A recent joint statement on referrals to the tribunal published by the SRA aims to give some clarity about the types of disciplinary cases which will end up at the tribunal.
With the SRA’s newly increased fining powers, cases that will no longer be referred to the SDT will include some relatively serious breaches of conduct rules with a high degree of personal culpability, where a fine is an appropriate sanction.
However, the most serious cases of unethical behaviour (e.g. dishonesty), instances of repeated low level breaches, and those cases where oral evidence is necessary will continue to be referred to the tribunal.
One of the categories of cases highlighted in the joint statement that ‘should typically be referred to the SDT’ relates to toxic workplace culture.
The status of ‘freelance solicitors’ is a relatively new regulatory arrangement for the SRA, coming in with the 2019 Standards and Regulations. Before that, the only way for a solicitor to practice was through a firm, as a sole practitioner or in-house lawyer. Freelancers are a new breed of solicitors, who don’t quite fit into those models.
It is incorrect to say that freelance practitioners are ‘unregulated’, since the full Code of Conduct (for individuals) and SRA Principles apply. These rules contain the core professional and ethical duties, and freelancers are answerable to the SRA for breaches.
But since freelancers operate outside the scope of a regulated firm or sole practice, many of the other parts of the rule book fall away. That includes the rules on professional indemnity insurance (PII).
So what level of insurance does the SRA require freelancers to have?
Not long ago, we were reporting the occasional low level fine for firms incurring the ire of the SRA for AML failures. £600 for a lack of risk assessment here, £1,200 for an inaccurate declaration there. Nothing too dramatic – the most damaging aspect of a finding was the naming-and-shaming in the legal press.
Over the past year, however, the regulator’s fining powers have increased from £2,000 to £25,000, the regulatory importance of AML controls has heightened due to Russia’s invasion of Ukraine, and the SRA has increased its AML supervision visits.
This is resulting in an increased willingness by the SRA to issue more significant financial penalties.
The most recent example is a £20,000 fine to a small Oxford firm, Ferguson Bricknell, for anti-money laundering failures.
It’s been a rollercoaster first 5 years for GDPR, says Rachael Eyre.
In this article, Rachael looks at the effect of Brexit on the UK’s data protection regime, ICO enforcement, and international developments.
News and Guidance
- Joint statement from the SRA and SDT on referrals to the Solicitors Disciplinary Tribunal (SDT) – in light of the SRA’s new powers to fine up to £25,000, this statement of understanding between the regulator and tribunal sets out the types of cases that are likely to end up in a formal SDT hearing.
- Risk Outlook report: cryptocurrencies and other distributed ledger technologies – law firms entering this space need to be aware of the opportunities and risks.
- SRA response to LSB statement of policy – ongoing competence – SRA commits to publishing an annual report on competence in the profession. Note that they ‘will develop and broaden the ways that [they] identify solicitors who are not competent‘, which is likely to mean closer monitoring of annual competence declarations and training records.
Law Society – New and updated practice notes (may require login)
- Ethics feature: Witnessing signatures: solicitor struck off for false claim
- Business management feature: SLAPPs and reputational risks
- Practice note: Residual client balances
- Practice note: Protection for client accounts
- FATF annual report 2021-2022 – the international AML organisation sets out its recent achievements and strategic priorities.
- National Crime Agency publishes Suspicious Activity Reports (SARs) annual report 2022 – law firms make around 2,000 SARs and apply for around 1,300 DAMLs (‘safe harbour’ defence against money laundering prosecution) per year.
- (Updated) NCA SAR Online User Guidance – refer to this if you need to make a SAR or DAML.
- Transparency International publishes latest Corruption Perception index – always a useful resource to find out more about unfamiliar jurisdictions, particularly whether enhanced due diligence is warranted in a transaction.
- Rogue RAC employee prosecuted and fined £5,000 for data protection breaches – Asif Iqbal Khan passed details of road traffic accidents to claims management companies.
- Gazette – Raise SRA’s fining power to £250 million, say peers– although this is meant in relation to SLAPPs, the headline highlights the gap in the regulator’s current fining powers between traditional law firms (£25,000 – described as ‘a peashooter against a tank‘) and ABSs (£250m).
Recording: GDPR turns 5!
Led by our in-house data protection practitioner, Rachael Eyre, the session covers:
- GDPR basics
- How data protection ties in with duties of confidentiality
- The future for the UK GDPR
- Data Processes / Data Maps – the foundation of your Data Protection Regime
To access the recording, click here and use passcode =#4s7*ZU – available for 21 days.
Next webinar: Terrorist financing – the forgotten piece of AML compliance
Invitations will shortly be sent out for a live lunchtime session later this month. We will look at how and why terrorist organisations might use a legal transaction to raise funds, some red flags to look out for, and what you need to do to remain compliant.
As always, JBL clients get priority access.
SRA and SDT disciplinary decisions
- Buckworths Limited – firm fined £1,600 for allowing the client account to be used as a banking facility in relation to a £200,000 loan, which was unconnected to legal services provided by the firm.
- Samuel Thorne – rebuked for being caught on camera making a ‘lewd gesture’ towards a colleague at a staff Christmas party (over five years ago)
- Emma Burns – paralegal fined £2,000 by SRA for drink driving conviction.
- Michael Coghlan – solicitor rebuked by SRA for drink driving conviction.
- Sarah Tyler – unqualified conveyancer banned from the profession for misappropriating over £300,000 in land tax fraud.
- Scott Galbraith – paralegal, who lied about a previous dismissal in a job application, handed Section 43 order (effectively barred from working in regulated firms).