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Regulatory Settlement Agreements: Lessons From Recent Cases
January 25, 2024


Law firms are subject to strict regulations that govern their management, supervision, and operational procedures. Therefore, law firms need to establish policies, procedures, and documents that outline how the firm operates and what conduct is expected of its staff. Secondly, training all your staff on your firm’s policies and procedures is vital. Furthermore, it should include your expectations on how personal behaviour once out of the office – including online – reflects on the firm, reminding staff of their professional and regulatory obligations. Ensure that the training is recorded as proof and that staff have easy access to policies and support from managers or the firm, especially for remote workers who are not physically present in the office.

Recently, the Solicitors Regulation Authority (SRA) has published some decisions that serve as a stark reminder of the importance of strict adherence to anti-money laundering (AML) compliance and SRA rules and regulations. In this blog, we highlight some of these below. 

Case 1: Conduct Out of The Office

In a recent regulatory settlement agreement, Richard Lunn, a director of Haywood Lunn and Allen Ltd, faced consequences for his actions outside the office. Mr Lunn was arrested in Grimsby for driving under the influence of excess alcohol. He pleaded guilty and was convicted, resulting in a 19-month driving ban. Following the SRA investigation, by virtue of his conduct and conviction, it was found that he failed to behave in a way which upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons, in breach of Principle 2 of the SRA Principles 2019.

The Solicitors Regulation Authority (SRA) fined Mr Lunn £13,836 and required him to cover the investigation costs. Despite the severity of the incident, mitigating factors such as prompt reporting, the isolated nature of the incident, and genuine remorse led to a reduced penalty.

This case highlights the importance of maintaining professional standards even outside the workplace, with the SRA emphasising the need for solicitors to uphold high ethical standards.

Full details of the published decision can be found here.

Case 2: Firmwide Risk Assessment Failures

Another firm has been sanctioned for failures relating to compliant AML procedures. Following the investigation, the firm faced disciplinary action for failing to implement a documented and compliant firmwide risk assessment (FWRA) and related policies, controls, and procedures. The firm’s misconduct persisted for over six years, resulting in a financial penalty of £4,240.57 and additional costs of £1,350. The SRA considered the breach serious, placing it in conduct band C, indicating a significant penalty.

Full details of the published decision can be found here.

Case 3: Misunderstanding SRA Rules

Jane Thirza Moir, a solicitor and former employee of Goodwin Cowley Limited, faced fines and costs amounting to £768.00 and £4,000.00, respectively, for unintentional breaches of SRA rules. It was found that Ms Moir conducted legal matters without professional indemnity insurance, received client money in non-designated accounts, and failed to conduct proper risk assessments. The key oversight occurred when Ms Moir, unaware of a crucial rule change in November 2019, provided conveyancing services for friends and family without the required insurance. As these services were provided unpaid, she mistakenly believed this exempted her from this requirement. Other key issues identified by the SRA included a breach of the Account Rules for handling client monies in her conveyancing matters. It was found that in relation to these matters, Ms Moir held or received client money where she failed to ensure such client money was held in a designated client account and in doing so breached several of the SRA Accounts Rules and SRA Principles.

The SRA acknowledged the genuine oversight but deemed a fine necessary to protect public interests and the legal profession’s reputation. Despite Ms Moir’s experience, the case highlights the importance of staying informed about rule changes and ensuring compliance with SRA regulations.

Full details of the published decision can be found here.

Expectations from the SRA

These recent decisions are not isolated cases. There have been several recent examples where the SRA has been stringent in its dealings with anyone it found in breach of its rules.

The regulator has made it clear it will focus on all cases of misconduct and compliance failures, not just on areas of obvious regulatory requirements such as FWRA and AML PCPs.

Read about some of the other cases we have highlighted:

Guidance for Law Firms

At The Strategic Partner, we aim to empower firms to manage risk, compliance, and regulation efficiently, allowing them to focus on delivering exceptional service to their clients. We provide comprehensive compliance solutions that help firms identify and address potential risks and misconduct within their firms. By working closely with firms, employees, and their MLRO, COLP, and COFA, we aim to instil a culture of self-regulation and accountability.

Our services are designed to provide firms and their employees with the comfort of knowing that even in the busiest of times, you remain compliant and can evidence that you are.

We can offer expert guidance and support, including:

  • Risk Management and Compliance Review – A review of the firm’s approach to regulation and compliance to include all regulatory requirements and AML procedures. The output of this provides the firm with a written gap analysis and solutions to remedy any issues.
  • Regulation 21 AML 2017 Independent Audit – An audit that reviews the firm’s approach to regulation and compliance, including AML procedures, and meets the requirements of Regulation 21 of the AML 2017. The output will provide the firm with a written gap analysis and solutions to remedy any issues discovered and ensure compliance.
  • Training and Education – Our typical AML Training includes:
    • AML Training for ALL staff to meet the firm’s obligation to provide annual training.
    • 1-2-1 training for the MLRO and MLCO on their obligations and requirements.
  • Auditing – Procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at case level with a report of the outcome.
  • Expert Process and Procedures Drafting – The Strategic Partner provides quality and bespoke document drafting in consultation with the firm and can incorporate a range of document drafting services. Our teams have the expertise to assist with more complex documents, such as Risk and Compliance and Anti-Money Laundering, alongside Client Care documents.
  • Packaged Solutions – Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance:
  • Risk, Regulation and Compliance Service (including AML)
  • Risk, Compliance, AML Guidance and Register Administration Service

Get in touch with The Strategic Partner

For more information on The Strategic Partner and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation or simply to keep this up to date, you can call us on 020 3911 9710 or email us at info@thestrategicpartner.co.uk.

View the PDF version of this article here.

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