Morgan Wiseman, a law firm located in Luton, has recently been fined by the Solicitors Regulation Authority (SRA) for a procedural error involving the transfer of proceeds from a property sale. The firm failed to adhere to its internal protocols and transferred funds to a third party instead of the intended client. The SRA found that the firm did not inquire about the recipient of the funds and failed to question the transaction’s legitimacy.
In August 2020, the firm was tasked with handling the sale of a property for a company. The client granted explicit permission to transfer the proceeds to an individual identified as ‘Mr S’, whose bank was situated in the United Arab Emirates. However, the firm’s records did not indicate any effort to understand the rationale behind this arrangement.
In a subsequent transaction, the firm transferred £102,605 to Mr S, despite there being no apparent valid reason for the transfer. Strangely, the fee-earner instructed the firm’s accounts department to make the transfer under the pretense that the funds were going to the client, even though this was not the case.
Morgan Wiseman’s internal procedures did not permit payments to be made to parties other than the client. Notably, both the accounts department and the director authorizing the transfer failed to identify the discrepancy between the client’s name and that of Mr S.
The firm admitted its failure to verify the legitimacy of the transfer and acknowledged that it provided an unauthorized banking facility. The SRA noted that the misconduct appeared to stem from an oversight by the firm’s accounts team rather than intentional wrongdoing. The firm subsequently adjusted its client payment processes to prevent such errors from recurring.
In light of the circumstances, the SRA decided to impose a fine of £2,500 on Morgan Wiseman and also ordered the firm to cover costs of £1,350. The SRA justified the fine as a necessary deterrent and highlighted that although the potential for client loss existed, no actual harm was inflicted.
The case underscores the importance of strict adherence to internal protocols and thorough due diligence in financial transactions within law firms.
