Regulatory update - August 2018
So the World Cup is over (well done England and Gareth Southgate for bringing some well needed 'feel-good factor' (and stress during the penalty…
So the World Cup is over (well done England and Gareth Southgate for bringing some well needed 'feel-good factor' (and stress during the penalty shoot-out!) to the country) and holiday season is now in full flow. By the time this edition is published, I will be in Tuscany eating delicious pasta and drinking a nice glass (or two) of Chianti. I hope you all have a relaxing summer wherever it is spent. And don't worry, the football season will have started again by the time I next write this column!
It never ceases to amaze me how much can happen in the regulatory arena over the period of just one month and this month is no exception so here is my update for you. As always, if you have any questions on compliance or regulation, please get in touch.
New waiver approach launched by SRA
The SRA published its new approach on how it grants and publishes its decisions on waivers to their rules on 26th June. It is tied in with its Innovation Space, designed to encourage innovation in the legal marketplace. The focus will be on waivers which deliver benefits to the public and the new approach features simplified criteria and an application process which the SRA says should be easier to understand. Paul Phillip, SRA Chief Executive, said: "Our new approach will not only help encourage innovation, but will also ensure that there is real transparency about the waivers we grant."
CILEx to become ABS regulator no.6
The Chartered Institute of Legal Executives (CILEx) application to be allowed to license ABSs has recently been approved by the Lord Chancellor, enabling members to set up their own businesses with non-lawyer ownership/investment. It is the 6th regulator approved to grant ABS licences.
The Lord Chancellor has also appointed Dr Helen Phillips as Chair of the Legal Services Board. Her interim appointment, which she took on in May 17 when Sir Michael Pitt's three year term came to an end and he decided not to re-stand, has now turned into a permanent role for a five year term.
ABS and business structure news
The last of the Big Four accountancy firms, Deloitte, has been awarded its ABS license, five months after announcing it wished to offer reserved legal activities. Deloitte is to extend its existing legal services in tax litigation, immigration, and employment law.
Also, DWF has announced that they are looking at the possibility of listing on the London Stock Exchange with a value estimated at between an eye-watering £600m-£1bn. DWF would join firms such as Gateley and Rosenblatt who have already listed.
SDT consults on adopting civil standard of proof
The SDT has published its consultation on whether to ditch the current criminal standard of proof for solicitors subject to disciplinary proceedings. This would be in alignment with most other professional regulators, including barristers, when the Bar Standards Board switches to the civil standard next April and the SRA has been crying out for a change for some time. The SDT has commented that if it doesn't lower the burden of proof from the criminal standard to the civil standard, solicitors could be seen as being given preferential treatment. However, a counter argument runs that there are serious consequences of a SDT finding for a solicitor and the current high prosecution success rate are good reasons for facts to be established 'beyond a reasonable doubt' in the SDT.
The SDT has given the profession a lot longer than the SRA generally does to respond to consultations – the deadline for responses being 8 October. We will be submitting a response on behalf of MLS members and anyone who wishes their views to be included in that response, please do not hesitate to contact me.
In other disciplinary news
Slater & Gordon has been rebuked and handed a record fine of £80,000 for an ABS. This followed the inspection of 7,087 files of confidential client data during the due diligence process that led to its acquisition of Quindell Legal Services in 2014/2015 and disclosure of confidential information without client consent to two other unnamed firms. They were found to have breached SRA principles 3, 4 and 6 and have been ordered to also pay the SRA's costs of £26,000. This is a salutary lesson for any firm looking to acquire/sell their business and compliance advice should be taken before embarking on such a transaction to ensure that you properly fulfill your regulatory obligations.
A solicitor, Mr Whittaker, principal of DW Law in Stevenage (now closed by the SRA in 2014) who sent over £64,500 from a client account to his personal account, along with £5,000 to a girlfriend in Romania which he referred to as 'counsel' has been struck off by the SDT.
In another case, an event executive in a large law firm, Bircham Dyson Bell, who kept raffle prizes for herself has been rebuked, fined £2,000 and £600 costs and made subject to a s43 order preventing her from working in a law firm without the SRA's permission.
The SDT has also issued its judgement on failed Bolton law firm, Asons. Mr Akram was suspended for 18 months and given a £115,000 fine after the SDT found that the firm had sent out inflated bills and made false claims.
A perhaps unexpected decision was that of Kate Helen Adamson, associate solicitor and director at Powell Davies in Aberystwyth, who fabricated a letter in "panic" and has been suspended after admitting dishonesty. Whilst the usual sanction for dishonesty is strike-off, mitigating circumstances including a pre-existing medical condition causing a psychiatrist to conclude it was a "momentary lapse caused by panic" persuaded the SDT only to impose an 18 month suspension instead.