Now that we are well into 2018, we know some lawyers are ever-so-slightly nervous about what the next few months will bring.
GDPR is the talk of the town, and will be upon us before you know it. There’s still time to get ready, but not much. If you are available on the 19th February, why not come along to our free GDPR seminar in Cardiff? We promise you will come away feeling confident about your next steps.
Our blog this week is on AML checks (“A passport is not enough”). We often come across firms who think ID checking alone is enough, it is not! Read more below.
This week we also look at the more accountancy firms potentially entering the legal market, a CiLEX firm providing training contracts, and further criticism of the SRA’s proposed handbook reforms, this time by the Legal Services Consumer Panel (The Law Society and LeO have of course already been vocal!).
Finally, we take a closer look at the most notable disciplinary decisions. We are seeing more decisions involving junior solicitors, led into misconduct through their firms’ “culture of fear”. This is something we wrote about last year.
Please do get in touch if you have any queries or comments.
Jon and the team
Come to our FREE GDPR seminar for law firms – limited spaces available
GDRP is coming – are you ready?
Law firms are custodians of significant amounts of sensitive personal data.
The SRA requires solicitors to “comply with legislation applicable to your business, including…data protection”. The ICO is becoming more active in pursuing data protection offences.
In short, you must take steps now to get GDPR-ready. There is still time.
Fiona Gillam will guide you through what you have to do to satisfy the regulators and reduce data protection risks in your firm.
The session is aimed at law firm partners, directors and compliance officers.
Blog: Money laundering – a passport is not enough
Have you fallen into the trap of thinking once ID checks have been conducted you have complied with the Money Laundering Regulations? Jon’s blog looks at this (apparently common) misconception.
The blog is timely as the SRA has this week sent out its mandatory survey, requiring all firms to provide information on AML compliance. Whether you undertake activities subject to the new regulations or not, you will need to complete the form by the 2 February 2018.
TIP: Don’t let the definition of “manager” trip you up in Q6. The MLRs definition is wider than the SRA’s (which is limited to partner’s, directors etc.)
Handbook reforms will ‘confuse consumers’
The Legal Services Consumer Panel (LSCP) has said that the SRA’s proposals to allow solicitors to practice in unregulated firms or as freelancers could confuse customers and complicate the market. The panel also said that the proposals were ‘unlikely to assist consumers’ and that customers were unlikely to fully understand the difference between regulated and unregulated firms. The varying consumer protection liabilities and access to LeO were also seen as problems, problems that have of course already been highlighted by both LeO and The Law Society. The Panel also criticised the proposal to take away the requirement for every firm to have a solicitor ‘qualified to supervise’.
The chair of the LSCP, Dr Martin, said ‘We do not believe that the SRA has struck the right balance between flexibility and the need for consumer protection in a number of these areas’.
Why it matters
Many consider that the SRA’s proposals will harm the profession and devalue the brand ‘solicitor’. Following the consultation with the profession which closed before Christmas, and the feedback from LSCP, The Law Society and LeO, it will be interesting to see where the SRA take these proposals.
Based on past performance, we would expect the SRA to plough on regardless. They have committed too much to this reform agenda.
The threat of accountants and the ‘Big Four’
Earlier this month, Deloitte became the last of the Big Four accountancy firms to announce it will set up an ABS. In an intriguing about-face, the giant firm had previously rejected the option of competing with many of its law firm clients.
Around the same time as this announcement, Citibank and Hilderbrent Consulting published a report that looked at the legal market. The report concluded that the Big Four ‘have the scale to disrupt the legal services market’ and that ‘the sheer depth and reach of the Big Four potentially makes them formidable competitors.’
The report also said that the Big Four spend significantly more on technology and training each year than law firms and ‘given their global platform and their mindset around technology infrastructure investment and the more efficient delivery of large scale legal services’ the push towards artificial intelligence is likely to suit them.
And accountants are not just gunning for the City firms, either. The Association of Chartered Certified Accountants (ACCA) has also been granted power by the LSB to regulate probate activities. The ICAEW of course already regulates probate activities, and has made moves to extend its reach into litigation.
Why it matters
Ever since Clementi and the subsequent Legal Services Act, there has been a palpable fear in the legal profession that non-solicitors will take over the legal profession. Ten years on, that hasn’t really materialised. Certainly not the ‘Big Bang’ some were predicting. However, there has certainly been a noticeable erosion of lawyer-owned law firms’ monopoly over the legal market.
However, as was pointed out to me yesterday, accountants may well be ill-equipped to deal with the messy realities of running probate cases. It is not purely a tax and numbers exercise. Legal practice is still, first and foremost, a people business.
Are junior lawyers under too much pressure?
Kate Sanderson, 4 years PQE, was struck off by the SDT following a finding that she had fabricated attendance notes and letters as well as policy schedules on a case, allegations that she denied. Sovani James escaped a strike off, but was given a two-year ban, suspended for three years for similar misconduct.
The SDT found that Ms James had backdated correspondence, as well as misleading a client and the firm on the status of a file. The negative and unsupportive culture of the firm (the ‘Culture of fear’) as well as her mental health problems were the main mitigating factors.
Why it matters
We have written before about the culture of fear, and the number of solicitors (often junior), who go to great lengths to cover up their mistakes. Should we do more to make sure that these cases do not continue to crop up so often? Making a mistake will rarely get you struck off. Covering it up will. Firms should have a culture where fee earners feel that they can openly stick their hand up.
We’ve come across two useful articles on this topic; firstly The Law Society’s Pearl Moses blog, which states, ‘It is essential to educate everyone within the firm that making a mistake is not the real issue – it’s how the mistakes are handled that counts’; and Secondly disciplinary solicitor, Paul Bennett of Aaron and Partners’ useful article titled ‘Under Pressure’ that looks at what firms, and managers can, and should, be doing to help (incidentally he represented Sovani James at the SDT).
In the Sovani James case, the tribunal said it ‘was left in no doubt that the Firm was a challenging place to work’. Will the SRA be checking up on this firm that has been so heavily criticised by the SDT, we wonder?
The best of the rest
- Kate Sanderson was struck off the roll by the SDT. The SDT found that she had falsified documents, although Ms Sanderson made no admissions that she had done anything wrong.
- Legal Executive Dawn Plant was given a section 43 order following a finding that she haad amended three clients’ wills appointing herself as executor and also a beneficiary without advising her clients to take independent legal advice.
- Azfar Bajwa was struck off by the SDT following a finding that he and his firm had ran judicial review cases with no prospects of success and in doing so misled his clients.
- Newly-qualified solicitor Steven Barker, agreed to be struck off the roll after confessing to the fraudulent misuse of a parking permit.
- Experienced Solicitor, Susan Lowe, was struck off the roll for misappropriating over £170,000 from vulnerable clients whilst acting as their deputy.
- Solicitor Keith Tallon was fined £2500 for account breaches, including failure to pay monies received from the Legal Aid Agency in respect of professional disbursements, to pay those disbursements.
- Solicitor David Pius Jude Feenan was order to pay a fine of £30,000 and costs of £21,000 by the SDT. The SDT found that he had allowed a client account shortage in the sum of £26,020, failed to carry out client account reconciliations and failed to maintain proper accounting records. He also failed to appropriately use a suspense account and failed to deliver the firm’s Accountants Reports to the SRA within 6 months of the accounting period.
- Paul Dumbleton was struck off the roll by the SDT for client account failures including instructing the firm’s legal cashier to effect transfer of funds received for professional disbursements to office account bu to the retain the corresponding cheques.
- Luftur Rahman was struck off following a decision by an election Court that he had engaged in corrupt and illegal practices in winning the mayor of Tower Hamlets election in 2014.
- Leonard Ejiofor was fined £25,000 by the SDT for providing a banking facility to a client and in acting for the same client, failing to have regard to the Money Laundering regulations 2007. He was also given a restriction to acting as a compliance officer or a manager/owner/sole practitioner. Some interest points in the judgement here:
- The firm had carried out adequate due diligence on the client
- This was an existing client – the firm had acted for the client in 3 previous transaction
- Adequate due diligence was not undertaken on the source of monies received.