- Publication Date
- 2021-06-10
The Solicitors Regulation Authority (SRA) received several reports raising concerns about the conduct of solicitors at the law firm, prompting an on-site forensic investigation that began in August 2018. This investigation revealed numerous issues.
The relevant lawyer was the Compliance Officer for Legal Practice (COLP) and the Compliance Officer for Finance and Administration (COFA) of the law firm from December 2015 until October 2019. The investigation found that the law firm undertook work in areas outside its expertise. Notably, in December 2017, the firm handled a probate matter despite lacking prior experience in probate issues. The fee-earner assigned to the case had no previous experience in probate matters. During the investigation, it was discovered that the firm had received client estate monies totaling £57,908.50 without having a client account. There was no evidence of supervisory oversight on the client file for the probate matter, and the debts of £6,050.94 identified in the estate were not settled before distributing the estate monies to beneficiaries. The review also uncovered that the firm did not perform necessary client due diligence (CDD), accepting client monies before verifying the client’s identity, and potential beneficiaries with equal or greater claims to the estate were not identified by the firm.
Additionally, a total of £37,610.66 of estate monies were inappropriately paid out to third parties, including payments of hospital bills for relatives of the deceased. In a separate instance, in April 2018, the firm was engaged in a commercial matter to review and advise on a contract, a field in which it had no prior experience. The relevant lawyer supervised this file but did not inform the client of the firm's inexperience, thus failing to protect the client’s best interests. By July 2018, the firm transferred this matter to another solicitor’s firm due to its inexperience.
The investigation also highlighted that the law firm received a total of £62,208.50 in client monies into its office account, contrary to its policies that required the relevant lawyer’s signature for transactions of £1,000 or more. The relevant lawyer claimed to be unaware that client monies were held by the firm, and a review revealed procedural failures and the absence of required authorizations or signatures on the file transactions. The firm did not operate a client account, using the office account to disburse estate money to beneficiaries, which violated the regulations.
As the Money Laundering Reporting Officer (MLRO), the relevant lawyer allowed the firm to hold £62,208.50 of client monies without a client account, and the firm failed to undertake adequate CDD to verify the validity of the money received. The investigation of the firm’s Anti-Money Laundering policies showed non-compliance with Money Laundering Regulations 2017.
Based on the findings, the SRA decided to impose conditions on the relevant lawyer’s practising certificate for 2020/2021, preventing them from acting as the manager or owner of an authorized body and from serving as a compliance officer.