the only practical remedy open to the innocent purchaser. The firm may well be insured, but a large loss like this will hike premiums, potentially across the board if the decision is upheld.
So what is the answer? A new insurance product to cover the risk? A development in the law of negligence? Mandatory undertaking on the seller’s solicitors? Compensation fund stepping in?
Property lawyers need to keep a close eye on the appeal.
Notable disciplinary decisions
- Disgraced human rights solicitor Phil Shiner struck off over his conduct of abuse claims against British soldiers in Iraq.
- Solicitor fined and conditions placed on his practicing certificate for failure to carry out CDD checks and providing a banking facility.
- Solicitor given a written rebuke and a fine for failing to update his practice address and telephone number and misleading the SRA.
- A post-room assistant, who was convicted of a criminal offence was fined and barred from working in legal practice.
- And finally…we must say that we feel enormous sympathy for the retiring solicitor who became inadvertently caught up in a property fraud when trying to sell his firm.
