Welcome to the Regulation & Compliance Office’s fortnightly roundup, where we look at all the latest stories to keep you ahead and informed in the world of law and compliance.

The RACO roundup is just another way in which we keep the solicitors and other law professionals we work with in the know, so we can ascertain that you are never missing the vital developments occurring in your profession.

Below, you will find the most recent headlines selected by our compliance experts, followed by a Security Section, where we will also give you an overview of the latest scams currently impacting solicitors and their clients.

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Arrested by SFO: Solicitor Found Allowing Firm to be Used as £30m Banking Facility   

Solicitor suspended for allowing their firm to be used as a banking facility for over £30m.

The owner of a firm based in central London has been arrested by the Serious Fraud Office (SFO) on suspicion of offences relating to money laundering. This was disclosed to the public following a Solicitors Disciplinary Tribunal (SDT)’s judgment.

Following an extensive search warrant at the firm’s premises, which resulted in the seizure of a number of hard copy files, the Solicitors Regulation Authority (SRA) commissioned its own forensic investigation.

It has been reported that between May 2014 and October 2017, the firm received £31.9m into its client account in respect of six matters and, according to its own records, paid out £28.3m. 

All transactions related to a particular client referred to as Person A, whom the solicitor in question described as a “substantial client of the firm accounting for about 10% of its turnover”. The SDT later disclosed that no underlying legal transactions were discovered that justified the payments and that the solicitor in question had allowed them to be made.

The solicitor in question also made the admission that the firm’s client account had been “used as a banking facility, for no other reason than the convenience of the client” –  more details here. 

According to the SDT’s report, “There was no evidence discovered by the Forensic Investigating Officer to suggest the respondent ever questioned Person A to ask why he was being asked to receive/make payment of funds and for what purpose. This was despite the significant amount of payments made to third parties across all six matters.”

The solicitor also admitted to continuing to authorise transactions over a thirty-nine-month period. In mitigation, however, the solicitor clarified that none of the transactions resulted in loss to any client or third party and that no profit was gained from them.

The SDT remarked that the misconduct “fell within the range to merit striking off from the roll”. An indefinite restriction order in addition to a 12-month suspension, was furthermore agreed upon and will prevent the solicitor from practising as

• A sole practitioner  
• A sole manager  
• A sole owner of an authorised or recognised body
• A freelance solicitor
• A solicitor in an unregulated organisation
• Head of legal practice/compliance officer for legal practice  
• Head of finance and administration/compliance officer for finance and administration; holding client money and being a signatory on any client account.

Read the full article here.

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Removed from the Profession for Hiding Complaint Progress

A team manager based in Cardiff has been removed from the profession for misleading a complaining client.

The team manager in question reportedly embellished attendance notes to hide the actual conversations he had with the complainant. Despite his ten years of experience in the profession, they were dismissed by the firm and made subject to a Solicitors Regulation Authority order preventing him from working for any other regulated firm without permission.

The team manager, who managed a new client unit, reportedly spoke with the complainant in 2023 and agreed to escalate their concerns. It has now been revealed that this was not carried out, meaning the client had to follow up almost a month later. The team manager reportedly then misled the complainant about the progress that was being made.

Telephone attendance notes of both phone calls with the client (that deliberately and inaccurately reflected the true extent of the dialogue) were then created. The SRA later remarked that this was a deliberate attempt to conceal his failings.

Following an internal investigation, the team manager in question was dismissed in spring of 2024. On completion of the investigation, the SRA commented that the team manager’s conduct was “dishonest” and deemed him “undesirable to be involved in a law firm.” As a result, the team manager in question was ordered to pay £300 in costs.

The Solicitors Regulation Authority further concluded that “[the team manager] was willing to mislead a client and falsify attendance notes in order to mislead colleagues rather than admit a mistake.”

“A person willing to do this is not suitable to work in legal practice. If such conduct were to be repeated in future, it would pose a risk to clients and public trust.”

Source: here.

Complaint Procedures in Legal Firms

Improving complaint handling in law practice isn’t easy. Responding to legal complaints and handling dissatisfied clients in law firms should remain a priority for all businesses looking to improve their reputation management.

We at Regulation & Compliance Office specialise in complaint procedures for legal firms and can help firms of variable sizes respond to legal complaints to enhance customer experience and maintain best practices.

Reducing client complaints and optimising client care in law firms is not only possible but elementary. Read on to discover how our compliance experts can help.

Complaint Management Service

The Regulation and Compliance Office’s Complaint Management Service is an outsourced solution that enables firms to pass any complaint received from a client or other party for independent investigation, response, and resolution. This will include:

• Complaints made against the Firm by clients.
• Complaints made against the Firm by other parties.
• Legal Ombudsman Complaints about service.
• SRA Complaints made against:
  • The Firm.
  • An Individual in the Firm.

Whether handling a complaint as a one-off solution or as part of an ongoing contractual relationship, RACO is able to provide support.

For more information and costings, download our full service brochure here.

Read full article here.

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Can I Accept Crypto Assets as a Payment from a Client?

The Solicitors Regulation Authority has recently updated its anti-money laundering Q&A about accepting cryptocurrency as a payment. In a key point, the regulator makes it clear that it does not currently recognise crypto as a “money” that can be paid into the client account. It also stresses that a valid client account can only be used via a bank or building society, neither of which has the facilities for cryptocurrency at this stage.

What other key areas should firms consider?

What does the SRA say about accepting cryptocurrency?

The Solicitors Regulation Authority (SRA) does not impose any outright restrictions in the Standards and Regulations regarding the acceptance of crypto assets as a payment for services. Additionally, there is nothing in the money laundering regulations against accepting these forms of payment. However, law firms must remain aware of the associated risks and proceed with caution in such matters.

Key factors to consider:

• Cryptocurrencies are not classified as “money” under the SRA’s Accounts Rules. Payments in crypto cannot be deposited in client accounts as the Accounts Rules require client money to be held in a bank or building society account, and no such accounts for cryptoassets currently exist.
• Any firm that accepts crypto payments must inform clients that these payments lack the same protections held in client accounts.
• Although these funds are not held in client accounts, compliance with safeguarding regulations still applies under rules 5.2 of the Code of Conduct for Firms and 4.2 of the Code of Conduct for Solicitors (‘You safeguard money and assets entrusted to you by clients and others’) if you are holding them on a client’s behalf for any reason. For example, as part of an estate administration or under a lasting power of attorney.

Read more about: Cryptocurrency query updated.

Protecting your firm against the risks:

Cryptocurrency payments carry significant risks and raise questions that firms must answer. The guidance includes recommended checks, such as: 

• The source of funds for their original crypto investment, particularly where it was a substantial amount in relation to their income/salary. 
• Claimed profits, given what you know about their initial investment and the changes in price over time. 
• Transactions using publicly available records. Bitcoin and many other crypto assets allow you to use Google to track down transactions involving specific assets or between specific wallets. You will need details of the client’s wallet or the assets held to check them against publicly available transaction databases, e.g., blockchain.com. 

Furthermore, part of the Anti-Money Laundering (AML) Regulations requires a business to undertake a formal risk assessment. The predominant purpose is to identify, manage and, where possible, eradicate the potential for firms to be caught up in money laundering, and cryptocurrency considerations form part of this. 

Client and matter risk assessments will help you to consider whether you are comfortable acting and, if so, to adjust your internal controls to the appropriate level according to the risk presented. For example, different aspects of your CDD controls may be adjusted to meet the identified risks. Regarding crypto assets, guidance provided by the Legal Sector Affinity Group includes sample questions for matter risk assessments, such as:  

• Does the matter involve new sources of finance – anything unregulated, e.g., involving crowdfunding platforms or some aspects of bitcoin/cryptocurrencies? 

Cryptocurrency should be an immediate high-risk indicator, and firms should report any client seeking to use cryptocurrency as part of their funds to the MLRO for further guidance. Enhanced Client Due Diligence is a must in these circumstances. Understanding how the currency has been financed, and by whom, is the starting point in deciding whether to allow a matter to proceed. 

Read the full article here.

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S CA M     A LE R TS

Misuse of the name of Talbot & Co

The SRA has notified the public via its website that the website ‘talbotsolicitors.co.uk’ is operating and falsely claiming to be for a genuine firm of solicitors.

Please note that this website provides an email address of ‘info@talbotsolicitors.co.uk’.

Any business or transaction through the website at ‘www.talbotsolicitors.co.uk’ or email address ‘info@talbotsolicitors.co.uk’ is not undertaken by a firm or individual authorised and regulated by the SRA.

Please note also that the SRA authorises and regulates a genuine firm of solicitors called Talbot & Co trading as Talbot & Co Solicitors based in Burton On Trent. The firm uses the email domain @talbotco.co.uk.

Talbot & Co has confirmed that it does not have a website, and that it does not have any connection to the website referred to above.

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Misuse the name of Hillcrest Solicitors & Associates

A website (www.hillcrest-solicitors.com) is operating and misusing the name of a genuine firm of solicitors.

The website provides the address ‘Heron House, 2A Heigham Rd, London E6 2JG’. The telephone provided number is ‘+44 770 119212’ along with an email address – ‘info@hillcrest-solicitors.com’.

The SRA has notified the public via its website that individuals have also been contacted by individuals called ‘Mark Lanham’ purporting to be a Barrister at ‘Hilcrest Solicitors and Advocates’, and ‘Robert Leep’ purporting to be a private solicitor at ‘Hillcrest Solicitors & Associates Law firm’ in relation to a supposed unclaimed inheritance. ‘Mark Lanham’ is understood to have provided the address ‘Barbirolli Square, Manchester M2 3AB’.

Please note that the SRA does not authorise or regulate individuals by the names of ‘Mark Lanham’ or ‘Robert Leep’, or firms called ‘Hilcrest Solicitors and Advocates’ or ‘Hillcrest Solicitors & Associates Law firm’.

Any business or transactions through the website, telephone number or email addresses above are not undertaken by a firm of solicitors authorised and regulated by the SRA.

Please note, however, that the SRA authorises and regulates a genuine firm of solicitors called Hilcrest Solicitors GB Limited. Its address is 209A, Ilford Lane, IG1 2RU. Its genuine telephone numbers are 02089119169 and 02085144878. Emails from the genuine firm use the domains @hilcrestsolicitors.co.uk and @hilcrestsolicitors.com.

The genuine firm has confirmed it has no connection to the website and scam referred to above.

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 ‘www.lawmaster.info’ is operating and claiming to employ a Jack Andrew as an attorney

The SRA has notified the public that the website ‘www.lawmaster.info’ is operating and claiming to employ a Jack Andrew as an attorney.

The website provides an address of genuine firms of solicitors and a telephone number of ‘+447451295201’.

Please note that the SRA does not authorise or regulate a genuine firm of solicitors called ‘Law Masters’ or ‘Law Master’.

Any business or transaction through the website address ‘www.lawmaster.info’ or the telephone number ‘+447451295201’ is not undertaken by a firm or solicitor authorised and regulated by the SRA.

Please note, however, that the SRA does authorise and regulate a genuine solicitor called Jack Andrew who is employed by Masters Legal Costs Service LLP.

Jack Andrew has confirmed that he does not have any connection to the above website or telephone number.

BEEN CONTACTED?

Here’s What to Do…

When a firm’s or individual’s identity has been copied or cloned, due diligence is necessary. If you receive correspondence you believe to be suspicious, you should conduct your own due diligence by checking the authenticity of the correspondence by contacting the law firm directly by reliable and established means.

You can also contact the SRA directly to find out if individuals or firms are regulated and authorised by the SRA and verify an individual’s or firm’s practising details. Other verification methods, such as checking public records (e.g. telephone directories and company records), maybe required in other circumstances.

Reach Out to RACO

We at RACO are always at hand to provide tailored guidance to help you make the most informed and beneficial decisions. We help you understand the recurrent regulatory shifts and work with you to provide solutions. With our team of professional specialists and our renowned legal expertise, we can work with your firm to ensure you are never left unprepared in the wake of legal changes or cyber threats.

For more information on how we can help, call our consultants on 0203 985 8550 or email us at  info@regulationandcomplianceoffice.co.uk