Compliance Round Up March 2024

CRCS Legal March 2024 Newsletter

Complaint Resolution Compliance Solutions

Welcome to our March 2024 newsletter.? Easter is nearly upon us-with the 2 short working weeks.?

Meanwhile compliance continues and here is this months round up.?

Update on SBB Law - SRA Statement.

The SRA have issued a statement about SSB Group.

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They said that at the end of 2023, they received a number of reports that SSB Group's clients were unexpectedly being pursued to pay adverse legal costs in relation to their discontinued cavity wall insulation (CWI) litigation claims.

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SSB Group had arranged after the event (ATE) insurance for clients to cover the other side's costs in relation to their CWI claims on a 'No win, No fee' basis. However, the ATE insurance providers have declined to meet the costs as expected under the insurance policy, and so the defendants have pursued SSB Group's clients for costs.

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What are the SRA doing?

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They are investigating whether SSB Group acted in compliance with professional standards.

The SRA will investigate why ATE insurance providers haven't paid the defendants' costs. They will investigate whether the firm accurately assessed the merits of claims, explained any potential liabilities to clients and what information it gave to its clients about the ATE insurance policies.

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The SRA say they are inspecting a sample of client files and checking the firm's systems and processes. They will also interview its directors and/or employees where necessary and engage with the ATE providers to clarify any information.

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Unless the SRA discover dishonesty or client money has not been accounted for, then the requirements of the Compensation fund's rules will not be met, and payments will not be made to clients.?

The SRA said they will deal with this as quickly as possible, but with the volume of clients it remains to be seen when this will be finalised.?

Have you checked your ATE cover provides sufficient cover?? Have you complied with the terms of the policy?? Have you provided your client with appropriate advice?

Mental Health and burn out in the Legal Profession.

Mental health is quite rightly at the forefront of debate following the incredibly sad death of a Pinsent Mason’s Partner.

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Pinsent Masons’ managing partner has pledged to seek “positive and lasting change” following the death of a partner who was suffering from an “acute mental health crisis” after working on a high-profile deal. The inquest has recently taken place into the death of Vanessa Ford who was hit by a train last September.

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Pinsent Mason’s Managing Partner, Laura Cameron noted the difficulty of “balancing work and family life… particularly for working parents”.

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She added: “We want this to be an ongoing conversation with colleagues to ensure we are doing everything we can to support our people. Across the legal industry – and more generally in society – a stigma around mental health persists and this is challenging to address. With vigilance, refreshed support measures and ongoing dialogue, both internally and externally, we will seek to make positive and lasting change.”

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Taking care of our mental health is something we should all do.? if you find that you need help, don’t be afraid to ask, we all need help at some point in our lives. There are a number of organisations that can help including LawCare who are the mental health charity for the Legal sector. Their website says that 10,000 legal professionals have used their emotional support service to date.

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LawCare's confidential helpline is available in the UK on 0800 279 6888 during office hours; alternatively email the team at [email protected].

Cutting corners – don’t do it.

A solicitor, Krystel Marzen, submitted two lasting powers of attorney (LPAs) to the Office of Public Guardian (OPG) showing she had witnessed the signatures when she had not. The donor’s signatures were dated and witnessed by her in 2015, the decision to appoint extra attorneys was only made in 2016 (after the date of the donor’s signature), Therefore, Marzan could not have correctly witnessed the signature. The issue is that if a donor wishes to make changes after registration that they must create new LPAs.

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Krystel Marzan, admitted in 2014, accepted before the Solicitors Disciplinary Tribunal that she should have arranged for fresh signatures but insisted these were mistakes and that she had not been dishonest.

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The SDT found that Marzan had known the rules about the signing and witnessing of LPAs and that there was an obvious risk of misleading the Office of the Public Guardian by submitting them.

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It was found that her motivation was to get work done in the shortest time and at the cheapest costs. The SDT said she had taken a ‘thought-out path’ and had breached the trust of clients. “The failure of the documents to be validly executed had potentially, catastrophic ramifications”.

The STD found that a solicitor acting with integrity would not have signed an LPA as a witness to a donor’s signature unless they had in fact witnessed the signature of the donor on the date recorded!

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Ms Marzan was struck off the roll and ordered to pay SRA costs of ￡19,453.

Once upon a Christmas in 2019………

A junior lawyer who got drunk at the office Christmas party and inappropriately touched his colleague has been suspended for three months.

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Colleagues on the night had been reportedly, so sufficiently concerned that they took turns on the dance floor to stand between lawyer and the woman, referred to during proceedings as Person A.

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The junior lawyer said he was very drunk and had little recollection of what happened after a staff meal, and he apologised unreservedly for what he had done. The firm’s bosses examined CCTV footage of the events and he was dismissed in 2020 for gross misconduct.

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The tribunal said a fine would not meet the seriousness of the misconduct and that the public was entitled to expect that solicitors would not make inappropriate, unwanted and sexually motived advances on another.

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The Lawyer admitted in 2016, was suspended for three months and ordered to pay ￡10,000 costs.

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This type of behaviour is never acceptable, anyone who has been subjected to inappropriate behaviour should report this as soon as possible as you cannot be expected to accept this behaviour.?

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Beware of “deepfake” technology

The Solicitors Regulation Authority (SRA) has warned lawyers who rely on video calls to identify clients of the risks posed by ‘deepfake’ technology.

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The regulator said it had also seen “increasing numbers” of law firms facilitating vendor frauds.

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What is Vendor fraud? Properties, usually residential, were being targeted by fraudsters and sold “without the consent or knowledge of the genuine owners, with fraudsters often impersonating the owners”.

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In an updated sectoral risk assessment for anti-money laundering (AML) and terrorist financing, the SRA said that not meeting clients face-to-face “may make sense in the context of a given transaction”, but where they appeared “unnecessarily reluctant or evasive about meeting in person”, this could be a cause for concern.

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“You should also be aware of the risk posed by AI tools – known as ‘deepfakes’ – which can impersonate a real person’s appearance convincingly. This increases the risk of relying on video calls to identify and verify your client.

“If you only meet clients remotely, you should understand whether your electronic due diligence protects you against this, or to explore software solutions to assist in detecting deepfakes.”

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Are your CDD processes up to speed and take into account the SRA new guidance?? Is it time to review these??

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CRCS Legal can help with this, please contact us to see how we can help.?

Anti-money laundering: The fines continue.

The Solicitors Regulation Authority (SRA) has handed out three more hefty fines for anti-money laundering (AML) failures.

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South Wales firm Stephens Wilmot failed to verify its client’s identification documents and then did not act upon the ‘Refer’ decision in an AML report.

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As a result, the firm remitted ￡110,910 to an unrelated third party.

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In a notice published this week, the SRA fined it ￡19,383 given that “the misconduct had a hand in facilitating vendor fraud”, causing substantial harm.

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The SRA’s fining guidance placed the conduct in a band with a financial penalty of 1.6% to 3.2% of annual domestic turnover.

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There were multiple mitigating factors: it made an early admission and co-operated with the SRA; the firm has remedied the breaches; the money was returned; and the conduct “was not reckless or intentional”.

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The SRA has added the growth in vendor fraud to its updated sectoral AML risk assessment.

Northumberland firm Carpenter & Co has been fined ￡12,772 for not having a documented firm-wide risk assessment between June 2017 and December 2022, and then drafting an inadequate one because it was not tailored to the firm.

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The SRA and firm agreed that it was in a band when required a basic penalty of 1.6% of turnover.

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Carpenter & Co’s was just less than ￡1m, but the amount was then reduced by 20% to reflect the “urgent steps” it took to bring itself into compliance and co-operation with the SRA.

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Surrey firm TP Legal has been fined ￡12,181 on largely the same basis as Carpenter & Co – not having a firm-wide risk assessment or policies, controls and procedures in place between June 2017 and spring 2023.

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Each firm was also ordered to pay the SRA costs of ￡1,350.

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It is imperative that your FWRA and PCP’s meet what your needs and does.? This is not simply a ‘tick box’ exercise and requires an in depth review before developing adequate policies.? These fines will continue to happen, so it has never been more important to get this right.?

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CRCS Legal have the skills to help you manage this regulatory risk.? Contact us for a no obligation chat about how we can help.?

On a lighter but serious note!

Have you heard about the one about a barrister who got stuck in a lift while attending court?

Well, he did!

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The lawyer was attending Nottingham Crown Court, when he got in a lift alone, which malfunctioned between the first and second floor, leaving him trapped.

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“I got in at 9.30am and pressed the button for level two (where the advocates room is situated) and it became stuck just outside," the unidentified lawyer told the Nottingham Post. "I called the number on the inside of the lift and they referred me to Nottingham Crown Court’s office which I called and they said ‘what can I do for you?’ to which I replied ‘I’m stuck in the lift’."

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Maintenance staff got on the case to fix the elevator. It was reported that the barrister was finally freed at around 10.20am, some 50 minutes after he had entered the lift.

The barrister stated that he was "in the middle of trial" and "had to ask someone to let the judge know.”

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However, this comes at a time when there have been questions raised over government funding for public buildings, including schools, hospitals and courts. Last year, a court building had to be shut down due to safety concerns over the roof, with cases having to be moved to other sites.

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Delays and cancellations in crumbling court buildings are leaving clients in limbo and denied access to justice, with their time and costs wasted. The Law Society said in 2022 that they asked over 500 solicitors about their experiences in courts and tribunals.

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Around two-thirds (64%) of respondents had experienced delays in cases being heard within the past 12 months, due to the state of the court.

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Over 30% did not feel physically safe while attending court and 28% told us the courts were “not at all fit” for purpose.

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Many solicitors flagged the poor condition of court buildings, due to lack of investment.

Disabled court users are even less likely to feel physically secure or safe from harm while attending court according to the Law Society.

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Hopefully,the punch line is that our courts get the investment that we all deserve!

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That is the end of this month’s round up.? A reminder of what CRCS Legal offers to help your business navigate the ever changing regulatory landscape:

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·??????? A comprehensive compliance and web-site health check. A thorough look at your policies and procedures with solutions for any non-compliance.

·??????? Technical compliance support on an ad hoc or retainer basis. This will give you direct access to compliance professionals.

·??????? Complaint handling and assistance with the Legal Ombudsman (LeO) We can investigate the complaints, make recommendations, and draft your complaint response. We have years of experience of dealing with LeO.

·??????? Compliance training – one off training courses and comprehensive training programmes.? We can help you comply with the SRA’s continuing competence requirements.

·??????? File reviews and audits – detailed and in-depth reviews in accordance with the SRA supervision requirements.

·??????? R21 Audits-compliance with your obligations under the AML legislation.?

·??????? Bespoke Compliance policies, procedures and templates.?

·??????? Assistance with Lexcel accreditation and visits

·??????? Anti-Money Laundering (AML) – a review of procedures and policies update

·??????? Transparency rules – Are you publishing the correct costs and complaints information?

·??????? GDPR and the ICO – including managing data breaches and SARs.

·??????? Assistance with SRA investigations and prosecutions

·??????? Merger and Acquisitions- assessment of regulatory compliance issues and due diligence.

All of our services are tailored to your requirements.? All of our Consultants are vastly experience bringing value to your business, maintaining and improving your compliance.?

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Take control of your risk and contact us today for a confidential, no obligation, free discussion-03302210511, or [email protected] to set up an appointment.?

That is the round up for the month-we hope you have a Happy Easter and have a wonderful break and some chocolate eggs!