Four developments from the end of last week: an anti-corruption charity calling for statutory powers over privileged material, two strike-offs over a client account payment, an unregulated divorce service applying to become a law firm, and a disbarment over covert recordings of family hearings.
Should the SRA be able to see privileged material?
Spotlight on Corruption has argued that the government should give both the SRA and the Financial Conduct Authority explicit statutory powers to examine legally privileged material when investigating lawyers, and that the case for doing so holds whatever the High Court decides in the challenge now awaiting judgment. Mohamed Amersi and his solicitors, Carter-Ruck, are seeking a declaration that the SRA’s use of production notices under section 44B of the Solicitors Act to obtain privileged material is unlawful, in a claim listed for a three day trial in July. Writing for the charity, legal fellow Zainab Saleem pointed to two of the most significant anti-money laundering cases the regulator has brought, involving Dentons and Clyde & Co, in which the client declined to waive privilege and the SRA was nonetheless able to see the material. Her argument is that Parliament should settle the question in legislation rather than leave a power assumed for decades exposed to challenge. Timing sharpens it, because the FCA is preparing to take over as anti-money laundering supervisor for the legal sector. For the underlying doctrine, see our guide to the iniquity exception, and our report on Bourlakova for how the courts have been drawing the line.
Two directors struck off over a £95,000 client account payment
The Solicitors Disciplinary Tribunal has struck off two directors of a City firm for acting dishonestly over an unauthorised payment of almost £95,000 from client account to a third party. James Swead, who qualified in 2009 and became a director of AAG Legal Services in 2015, was also found to have made untrue statements about the firm’s borrowing during winding-up proceedings and to have agreed loan terms without disclosing material adverse information. The tribunal described his dishonesty as extending across multiple allegations in different factual contexts between 2017 and 2020. John Szepietowski, admitted in 1995 and a director between May 2015 and November 2017, faced the single allegation concerning the payment, which the tribunal treated as a short-lived course of conduct by an experienced solicitor who knowingly participated in the unauthorised use of client money. One detail connects the case to this morning’s lead story: Swead held the firm’s compliance officer roles as well as his directorship, which is the precise combination the newly approved COLP and COFA rules are designed to prevent in firms above the thresholds. Decisions are published through the tribunal once the appeal period expires.
What happens when an unregulated divorce service enters regulation?
amicable, which has spent a decade marketing itself as an alternative to instructing two solicitors, has applied to the SRA for an alternative business structure licence so that it can operate a regulated law firm alongside the existing service. The new practice would act for people whose partners refuse to engage with the joint model, a group amicable currently has to refer out, and would take on the reserved work it presently outsources, including deeds giving effect to pre-nuptial and separation agreements. It also intends to offer a narrow conveyancing service covering transfers of equity and related remortgages where a separating couple moves the family home into one name, which puts a family technology business into the same regulatory perimeter as the firms it has competed with. Co-founder Kate Daly told reporters the move was driven by frustration at the people the existing model cannot help. The application sits with the SRA and will appear on the register of licensed bodies if granted. Our guide to who regulates whom explains why the licence, rather than the service model, is what changes the consumer’s position.
Barrister disbarred over covert recordings of family hearings
A disciplinary tribunal has disbarred Mariam El-Sobky, called to the Bar in March 2001, after finding that she made audio recordings of family proceedings on at least three occasions between March and December 2021 without the consent of the parties or the judge and knowing she was not lawfully entitled to do so. She then sent the recordings to people she employed, asking them to produce transcripts. Three cases were heard together. The tribunal also found that she had made dishonest or misleading statements to a court, that she failed to keep her client’s affairs confidential by sending appeal papers to the personal email address of somebody engaged to work on the case without a confidentiality agreement, and that she had harassed a former employee in a group chat. Recording a hearing without permission is a contempt under section 9 of the Contempt of Court Act 1981, and the finding is a reminder that the prohibition binds advocates exactly as it binds anyone else in the room. Findings are published on the Bar Tribunal and Adjudication Service website.