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 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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MAXIMUM FINE For Central London Law Firm

The Solicitors Regulation Authority has fined yet another law firm the maximum penalty amount after it admitted failing to carry out sufficient checks in regard to a foreign client considered risky.

The SRA has now confirmed the fine was issued after it discovered the central London-based firm failed to initiate the adequate measures required to establish the source of wealth in its transactions with an international client considered a politically exposed person (PEP). It has since been revealed that the firm failed to conduct enhanced ongoing monitoring of the same client.

For almost eight years to 2020, the firm acted for the PEP and their associated companies across 36 matters consisting of property purchases, refinancing and reassignment work.

It is essential to note that the source of wealth and source of funds checks were, in this instance, required by the money laundering regulations. The SRA has since stated that the breaches could have resulted in the firm unknowingly carrying out money laundering or terrorist financing and had the potential to cause ‘significant harm’.

The SRA further stated that “The firm’s conduct was serious, and diminished trust in the legal profession. Any lesser sanction would not provide a credible deterrent to the firm and others.”

The penalty was assessed as being between 1.6% and 3.2% of the firm’s annual turnover. Due to this, the basic fine was set at £39,455. This was further adjusted, however, to account for the firm’s early admissions and prompt remedial action (including additional training, new processes, and continued cooperation.

As a result, the adjusted fine was £646 above the SRA’s maximum fining power. However, both parties agreed to reduce it to £25,000, owing to the SRA’s own fining guidance that gives discretion to reduce fines to come under the maximum in exceptional circumstances. This is practised so as to avoid proceedings going to the Solicitors Disciplinary Tribunal.

The SRA further stated that, “Such proceedings would undoubtedly attract increased legal costs and excessive and unnecessary delays and resource impact. A financial penalty of £25,000 would still have the effect of setting a credible deterrent and upholding public confidence in the regulatory and disciplinary process.”

Source: here.

In addition to the £25,000, the firm was ordered to pay £1,350 in costs. For related stories concerning the SRA and recent fines for non-compliance, see below:

Recent SRA Fines

• Long-Serving Solicitor Fined £15,000 for Client Check Failings
• Multiple Breaches Result in £25,000 Fine for Both Firm & Compliance Officer
• Maximum £25,000 Fine Imposed for South East Firm

AML Systems & Processes Support

All firms need to demonstrate and uphold high standards in their AML systems and processes, as well as in their management and supervision. This also involves outlining how the firm operates, including the conduct of staff through set policies, controls and procedures.

At the Regulation & Compliance Office, we can offer a number of outsourced support solutions, including:

Regulation & Compliance Service  – Our Risk Management Assessment Service has been specifically designed to review and update a firm’s approach to risk and compliance management.

MLR 2017 Regulation 21  Independent Audit – A review of the firm’s approach to regulation and compliance, including AML procedures with the audit meeting the requirements of Regulation 21 of AML 2017. The output provides the firm with a written gap analysis and solutions to remedy any issues and ensure compliance.

AML Training Courses – Our Typical AML Training Includes:

• AML Training for ALL staff to meet the firm’s obligation to provide annual training.
• One-to-one training for the MLRO and MLCO on their obligations and requirements.

To read the full article, click here.

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Finance Head’s Hidden Winding Up Order & £22 Million Debt Leads to Disqualification

A manager for a law firm close to insolvency, who failed to inform the Solicitors Regulation Authority it was subject to a winding up order and over twenty million pounds worth of debt, has been disqualified.

The SRA also revealed that it had disqualified the head of finance from being a manager or head of legal practice at any firm after they admitted failing to perform their duties adequately.

The claims practice is now considered one of the biggest law firm failures of the past five years, with creditors collectively owed more than £35m and at least 70 jobs lost in tow.

As of January, the administrators claimed that no money had been received from any of the work in progress handed over when the firm folded in June of 2023.

The SRA first started a forensic investigation into the firm at the start of 2023 after receiving reports telling of its routine failures to meet financial demands. The regulator met with the head of finance and another of the firm’s managers in February, where it was alleged that the firm’s debts accumulated to an estimated £4m. A schedule of liabilities and loan agreements disclosed later revealed that these balances came to over £26m.

In subsequent meetings, the head of finance and other managerial staff informed an SRA forensic investigator that no decision had been made regarding the future. A day later, however, the investigator discovered that the firm had, in fact, been subject to a winding up order resulting from a debt of £340,000.

As far back as 2021, the head of finance had arranged a repayment plan, which saw off a first winding up petition, but when the law firm defaulted on payments, a second petition was listed to be heard in May of 2023. None of this information had been communicated to the regulator throughout the previously held meetings.

The manager of the law firm accepted that they should have reported matters but reiterated that they tried their best within their role as head of finance. They further insisted to SRA investigators that they at no point considered that making a report had been mandatory, and “felt [the firm] would get that back on board and sorted [once] going forwards”.

The SRA said that the manager and head of finance had shown that they were unsuitable to hold responsibility for compliance roles. As a result, the manager agreed to be disqualified and pay an additional £600 in costs.

Source: here.

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Dewsbury-Based Solicitor Fined for Accepting £25,000 Loan from Client

A solicitor based in Dewsbury and former consultant has been fined by the Solicitors Regulation Authority for accepting a loan of £25,000 from a client.

A report was made to the regulator in 2023 that the solicitor in question had accepted a loan from a client for whom he was at the time acting in a civil matter. The solicitor continued to act for the client after having received the loan and failed to advise them to take independent legal advice. The solicitor also failed to repay the loan in accordance with the terms of the agreement with the said client.

As a result, the solicitor was in breach of Paragraph 6.1 of the SRA Code of Conduct for Solicitors 2019 and Principles 2 and 5 of the SRA Principles 2019, and was directed to pay a financial penalty of £5,787, with an additional £1,350 in costs.

In a report made public on its website, the SRA stated that:

“It was decided that a financial penalty was an appropriate and proportionate sanction. This was because [the solicitor’s] conduct was serious by reference to the following factors in the SRA Enforcement Strategy:

• any lesser sanction would not provide a credible deterrent to [the solicitor] and others. A credible deterrent plays a key role in maintaining professional standards and upholding public confidence.
• [the solicitor] was an experienced solicitor who had direct control and responsibility for his conduct.
• [the solicitor]’s conduct lacked integrity and failed to uphold public trust and confidence in the profession.”

The solicitor’s conduct was placed in conduct band C. Conduct band C has a financial penalty bracket of between 16% and 49% of an individual gross income for the previous financial year. The conduct was placed towards the middle of this bracket at C4 (32% of gross annual income), in consideration of the following mitigating factors:

• Early admissions to misconduct were made.
• The solicitor’s full cooperation with the SRA’s investigation.

In consideration of the above, the financial penalty was reduced by 10%.

Breaches Breakdown

• SRA Code of Conduct for Solicitors, RELs and RFLs 2019 Paragraph 6.1 You do not act if there is an own interest conflict or a significant risk of such a conflict.

SRA Principles 2019

• Principle 2: You must act in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons.
• Principle 5: act with integrity.

Read the SRA’s full report here.

Compliance For Law Firms

Our Regulation and Compliance Service, including Risk Management and AML Risk, provides a cost-effective but essential solution for law firms to ensure they achieve a compliant environment.

Our approach to compliance is to bring to firms bespoke and compliant policies and procedures that are proportionate and sensitive to the way in which a firm operates. For a compliance strategy to be successful, it has to be adopted by all in the firm. We work to remove the ‘red tape’ wherever possible and ensure, whilst the firm is compliant, that there is full adoption of the policies and procedures.

We work with firms of all types, from sole practitioners through to partnerships, Limited Companies and ABSs. We recognise that it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices. This is why our service is completely bespoke to each firm we work for.

Contact Us

For more information on Regulation & Compliance Office and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation, you can call us on 0203 985 8550 or email us at info@regulationandcomplianceoffice.co.uk

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SCAM  ALERTS

Website for ‘Stevens Advocate Firm’ claiming to be a law firm

The SRA has reported via their website that a website at ‘www.stevensadvocatefirm.com’ is operating and falsely claiming to be a law firm called ‘Stevens Advocate Firm’.

The website provides a postal address of ‘160 Friar St, Reading, RG1 1HE, United Kingdom’ and the telephone number ‘+44 7451 221207’.

The email addresses provided on the website are ‘Michael@stevensadvocatefirm.com’ and ‘info@StevensAdvocateFirm.com’. The website names the purported founder of ‘StevensAdvocateFirm’ as ‘Michael J Stevens’.

Please be mindful that the website also misuses the name of a genuine practising solicitor.

The SRA does not authorise or regulate a firm of solicitors called ‘StevensAdvocateFirm’ or an individual by the name of ‘Michael J Stevens’.

Please note that any business or transactions through the website or contact details set out above are not undertaken by a firm of solicitors authorised and regulated by the SRA.

The SRA does, however, authorise and regulate a genuine individual called Steven Jamie Gibson (SRA ID 435874).

The genuine Steven Gibson has confirmed that he does not have any connection to the website referred to above.

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Multiple websites and emails misusing the names of Wozi Law Firm and Michael Burdon

The SRA has reported multiple emails from an individual misusing the name of a genuine solicitor. The email states that it is in relation to a supposed application for legal protection of a third-party brand under UK intellectual property laws.

The email goes on to state that the applicant is seeking exclusive rights to this name, and as part of due diligence, the application has been reviewed to ensure compliance with the Trademarks Act 1994 and other relevant regulations.

The emails then misuse the postal address of a genuine firm of solicitors.

The email was sent using an email address of ‘michael@wozilawfirm.org’ and provides a telephone number of ‘+44 (0) 20 7193 8010’ and a website address of ‘https://wozilawfirm.org/. This website was not accessible.

The SRA has also reported another email from an individual called ‘Eric Leicht’ claiming to be an Intellectual Property Solicitor. The sender, ‘Eric Leicht’ contacted a genuine organisation, claiming that an unknown applicant was seeking exclusive trademark rights over the organisation company name and urging them to take immediate action.

The SRA understand that a further website at ‘www.wozilawfirm.com’ is also operating misusing the name of a genuine firm of solicitors. However, this website was not accessible.

Please note that any business or transactions through the websites or contact details set out above are not undertaken by a firm of solicitors authorised and regulated by the SRA.

The SRA does, however, authorise and regulate a firm of solicitors called Wozi Law Firm Limited. The Head Office is at 703 Wiverton Tower London E1 7AS. They also trade from the registered address of Flat 3 01, 7 Lillie Square London SW6 1GD. Wozi Law Firm Limited does not have a website, or a telephone number assigned to the firm.

The email domain for the firm is @wozilaw.com.

The SRA also authorises and regulates a genuine solicitor called Michael Burdon.

Wozi Law Firm Limited and Michael Burdon have confirmed they do not have any connection to the alert above.

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Website misusing the name of Russell-Cooke LLP

The SRA has reported that a website at ‘www.grahmwhite.com’ was falsely operating and misusing the name of a genuine firm and genuine individuals at that firm.

The SRA has also supposedly been informed that a member of the public was contacted several times by an unknown individual. Throughout contact, the member of the public was provided with the website of ‘www.grahmwhite.com’.

The SRA reported that the website also included an ‘Our People’ section, which listed profile images for several lawyers employed by the genuine firm. It is believed that the profile images had been taken from the genuine firm’s website.

The SRA understands that the website domain has now been suspended. Please note that the regulator does not authorise or regulate a genuine firm of solicitors called ‘Grahm White’.

Therefore, any business or transaction through ‘Grahm White’ or the website ‘www.grahmwhite.com’ is not undertaken by a firm or individual authorised and regulated by the SRA.

The SRA does, however, authorise and regulate a genuine firm of solicitors called Russell-Cooke LLP. The genuine firm uses the email domain @russell-cooke.co.uk, and its genuine website is www.russell-cooke.co.uk.

The genuine firm Russell-Cooke LLP has confirmed that they do not have any connection to the website referred to in the above alert 

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