Solicitors conflicts of interests: when can you act?
It’s often best to think about compliance issues in simple terms. Solicitors conflicts of interests is no different. If you go back to the first principles, regardless of what the Codes of Conduct and reams of guidance say, you should be in a good position to come to a view on whether you can or can’t act.
Principle 7 says you have to act in the interests of each client. That is not new. It is a fundamental part of being a lawyer.
So essentially, what you are doing when weighing up the potential for a conflict is asking yourself:
- “Is there any reason why I can’t act in each of my clients’ best interests?”
- “If I do this for client A, will it be detrimental to client B?”
- “Would my advice be any different if I only acted for one of these clients?”
- “Am I able to act in my client’s best interest if I also have an interest in this somehow?”
Going back to basics often means you don’t have to get into the weeds of the rulebook.
After all, we are told that the point of principles based regulation is a focus on professional judgment, not prescriptive rules.
However, the Codes of Conduct do contain strict rules around conflict of interests. Essentially:
- You must not act if there is an own interest conflict (i.e. your own interests are in conflict with your client’s) or a significant risk of such a conflict
- You must not act if you have a conflict of interest (where two or more clients’ interests are not aligned, formerly known as a client conflict) or a significant risk of such a conflict – unless the exceptions apply.
In this post
- What are the exceptions to the conflict rules?
- The all-important conditions
- Poor drafting in the rulebook
- Unbundling, and the use of restricted retainers to manage solicitors conflicts of interests
- How to manage conflicts of interest risk
Not got the message yet? Minor SRA sanctions against law firms for AML breaches is just the start
In May 2021 the SRA issued £800 fines (plus costs) to six law firms:
- Charles Hoile Limited
- JE Bennett Law Limited
- Fairhurst Menuhin and Co Ltd
- Alister Pilling (sole practitioner)
- Morrison Spowart Ltd
- Cartwright Solicitors Ltd
Their crime? Failure to provide the required declaration of AML compliance to the SRA in time.
The size of the fines is neither here nor there. These sanctions are the low hanging fruit for the SRA.
It is the regulator’s willingness to take further action on minor AML breaches that is more interesting. It is a shot across the bow for all regulated law firms.
What is Lexcel…and is it worth it?
When people talk about the ‘Lexcel standard’, they are referring to the official quality mark for legal practice set by The Law Society.
The aim of the standard is to provide a clear and consistent benchmark of quality for client care, compliance and practice management.
Some law firms say that Lexcel brings order and cohesion, in large part due to a focus on continual reassessment.
The standard is designed to improve and develop operational efficiency, risk management, client service and law firm profitability.
In this post
- Benefits of Lexcel
- Are there any drawbacks?
- Is Lexcel suitable for everyone?
- What is the process, and how much does it cost?
News and Guidance
Law Society Updates
- Travelling to the EU on business after Brexit
- EU mobility after Brexit: practice rights and rules in EU 27 member states
- Joint guidance on changes to the City Code on Takeovers and Mergers
Other updates
- UK’s data protection regime granted ‘adequacy’ status by EU – it would have been a strange affair indeed if any other decision was made, given that UK law is based on EU law. Data transfers from the EU should be less tricky than feared.
Webinar training
Thanks to everyone who attended last week’s webinar on conflicts and confidentiality. The slides are here and the recording has been sent out separately (feel free to share amongst your team).
July’s session will be Accounts Rules for non-accountants with Richard Lane, and you will get a separate invitation to the event in the coming days. If you haven’t gotten to grips with the new Accounts Rules yet, this one isn’t to be missed.
Disciplinary decisions
- Andrew McNeill – struck off following convictions for making indecent images of children, along with cannabis cultivation.
- Adeel Saghir – suspended for two years following GBH conviction which left the victim with a serious head injury.
- Andrew George Davies – struck off (and jailed for 4 years) after fraudulently withdrawing over £2m from his firm’s client account over a sustained period.
- Darren Fazackerley and Meenal Goyal – fined £10,000 and £5,001 respectively for failing to spot property frauds perpetrated by criminals who set up and infiltrated a separate branch office.
- Peter Hobson Brothwell – struck off for charging an estate £9,000, despite being inactive on the file.
- Jonathan Andrew Simon – two year suspension after forensic accountants discover over 1,500 client balances (some dating back 20 years) and other Accounts Rules irregularities.