Laceys, a renowned law firm in Bournemouth, has been fined £4,250 for a failure to identify a conflict of interest while representing a party in a property boundary dispute. The firm candidly acknowledged the situation as a “genuine mistake following the exercise of professional judgement”.
In an incident that has caught the attention of the legal community, Laceys was tasked by executors to separate a property into two distinct titles. The resulting boundary, which the firm had set, later became the subject of the dispute. This unfortunate event transpired despite the firm’s belief that there was no conflict of interest based on the information they had at the time.
Rudi Kesic, CEO at Lawtech 365 Group, The Law Society Lexcel Auditor and an expert on these matters, commented, “In challenging situations like this, it’s crucial to carefully examine all factors that could potentially lead to a conflict of interest.”
The Solicitors Regulation Authority (SRA) noted that Laceys even discouraged their client from seeking independent legal advice, believing it to be an unnecessary expenditure of estate funds. Laceys mistook client feedback from another law firm as evidence of independent legal advice.
However, as the conflict unfolded, the client expressed dissatisfaction with the situation, attributing it to Laceys’ error during the initial property registration. Despite Laceys’ compliance officer deciding to refer the matter to their professional indemnity insurer and advising the client to obtain independent legal advice, the firm continued to represent the client.
This incident eventually led to a professional negligence claim against Laceys, which was settled without any admission of liability. Towards the end of the SRA’s investigation, Laceys accepted its failure to identify the conflict of interest and advise the executors to obtain independent legal advice, describing it as a “genuine mistake”.
This situation underscores the need for diligent conflict checks, as mandated by the Lexcel standard 5.3, and the potential benefits of modern legal technology. Case management systems like Actionstep could play a crucial role in mitigating such risks through automated conflict checks.
“Leveraging technologies like Actionstep’s automated conflict check could have helped prevent this unfortunate situation,” added Kesic.
In the light of the incident involving Laceys, the value of solutions such as Verify 365 Risk & Compliance Technology from Lawtech 365 comes into sharp focus. Verify 365 is a comprehensive platform that strengthens a law firm’s due diligence processes by effectively screening and cross-referencing client data, thereby reducing the risk of conflicts of interest and the ensuing penalties.
The tool integrates seamlessly into a law firm’s operations, streamlining administrative tasks and case management processes. As such, legal professionals can devote more time to substantive legal work, ensuring that all essential checks are conducted to avoid any conflicts.
“Verify 365 compliance with SRA standards and alignment with the Lexcel quality mark underscore its commitment to maintaining high professional standards,” added Rudi. “In the face of evolving legal landscapes, law firms must adopt technologies that not only streamline their processes but also protect them from potential pitfalls.”
Identifying conflict of interest
Actionstep and Verify 365 stand as an example of how adopting advanced technology can significantly bolster a law firm’s practices. Their commitment to professionalism and compliance presents an effective solution to maintain a firm’s reputation and navigate complex legal scenarios with confidence. With a Verify 365 integration with Actionstep, firms gain access to a comprehensive suite of features for streamlined client onboarding and compliance. This includes instant verification of clients and their ID documents using biometric technology, automated address verification, source of funds checks, and analysis of digital bank statements. Enhanced customer due diligence checks enable clients to provide detailed fund origin information, while global PEPs & sanctions and adverse media checks ensure compliance with AML regulations. The integration also offers instant verification of businesses, including accounts, shareholders, and UBOs. Furthermore, it enables the use of legally binding eSignatures, simplifying the onboarding process, ensuring a robust AML/KYC and onboarding process.
As Laceys moves forward, more alert to the risks that could arise in situations like the recent conflict, technology solutions like Actionstep and Verify 365 could play an instrumental role in ensuring such incidents are less likely to recur.
The SRA stated that a fine was necessary to maintain professional standards and uphold public confidence, with the initial fine of £5,000 reduced to £4,250 after Laceys admitted misconduct. The firm did not financially benefit from this incident.
Moving forward, Laceys affirmed it is now “much more alert to the risks that arise in such circumstances and for the need for them to be kept under constant review as a matter develops,” indicating a reduced likelihood of such situations in the future.