Will The Real Proprietor Please Stand Up

| General

Will The Real Proprietor Please Stand Up?

In early July 2022 news emerged of sanction in the form of a £3,000 fine handed down to a solicitor by the Solicitors Regulation Authority, the professional regulator.

What Happened In The Case?

The solicitor had been employed in his capacity as a fee earner specializing in the area of commercial property. In the transaction in question, the lawyer had been acting for a client and its bank account details had been received in the name of a separate third-party business. The law firm had received monies in an amount just shy of seventy thousand pounds which were for the deposit from the purchaser’s lawyers. On receipt, the lawyer granted permission for this money to be sent over to the vendor’s bank account.

Nothing To See Here, Right?

Daily legal professionals handle enormous caseloads of property transactions and a substantial amounts of cash. This case was no exception and under normal circumstances, this would have been a fairly innocuous property matter with nothing out of the ordinary. When the monies had been transferred it suddenly became very apparent on the lawyer that the party purporting to be a commercial property client was in fact impersonating the registered proprietor of the property.

To stem the flow of losses in relation to the matter, the firm employing the lawyer communicated with the respective regulatory authorities and subsequently did not proceed to completion.

Regrets? I’ve Had A Few…

The lawyer subject to the proceedings faced with the evidence held his hands up and admitted that his behavior did not amount to overseeing the matter professionally and she had not carried out the required due diligence steps in the transaction.

What Did The Regulator Say?

The Solicitors Regulation Authority reviewed the evidence presented to it and was faced with a delicate balancing act that recognized the seriousness of the allegations against the lawyer, and the punishment of the legal profession in the wider profession. The Regulator found that the delay in returning the vendor’s payment about the deposit for the property was so serious that it amounted to a significant contravention of the rules of professional conduct. The Regulator was attempting to balance the punishment of the legal professional with deterring future legal professionals from not acting with the required standard of vigilance by making the required searches.

The Regulator took into account the reduced chance of the debacle being repeated in the future, the regret demonstrated by the lawyer, and the lawyer’s understanding of his behavior. The Solicitors Regulation Authority considered the outcome to be proportionate.

Lessons Learned?

This case is a prime example to legal professionals and those aspiring for a career in the sector of how not to operate. They should consider using the following strategies such as:

  • ensuring they have carried out checks into the company to be receiving payment.
  • this could be by way of a Company Search on Companies House

making triply sure that the firm has an accounts department which is:

  • vigilant,
  • fully functioning and
  • alert.

Legal professionals should be ensuring they are carrying out the proper due diligence exercise about property transactions

They should also be making sure that they are closely checking the transaction to see if it complies with the Solicitors Accounts Rules and the Code of Conduct for Solicitors as promulgated by the Solicitors Regulation Authority.

If they do identify an error of this nature, they need to be ensuring that it is not repeated, understand their wayward behavior, and ensure there is no delay in paying back the monies once aware of the transfer.

The Legists Content Team

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THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES

[1] Hyde, John – Solicitor fined for allowing £68,000 deposit payment to a fraudster – Law Society Gazette - 8 July 2022 - Solicitor fined for allowing £68,000 deposit payment to fraudster | News | Law Gazette

[2] Rose, Neil – Solicitor’s “oversight” saw £68,000 paid to conveyancing fraudster – Legal Futures – 7 July 2022 - Solicitor's "oversight" saw £68,000 paid to conveyancing fraudster - Legal Futures

[3] McNamara, Felicity – Solicitor fined after Bradford firm fell victim to a fraudster – 12 July 2022 – The Telegraph and Argus - Solicitor fined after Bradford firm fell victim to fraudster | Bradford Telegraph and Argus (thetelegraphandargus.co.uk)

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