Fine for firm that failed to recognise conflict in property dispute


Plan: Boundary dispute

A law firm that failed to recognise a conflict of interest when it acted for one party in a dispute over a boundary issue on a property it had divided has been fined £4,250.

Bournemouth law firm Laceys said it made a “genuine mistake following the exercise of its professional judgement”.

According to a notice published by the Solicitors Regulation Authority (SRA) last week, Laceys was instructed by executors to divide a property into two separate titles – one made up of a house and its curtilage and the other of adjacent land.

This was based on a plan the firm submitted to HM Land Registry, which was used when the client subsequently sold the house, on which Laceys acted too. A dispute then blew up with the purchaser about the boundary.

The SRA said: “The firm did not consider an own-interest conflict had either arisen or was at risk of arising based on the information known to them at that time. Consequently, the firm continued to act and did not advise the client to take independent legal advice.

“Indeed, at one point the firm advised that the client should not seek other legal advice as it was not good use of estate funds given that counsel’s opinion was about to be taken.”

However, the client did discuss the matter with another firm and was told Laceys was “doing a good job”. The client passed this on to the firm, which considered this meant the client had obtained independent legal advice.

However, the client later “expressed dissatisfaction” that the situation had arisen due to the firm’s error at the time of registration.

Laceys’ compliance officer for legal practice decided the matter should be referred to its professional indemnity insurer and the client should be advised to obtain independent legal advice.

“Despite this, the firm did not advise the client to take independent legal advice and continued to act in the matter,” the SRA recounted. “Subsequently, the client made a professional negligence claim against the firm, which was settled without any admission of liability.”

The firm accepted – albeit only towards the end of the SRA’s investigation – that it acted where an own-interest conflict had either arisen or was at the significant risk of arising, and failed to advise the executors to obtain independent legal advice.

But it submitted that this was a “genuine mistake” and was not reckless.

The SRA acknowledged the mitigation that “the firm did its best to exercise professional judgement in difficult circumstances and took advice from counsel to ensure it was taking the correct steps at all times”.

Laceys was also 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”. The insight shown meant it was “unlikely” such a situation would recur.

The SRA said a fine was appropriate to maintain professional standards and uphold public confidence “because any lesser sanction would not prove a credible deterrent to the firm and others”.

It set the fine at £5,000, reduced to £4,250 to reflect the admission of misconduct. Further, the firm made no financial gain or received any other benefit as a result of its conduct.




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