Happy Friday!
It’s probably fair to say that it hasn’t been a great week for the profession. First we had the news that all personal injury solicitors had been dreading, that the MOJ is pressing on with ‘whiplash’ reforms (what a misnomer – they in fact cover all ‘low value’ PI claims).
Then Michael Gove stood up and said that solicitor-advocates’ rights should be restricted because clients get a ‘better service’ from Barristers. At least we have a strong professional body to challenge him though, hey? Cue tumbleweeds blowing down Chancery Lane…
‘Amicable Apps’ then made the news this week, promising to do away with lawyers in divorce proceedings. Take that with a pinch of salt if you wish, but there is no doubt that the technologists have their sights firmly set on a significant proportion of work that has typically been carried on by lawyers.
At least it’s the weekend!
Solicitor personally liable for “Partner’s” mortgage fraud
Legal Futures reported the cautionary tale of Ms Rahim, a solicitor who is on the hook for over £4 million lender losses resulting from a partner’s criminal activity after the High Court ruled that PI insurers were not responsible for the losses. The case is notable because Ms Rahim appears to have been a “partner” in name only, and was given the title so that the firm could remain on lender panels. It is reported that she earned just £1,500 per month. The Court found “some sympathy” for Ms Rahim, although there was also evidence of complicity and dishonesty on her part.
Why is it important?
It is well established that if you are held out as a partner – even if it is just a salaried title – you are likely to be treated as if you were a partner in the legal sense. That brings with it a certain amount of personal liability and risk. In addition, the regulator will treat you as a ‘manager’ (SRA-speak for partner, director, or LLP member) and could hold you responsible for failings in the firm. Which makes it essential that you make it your business to know what it going on in the firm and act accordingly. It’s a question of self-preservation.
Solicitor sentenced for ignoring LeO decision
If Ms Rahim was slightly lucky to avoid a custodial sentence, Ms Cory (previously of Castle Law) was not so fortunate. She has been in the news for failing to comply with a Court order enforcing a LeO decision, resulting in committal proceedings.
The facts are relatively innocuous, involving a complaint about an estate administration, resulting in a Legal Ombudsman decision in 2014. Cory was ordered to reimburse fees and complete the work. The now ex-solicitor ignored this, and went on to ignore an order enforcing LeO’s decision. As a result, in an application for committal (which Cory failed to attend), the Court had little option but to order a 14 day suspended sentence. Judge Seys Llewellyn commented “this is in short a solicitor who has hidden her head in the sand and continues to do so”.
Why is it important?
Compliance tips – Money Laundering
This week, a few thoughts on money laundering that often crop up:
- Does everyone in your firm know who your Money Laundering Reporting Officer (MLRO) is, and how to report suspicions? Maybe it’s time for a round-robin e-mail and a reminder of the firm’s AML policy. We always find the most useful part of AML training is identifying the “red flags” to watch out for.
- Always record your findings and keep an audit trail. This is relevant at both the file level (consideration of risk and conducting Client Due Diligence), and for the MLRO (recording your reporting decisions, and what you have done to educate the firm). Demonstrating that you have considered and addressed risk is key to evidencing that your systems work.
- Remember that SOCA is no more, make sure your policies and retainers are up to date with the NCA details. We often come across policies that clearly have not been reviewed for a very long time – and the wrong law enforcement body is a dead giveaway.
- Make sure that you understand the NCA’s reporting process, including the mechanics of the online portal, and how the consent regime works.
- Consider imposing AML updates as a learning objective across the firm, as part of the approach to the new Continuing Competence regime. This will keep financial crime issues on the agenda, and has the added benefit of not permitting any solicitors saying they have no training needs for the year.
- If you are a litigator or other non-transactional lawyer, do not assume that you can ignore AML and Client Due Diligence. Although the administrative aspects of the Money Laundering Regulations may not apply, the offences under the Proceeds of Crime Act and Terrorism Act apply to all legal work (the principal offences; failing to disclose; and tipping off). These are the parts of regime that really bite.
