This week we bring you some intriguing ABS news, demands for the SRA to do more about cold-calling, and news of LeO launching a live chat system. We also bring you the usual SDT disciplinary news.
We are working on a guide about preparing for the data protection revolution (GDPR), implementation of which is now less than a year away. The ICO recently urged businesses to prepare for ‘the biggest change to data protection law for a generation’. Watch this space.
And of course we are still waiting for the final Money Laundering Regulations, due to be implemented by 26 June. Realistically, we are not going to get anything before the election. That does not leave much time to get your ducks in a row, so we have been advising all affected firms to revisit their AML policies and procedures now. Some of the key things you should have in hand:
- a firm-wide money laundering risk assessment
- appointing a board-level person to me responsible for AML compliance (if your MLRO is not already board-level)
- setting up a system to audit your AML systems
- training your staff on the new Regulations, in particular the implications for Client Due Diligence (CDD)
As always please get in touch with any comments, we would love to hear from you.
APIL demands that SRA cracks down on cold-calling
APIL’s president, Brett Dixon, has urged the SRA to crack down on law firms that take cases from companies that are cold-calling. The Code of Conduct does of course address cold-calling, but as Mr Dixon pointed out, there must still be a market for it otherwise companies would not continue to do it. Mr Dixon feels the SRA could do more to tackle the issue and in return the SRA have stated that they will take ‘appropriate action’ if they receive any evidence that solicitors are accepting instructions obtained through cold-calling.
Why it matters
We would expect the SRA to come down quite hard on any firm that was taking on cases obtained through cold-calling. Remember that there is a duty on the firm of solicitors to check that their introducers obtain their work in line with the Code of Conduct. Wilful ignorance, or simply saying that you ‘did not know’ is unlikely to cut it with the regulator. Firms need to do their due diligence on introducers. Where are they sourcing their work? What are their scripts? How can we check their compliance?
Live chat for legal complaints
The Legal Ombudsman (LeO) has launched a new online live chat to make it easier for consumers to get advice on disputes against the profession. Chief Legal Ombudsman Kathryn Stone said:
“Modernising our systems with Live Chat should fit better into people’s busy lives and make it much easier for consumers to seek support about poor service from the legal industry and get the advice they need. People often don’t know where to turn when they have issues with legal providers, but we want them to know that we are here for them online as well as just a phone call or email away.”
Why it matters
The Live Chat system is part of the three-year plan by LeO to improve the ease of consumers making and resolving complaints. The implication is that there is a proportion of dissatisfied clients that do not currently make complaints, and LeO therefore expects more complaints to be made under this system. Whether it will have the desired outcome in the long run will depend on a number of factors, including the quality of the advice given during the Live Chat. LeO staff may of course just get fed up with bearing the brunt of misplaced client frustrations…
Litigation tactics disguised as conduct complaints
Paul Bennett, a leading regulatory solicitor and partner at Aaron & Partners, urged the SRA to treat reports from litigation opponents with “more caution”. This comes following the recent issue that reached the Court of Appeal in respect of stage 1 costs in MOJ RTA claims, where solicitors were being paid £400 after completing the stage 1, but then, for whatever reason, the case did not progress any further. Insurers argued that this money should be repaid and alleged that there was a practice where some firms (the ‘400 club’) were dishonestly submitting claims. The SRA investigated several of these firms on the back of complaints by insurers and Mr Bennett commented that “The Court of Appeal hopefully has shown the folly in the SRA getting drawn into litigation tactics.”
Why it matters
Most litigators will be familiar with threats of reports to the SRA being used as a tactic to get opponents to concede a particular issue, or even drop a case altogether. That abuse of the regulatory system in this way is plainly unethical. We would like to see the SRA issuing guidance to deter vexatious reporting, and take action where reports have been made as a litigation tactic.
First Bar Standards Board ABS
The first ABS to be licensed by the BSB is an intriguing combination of barristers and football agents. On its website, VII Law states that it is ‘an innovative law firm that provides Barrister led legal services to private clients and businesses’ .
Why it matters
Firstly, congratulations to VII Law for obtaining its licence, and being brave enough to be the BSB’s guinea pig. Particularly with what, on the face of it, is a pretty novel offering. Will these new BSB entities have a material impact on the take-up of ABSs generally? Do they pose a threat to the solicitors profession? We predict not. As things stand the BSB is limiting itself to litigation and advocacy-focused ABSs, as you would expect of the Bar. In other words, pretty niche. Not unless or until it moves towards regulating full service law firms will it be competition for the SRA, which is still the default option for most ABS applications as things stand.
New and updated Law Society Practice Notes
- Two partners and a non-lawyer partner were fined by the SDT for retaining unpaid professional disbursements in the firm’s office account.
- A former government solicitor has been struck-off for back-dating a defence and signing a statement of truth stating that he had filed the defence on time, which was not true. The Respondent admitted all the allegations and in mitigation he showed evidence that he had suffered an exceptionally stressful time including the passing of his mother after a period of illness, and a failing marriage, but the tribunal said that the case involved admitted and proved dishonesty and determined that there were no exceptional circumstances which could justify a lesser sanction than striking off.
- Two solicitors have been fined £35,000 each and ordered to pay the SRA’s costs of £48,655.44 for several Accounts Rules breaches, both solicitors can also no longer be partners, sole practitioners or compliance officers at a firm. The Accounts Rules breaches include failing to reconcile accounts, allowing a client matter to become overdrawn, due diligence failures, and holding residual balances totaling £293,524.20 in relation to 646 client matters without informing clients for the reason for the retention.
- A secretary at top City law firm Norton Rose Fullbright has been subject to section 43 order banning her from working in the profession. She was found to have acted dishonestly in submitting three false cash advance forms and received £558.33 knowing that she was not entitled to it.