Paul Philip, chief executive of the Solicitors Regulation Authority, welcomed the taskforce’s recommendation that the Solicitors Disciplinary Tribunal should move to using the civil standard of proof.
BSB welcomes LSB’s recommendation to the Lord Chancellor to enable it to regulate ABSs
19 May 2016
The Legal Services Board (LSB) has recommended to the Lord Chancellor that the Bar Standards Board (BSB) be permitted to regulate Alternative Business Structures (ABSs), by designating the Bar Council as a licensing authority.
BSB Director of Regulatory Policy Ewen MacLeod said: “We welcome today’s announcement. We want to permit innovation in the legal services market, which we hope will increase choice and provide other lasting benefits for consumers.
Commercial mediations increased by about 5 per cent last year in the UK, with their value exceeding £10.5 billion, figures from a London-based dispute resolution body revealed yesterday.
The 2016 audit from the Centre for Effective Dispute Resolution claimed the results showed that some businesses saved £2.8 billion in management time, relationships, productivity and legal fees by opting for mediation over conventional litigation.
The figures also highlighted how profitable the sector is for those arranging and running mediations. Service providers last year earned £22.6 million, which was described as “an impressive return on investment for the UK economy when compared with the savings for businesses in costs”.
According to the report, lawyers were “generally pleased” with the quality of the mediators, with 60 per cent rating those they worked with as very good.
The report also found that for the first time there more non-lawyers – 57 per cent – than lawyers acting as mediators.
SRA the largest of the legal regulators release its own research commending solicitors for adhering to money laundering regulations.
Paul Philip, chief executive of the Solicitors Regulation Authority, said that while “law firms are an attractive target for those wishing to launder money, our analysis shows that the vast majority of the firms take their responsibilities seriously and compliance is good”.
However, he added a caveat, saying the report was “just a snapshot and the challenges are evolving, so there is no room for complacency”.
The proposal by the Government for new legislation and offence of failure to prevent.
“The introduction of an offence of failure to prevent bribery under the Bribery Act led to a significant shift in the way that businesses approached anti-bribery and corruption and it would be expected that the introduction of a broader offence of failure to prevent corporate crime, such as fraud, would have a similarly beneficial effect.”
John Whittaker, a partner at Clyde & Co, a City firm, predicted that the prospect of corporate liability “will prove a major incentive in implementing strong anti-money laundering procedures”.
He added: “The cost of those procedures will be borne by commerce and the outcome will be that many companies will need to spend significant funds in preventative measures even where perfectly legitimate funds are not linked to any criminal activity.”
There was also concern at the government’s proposal to remove the existing suspicious activity report consent regime. Mr Whittaker described the scheme as a “source of comfort to many companies seeking to conduct legitimate business in difficult conditions”
LSB state that the SRA ‘will need to consider carefully how it manages the risk’ of overwhelming legal firms (and itself) through such a radical exercise as reducing the SRA Handbook to nearer 50 pages.
One common theme arising during the LSB review of the SRA was a concern that consultation outcomes ‘could lead the profession to question whether their views were adequately taken into account’. Various controversial reforms have progressed in the face of strong initial opposition from practitioners and representative bodies.
The Facts – Mr Dawson engaged the services of a solicitor, to sell his property at 35 Merton Hall for £440,000. It transpired that the client was not the real Mr Dawson, but a fraudster. His solicitor carried out client due diligence and inspected a passport which identified the fraudster as Mr Dawson. There was no suggestion that the solicitor ought to have known that the passport was in fact a forgery. The solicitor also obtained copies of two utility bills and a bank statement addressed to Mr Dawson at an address in Maidenhead. However, the address for service given by the Land Registry on the Office Copy Entries for the property was an address in Cambridge. The solicitor did not act on this discrepancy.
The Seller’s Solicitor – The judgment confirms that it is well established that (in general) a seller’s solicitor does not owe a duty of care to a purchaser, but says it is an “absolute obligation not to release the purchase money before completion”. The vendor’s solicitor is a trustee of the purchase money and parting with it before completion is a breach of trust. In the event of a fraudulent transaction, where there is no completion (i.e. no registration of the new owner) then the vendor’s solicitor is liable to the purchaser for the money paid away. There will be very few situations where the seller’s solicitor will be excused this liability.
The Buyer’s solicitor – The buyer’s solicitor on the other hand is in a much more unfortunate position. He had made a number of enquiries of the vendor’s solicitor over the course of the transaction including checking whether the vendor’s solicitors were familiar with the seller. As can happen on many transactions the vendor’s solicitor confirmed he had no personal knowledge of the vendor prior to the transaction but they had met him in person, seen his passport and utility bills showing his UK address.
The judgment held that these responses were not good enough for the buyer’s solicitor to have relied upon them. The buyer’s solicitor said that he had trusted the vendor’s solicitor to have carried out due diligence and ID checks but the athe buyer’s solicitor ought to have queried the circumstances of the seller’s solicitor’s involvement and the nature of the transaction in greater detail.
The Decision – The buyer’s solicitor was held to have acted honestly but not reasonably and was held jointly liable with the vendor’s solicitor.