Listen to the warning bells
The SDT was kind to a conveyancer who ignored so many red flags and got off with only a moderate fine; others may not be so lucky, says Jean-Yves Gilg
If you are working in a conveyancing shed, dealing only with incoming requests, or searches, or completions, spare a thought for Mr Tang.
Tang is a partner in a three-partner firm in Wembley, specialising in conveyancing. The firm itself is accredited under the Law Society’s conveyancing quality scheme.
Three years ago, he was instructed in a transaction involving a property to be bought at auction, by a gentleman whose family had been a client of the firm but who wasn’t technically a client on this occasion.
The case came with more than enough warning bells: a deposit paid by an unconnected third party, a third-party investor not advised independently, an undocumented loan from a relative, and funds received from outside the jurisdiction.
All were ‘dubious features’ and were sufficiently serious ‘red flags’ that the solicitor should have carried out further investigations before proceeding, the Solicitors Disciplinary Tribunal said as it fined Tang £7,500 for breaches of the code of conduct.
If, on top of that, one adds the SRA’s costs, assessed at just over £32,400, Tang is paying a hefty price for a mistake that he could perhaps easily have avoided. Still, the solicitor is getting off lightly. He accepted he was ‘sloppy’ and, as the tribunal made clear, there appears to have been nothing dubious about the transaction itself, and nobody suffered any loss.
This is the kind of situation that used to happen in many firms across the country, and even today, with much stricter money laundering requirements, Tang is probably not the only one to end up entangled in the regulatory net. Act for a client a few times, take instructions from them on behalf of a relative, advise on the side the relative’s friend who is getting in on the transaction, and before you know it you will be in breach of half a dozen provisions in the code.
Mostly, such transactions take place smoothly, and if it hadn’t been for a complaint to the SRA by the third-party investor, we probably would never had heard of it.
The ruling doesn’t provide much detail about the circumstances. There is no mention of extreme work pressure or mental health issues, factors often raised in mitigation. And the case arose only out of this single transaction. So what happened? Probably we’ll never know for sure. Even the SDT cannot make up its mind whether Tang was ‘a relatively experienced conveyancer’ or a ‘relatively inexperienced’ one.
What’s more, no lender was involved in the transaction. They would likely have queried some of the ‘dubious features’. Likewise, a conveyer-belt law firm would have had a series of automated barriers that would have picked up on the source of funding for the deposit and on the origin of the funds – or perhaps it would have rejected the transaction altogether because it would have been unable to provide the add-on investor agreement drafting.
Variety is what makes solicitor’s work fulfilling, even when you take account of a certain level of specialisation and mechanisation of process. It’s fluid in a way that conveyancing factories aren’t. But it’s the plight of small firms that, unless they make time to ensure their processes are fool-proof, they will be more exposed to risk.
As a solicitor, the choice is yours which kind of firm you would rather work in. Ours at Solicitors Journal is very much in support of traditional firms offering rewarding work to their lawyers, delivering exceptional client service, and embracing innovation.
It is this variety and talent that we celebrated last week with more than 450 guests at our annual awards evening. Thanks to all who attended and many congratulations to the winners.
Jean-Yves Gilg is editor-in-chief at Solicitors Journal