Firm rebuked for acting on both sides of property transaction


Written consent: Law firm did not obtain agreement to act

A law firm which acted for both sides in a property transaction without obtaining their consent has been rebuked by the Solicitors Regulation Authority.

It said the actions of Chesterfield-based Banner Jones had no adverse consequences to either the buyers or seller and it has “since strengthened its processes for managing conflicts”.

The SRA Handbook as of 2016, when the work was done, allowed a firm to act where there was a client conflict and the clients had a substantially common interest in relation to the matter – which they clearly did here – only if four conditions were satisfied.

There were that “you have explained the relevant issues and risks to the clients and you have a reasonable belief that they understand those issues and risks”, all the clients have given informed consent, “you are satisfied that it is reasonable for you to act for all the clients and that it is in their best interests”, and “you are satisfied that the benefits to the clients of you doing so outweigh the risks”.

Banner Jones admitted that it did not do any of these and so failed to act in its clients’ best interests.

In mitigation, the firm said there was no adverse impact on the clients and had “shown insight into its failure and taken steps to ensure they are not repeated”.

In deciding a written rebuke was the appropriate outcome, the SRA said the conduct “had the potential to cause harm, but no actual harm was caused as a result of the conflict of interest”.

It was an isolated incident and there were “no aggravating factors which suggests a more serious sanction is required”. At the same time, “some public sanction is required to uphold public confidence in the delivery of legal services”.

Banner Jones will also pay £300 towards the costs of the investigation.

The current conflict rule in the SRA code of conduct has since been rewritten. If the clients have a substantially common interest or are competing for the same objective, a firm can act if it meets three conditions.

These are that the clients have given informed consent; “where appropriate, you put in place effective safeguards to protect your clients’ confidential information”; and “you are satisfied it is reasonable for you to act for all the clients”.




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


Building a brand – lessons from Cazoo

Building a brand takes more than money – just ask Alex Chesterman, the founder of ill-fated online used car retailer Cazoo, which collapsed into administration last month.


The future of organic search for law firms

In a significant turn of events, thousands of internal Google search API documents have recently been leaked, shedding light on the intricate workings of the search giant’s ranking algorithms.


Commercial real estate: The impact of AI and climate change

There is no doubt climate change poses one of the most complex challenges for the legal industry; nonetheless, our research shows firms are adapting.


Loading animation