01/09/2020
The headlines have been filled recently with SDT cases relating to sexual misconduct. These recent decisions show the range of work undertaken in the SDT and the varied areas of practice which can result in regulatory sanction.
This was a libel action that proceeded to trial in July 2020 with restrictions on physical courtroom access imposed due to COVID-19. The judge gave directions as to the circumstances in which the hearing could be made available via video link to an adjoining courtroom to permit public access and other orders concerning witness and client access. In contravention of the order (which was accepted to be non-deliberate), and the general law on the broadcasting of hearings, a Zoom link was made available to associates of the claimants based overseas. The contravention only became apparent to the judge by chance during the evidence given remotely by one of the defendant’s witnesses.
The judge exercised the Hamid jurisdiction and referred the conduct of the solicitors concerned to the Administrative Court for review. The Hamid jurisdiction arises from dicta of Sir John Thomas in Hamid [2012] that “the Court …intends to take the most vigorous action against any legal representatives who fail to comply with its rules. If people persist in failing to follow the procedural requirements, they must realise this court will not hesitate to refer those concerned to the SRA”.
The solicitors in fact self-reported their breach to the SRA and hence it was not necessary for the Administrative Court to do so. The judgment is however a useful reminder of the court’s powers to direct regulatory enquiry and, further, the perils arising from conduct during the course of court proceedings in a new virtual environment (see, for example, the multiple occasions on which lawyers have recently been caught saying things in an “open” environment which they thought was “closed”).
The SDT published its annual report on 24 July. It received 137 applications in 2019 and heard 87 substantive hearings – in 81 of those allegations were proved (a remarkable success rate).
As to agreed outcomes, 48 were submitted, but 12 were refused. The rules require agreed outcomes to be presented 28 days before the final hearing – and a strong hint was given that the rule is to be enforced more rigorously than has previously been the case: “…intended to take a more robust approach going forward to dealing with late agreed outcome applications.”.
This case concerns anti-money laundering (AML) breaches in the conveyancing context and an agreed outcome. The SRA alleged that the solicitor failed, for up to six years to have: (1) any appropriate AML policy in place (2) a firm wide AML risk assessment and (3) a training regime for staff. Further allegations related to specific failures to identify clients as PEPs, failure to undertake enhanced due diligence, failure to scrutinise transactions and source of funds and retaining money on client account where there was no associated legal transaction.
The underlying matters were property transactions for entities owned by Russian or Ukrainian clients. Whilst in an agreed outcome and therefore not technically “authority” the SRA recorded that, in respect of a firm’s “scrutiny” obligations for source of funds – “the Regulations do not require a superficial check or even an averagely comprehensive check, rather they require scrutiny – which implies a critical, probing examination or exploration…”.
The solicitor was suspended from practice for 9 months.
This case concerns the backdating of property documents submitted to the Welsh Revenue Authority so as to avoid a late registration penalty. Dishonesty was admitted. In the light of that admission, despite the solicitor’s unblemished 41 year record in practice, a striking off order was made. Such an outcome is near inevitable following SRA v Sharma [2010] in which Coulson J found that “save in exceptional circumstances, a finding of dishonesty will lead to the solicitor being struck off the Roll”.
Here, the solicitor accepted a caution for possession of a Class A drug in March 2018 but did not self-report until 10 months later after an anonymous letter had been sent to his employer informing it of the 2018 caution. On a previous occasion, in 2014, the solicitor had self-reported a similar caution within a month.
The solicitor accepted breaches of Principles 2 (integrity) and 6 (undermining trust in the profession). The SRA accepted that it would not establish dishonesty to the requisite standard concerning the circumstances of the delay in self-reporting. Hence a suspension from practice of one year was agreed.
If you would like to discuss any of the issues in this update please contact Paul Castellani or Henry Saunders or your usual Kennedys contact.
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Read other items in Professions and Financial Lines Brief - October 2020
