SRA fines firm that took ‘unfair advantage’ of client

A north west firm has been fined after working for both parties at various points in a matter which ended in a dispute. AFG Law Limited, based in Bolton, admitted not making it clear to both parties who it was acting for, and failing to tell one of the parties in writing to obtain independent legal advice.

The Solicitors Regulation Authority said AFG had taken ‘unfair advantage’ of one client by not explaining whose interests it was serving.

The firm had been instructed in 2018 by a developer to act on its behalf in drawing up an agreement with a landowning company. It was the first time the firm had acted for the developer but it had acted for the landowner on an unrelated matter the year before.

When a meeting was held to discuss the agreement, the firm’s attendance note recorded that matters between the parties were amicable but there was the potential of a conflict of interest. This was confirmed to the landowner but not put in writing.

AFG did not make clear to the landowner that its responsibility was to represent the developer and the agreement was duly completed, as prepared by the firm. 

Six months later, the firm accepted instructions from the landowner in connection with securing a loan related to the development. It then acted again for the same client on a refinancing application. Both times, the firm was no longer acting for the developer.

In the course of these matters, the firm received confidential information about the landowner and its directors, including commercially sensitive and financial information.

But in early 2020, a dispute arose between the landowner and developer, and this time the firm accepted instructions to act on behalf of the developer, despite now having access to confidential information.

AFG explained as part of a regulatory settlement with the SRA that the fee earner overseeing the dispute did not have access to any of the sensitive information, but the firm admitted that it had failed to ensure there was no risk of disclosure.

In further mitigation, AFG pointed out that it had told the landowner what was happening and that they should seek independent legal advice. More advanced processes have since been introduced to safeguard confidential client information in future.

The SRA assessed the nature of misconduct to be low, judging that it was unintentional and did not form a part of a pattern. The firm was fined £2,000 and agreed to pay £1,350 costs.