CRCS Legal June 2024 Newsletter Complaint Resolution Compliance Solutions
Barbara Spoor LL.B (Hons)
Managing Director @ CRCS Legal | Complaints and Compliance Handling
Welcome to our June 2024 newsletter.? Summer seems to have finally arrived, well for a few days at least!? We hope you enjoy our latest round up of compliance news for this month.?
Update on SBB Law
Legal Futures have reported that they have seen the letter and form of assignment sent by RSA’s solicitors, Clyde & Co, to former SSB clients.
Legal Futures say the deal is that the client must assign to RSA any rights of action they may have against SSB and its professional indemnity insurers, their ATE insurer, and counsel and experts instructed on their behalf. If they do, then they will not be pursued for costs.
RSA agrees not to pursue the client for the costs if it fails to make a recovery from these actions. RSA’s action does not include the client’s loss of chance of a successful claim.
It offers to contribute up to ￡500 + VAT for the client to take independent legal advice on the offer, on condition that the assignment is signed. The costs of legal advice already obtained is not covered.
Lawyers acting for former SSB clients are concerned that this will not properly cover the clients’ losses.
Earlier this month, the SRA issued a statement that referenced assignment deals, saying it had written to other insurers to say ,“we believe there is a benefit in [them] taking a similar, pragmatic approach”.
Lawyers acting for SSB clients argued that the regulator has overstepped the mark with this advice.? The SRA qualified their advice and made it clear that it was not offering Legal Advice!
Have you checked your ATE provides sufficient cover?? Have you complied with the terms of the policy?? Have you provided your client with appropriate advice?
Post Office Scandal
Late to the party?? After initially saying that they would not become involved in this until the enquiry was completed the SRA has revealed that 20 live investigations are under way into solicitors and law firms linked to the Post Office scandal.
The SRA investigation includes whether solicitors breached their duties relating to expert witnesses, whether they breached disclosure obligations and whether they improperly applied legal privilege to protect communications from disclosure.?
The operation of the Post Office’s complaint review and mediation scheme is under investigation, too, including whether claimants were overcharged, non-disclosure agreements misused, and correspondence improperly labelled.
The Law Society Gazette said that Andrew Parsons from Womble Bond Dickinson advised a newly qualified solicitor to include this paragraph in an email to the Post Office Client:
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‘For now, we’ll do what we can to avoid disclosure of these guidelines and try to do so in a way that looks legitimate. However, we are ultimately withholding a key document and this may attract some criticism from Freeths [claimant lawyers]. If you disagree with this approach do let me know. Otherwise, we’ll adopt the approach until such time as we sense the criticism is becoming serious.’
It is difficult to know which will be the worst scandal this year!
Confidentiality and the Courts
A fee earner who sent confidential information to his personal email address days before leaving his firm has been given an ultimatum to show the material had been deleted in compliance with a court order.
In Bond Turner v Maginn, His Honour Judge Stephen Davies gave Patrick Maginn 28 days to explain what he did with the emails sent from his work address and to show nothing was forwarded to his new firm.
He left the firm in November and took up employment with a competitor in the housing disrepair market, McDermott Smith Law Limited.
Bond Turner subsequently discovered that in the days before leaving, Maginn sent 50 blank emails with attachments to his personal email account. These emails contained ‘a significant amount of its confidential and proprietary information’.
Most documents sent to his personal email address were sent on to his new email account with McDermott Smith and he had used some of those on six newly-opened files.
In February, His Honour Judge Pearce ordered that Bond Turner could serve a committal application on Maginn. This contained a penal notice which required positive steps about what to do with the emails and advising him to consult a solicitor. He was required to hand over any property or documents belonging to Bond Turner which were in his possession or control.
In the latest ruling the judge found allegations of contempt proved and Maginn was sentenced to four months’ imprisonment suspended for six months, on condition that he does exactly what he was required to do under the order.
Contact CRCS to review your Confidentiality and Information Security procedures.
TA6 Property Information Form Change Outcry
The Law Society released an updated version of the TA6 form in March 2024 to align with new guidance on “material information.”
The National Trading Standards Estate and Letting Agency Team (NTSELAT) focuses on material information in property listings. The Law Society apparently believed it would be “useful to update the TA6 so estate agents could instruct solicitors sooner and buyers could make more informed choices”.
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The outcry from the Profession led the Property Lawyers Action Group to collect the signatures it needed to call a special general meeting of the Law Society.
The Law Society have decided to postpone compulsory implementation for Conveyancing Quality Scheme members until January 2025 while they consult members further. The Law Society were widely criticised for not consulting with the Profession before significant changes were made to the form.?
Are Conveyancing Solicitors certain their will be no criminal liability?
We enclose a link from the Law Society of FAQs:
Client Account Warning
The Solicitors Regulation Authority has reminded managers and compliance officers that shortages in the client account will not be tolerated.
A newly-issued warning notice outlines the risks of firms failing to quickly address a shortage. It also dictates to firms thinking of shutting down that this cannot happen until client money is returned.
The biggest discovered shortage in a client account in recent years is the ￡64m missing from client funds held by Axiom Ince, which was shut down by the SRA last year.
Even where a shortage has occurred due to circumstances beyond a firm’s control, such as theft or a cyber-attack, there remains an obligation on the firm and its managers to replace the shortage.
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In the Enforcement section of the warning notice, the SRA starkly say:
?“Failure to replace missing money will usually lead to an intervention. It should not be assumed that replacing the money means that an intervention is not necessary since the conduct giving rise to the shortage may evidence reason to suspect dishonesty or other breaches giving rise to a need to intervene to protect clients and the public.”
Please contact us to assist with SRA account rules, practice and procedure.
SRA loses PEP case
The SRA has failed to overturn a tribunal’s decision to clear a solicitor on charges of failing to follow money laundering rules as there was an error on his firm’s external search system.
George Fahim Sa’id assisted a wealthy Iraqi family in two large conveyancing transactions.
One of the members of the family, was a minister in the Iraqi government and who was therefore classed as a politically exposed person (PEP). The SRA should have carried out an enhanced due diligence check.
Sai’id had made inquiries and was satisfied that his client was not a PEP, a family member of a PEP or a close associate of a PEP. The court heard that this failure meant the money laundering risk was categorised as medium when it should have been high.
Sa’id said that the PEP check was conducted by electronic means and showed a ‘pass’.?
The Solicitors Disciplinary Tribunal found that the due diligence conducted by Sa’id was sufficient in the light of his prior knowledge of his clients, whom he had known for over 20 years and whose business affairs, intentions and family assets he knew much about. He was unaware of any political involvement, ambition, or interest.
The SRA appealed the decision to the High Court.
Mrs Justice Thornton said :‘The respondent had a system which, in general, worked adequately’. ‘The court had also taken into account guidance in force at the time which indicated that the respondent had gone beyond the requirements of the guidance in subscribing to an external search service.”
She noted that it was common ground that the failure to identify the PEP connection was an error on the part of the external search service.
The SRA’s appeal was dismissed.
Are your PCP’s adequate, something that everyone in your firm use?? Are you confident your electronic searches match what you need to do?? CRCS Legal can help you navigate this ensuring your PCP’s work for your firm.?
How can this still happen?
A solicitor has been awarded damages of ￡26,475 after her law firm withdrew an offer of promotion and four weeks later summarily dismissed her because she was pregnant
Judge Arullendran said the employment tribunal in Newcastle did not accept that Mrs M Dobson was fired because County Durham firm Michael Cook Law Firm was in financial difficulties.
She joined the small, two-office practice in August 2022 as its only residential conveyancer.
On 26 January 2023, Mr Cook, the sole director, told Mrs Dobson that he was impressed with her work and asked her to become a director.
Negotiations around salary continued over the next few days but on 1 February Mrs Dobson revealed that she was nine weeks pregnant, while stressing that she was still interested in becoming a director. Mr Cook responded that he would have to “leave it”……..
A night at the Opera to forget?
Matthew Feargrieve sat down for a performance of Ring Cycle by Wagner at the Royal Opera House in October 2018 when?Ulrich Engler, a?German fashion designer, attempted to take the empty seat?next to Feargrieve's wife, Catherine Chandler, just before the curtain?went up.?
As the?performance began, Feargrieve leaned over his wife and subjected Engler to a "constant flow of blows",
Feargrieve was convicted of common assault, four and a half years later the Bar disciplinary tribunal has ruled that Feargrieve's action "was likely to diminish the trust and confidence which the public places in him or in the profession" and has ordered the Bar Standards Board not to issue him with a practising certificate for 12 months.
How can CRCS Legal Ltd help?
The risk of non-compliance is real, serious, and costly.? We can provide:
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.
Bespoke Compliance policies, procedures and templates.?
Assistance with Lexcel accreditation and visits
Anti-Money Laundering (AML) – a review of procedures and policies
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.
Save Time and Money-let us help you control and manage your risks. We offer tailor made Complaint Resolutions and Compliance Solutions.? Take control of your risk and contact us today for a free confidential discussion about how we can help you and your firm 0330 2210511 [email protected]