The Solicitors Regulation Authority has reminded firms handling conveyancing transactions that every effort must be made to avoid any hint of conflict.
Greater Manchester firm Sleigh Son & Booth was fined £2,000 at the Solicitors Disciplinary Tribunal last month for failing to secure informed written consent from clients about acting where a potential conflict may arise.
The firm admitted acting in eight transactions dating from September 2014 to March 2016 where either the vendor or purchaser had not given written consent to act for the other party involved.
The SRA stressed that the prosecution concerned conflict of interest (and the risk of it) rather than any issues of integrity or finaical loss to clients, and that any misconduct alleged was not deliberate.
But the regulator also emphasised that avoiding conflicts was a ‘fundamental objective’ for solicitors: in this case the conflict could have been managed at the outset, but any solicitor should remain alert to the possibility a conflict may arise.
It was acknowledged that the firm put systems in place to protect clients and itself from conflicts, but the allegations stemmed from these systems breaking down. The firm had devised a form which informed clients about the possibility of a conflict arising and its implications, which was intended to be a mechanism for obtaining consent. But in a limited number of transactions this form was not present on the case file.
The firm accepted it was not as ‘joined up’ as it could be at ensuring systems were applied in every case, and it had made prompt changes to the paperwork and auditing systems following the involvement of the SRA. Where slip-ups in the system had arisen, the firm submitted it had provided an explanation.
The firm consistently denied there was any absolute prohibition on solicitors acting on behalf of both vendor and purchaser in arms’ length domestic conveyancing transactions. In each case where it did act in this way, fee earners made a careful judgement about potential conflict of interest and concluded there was none. Professional rules allowed them to make such a judgement in good faith.
But without informed written consent, the SRA submitted, the firm was simply not in a position to act for both parties, with clients to some extent ‘kept in the dark’.
In mitigation, the firm submitted the misconduct was not even moderately serious, and breaches were minor, historic and caused no identifiable loss. The affected transactions amounted to around 1% of the firm’s caseload.
The tribunal said the harm caused by the misconduct was ‘relatively low’ and the firm had taken various steps to remedy systematic errors immediately, with open and frank admissions made.
It ruled that the £2,000 fine struck the right balance between reflecting the importance of processes and recognising the limited impact and harm caused. Costs of around £20,000 were ordered, after the SRA had originally applied for more than £32,000 to cover its costs.