Newly qualified left in charge of firm rebuked over client account failures

SRA: Solicitor’s conduct was not deliberate

A newly qualified solicitor left holding the fort when the sole principal she was working for was hospitalised, has been rebuked after apparent conveyancing frauds happened on her watch.

The Solicitors Regulation Authority (SRA) said Madiya Ahmed Arshad was trying to help Arrans Solicitors and principal Martin Keith Waters at a “difficult time”.

It also took into account Mr Waters’ comments that “he was the only person at the firm who could have identified that these might be fraudulent transactions as Ms Arshad was not a conveyancing solicitor”.

A cash shortage of £385,000 arose while Ms Arshad was supervising a paralegal in two conveyancing transactions at the Halifax firm.

In a regulatory settlement agreement with Ms Arshad, the SRA said: “By her own admission, she did not have any experience in conveyancing transactions.

“At the time of the transactions giving rise to the misconduct she was a junior solicitor who had been qualified for less than one year. She was the only full-time solicitor in attendance at the firm.”

The SRA said Ms Arshad, admitted in February 2017, was asked to operate the firm’s client account when in December that year Mr Waters was hospitalised following an assault and then had to convalesce at home.

In his absence, ‘Ms S’, a paralegal, carried out “a number of conveyancing transactions”, two of which caused a shortage on client account.

The SRA said: “Ms Arshad relied on Ms S’s assurances that the transactions had been authorised.

“However, Ms Arshad has shown insight by recognising that she should have reviewed the files relating to the transactions before authorising the payments and should not have simply relied on the explanations given by Ms S.”

Ms S was a “trusted member of staff” who had worked at the firm for a significant amount of time, the SRA noted.

In the first transaction, Arrans was instructed by Client A in the sale of a property for £185,000.

All but £500 of the purchase money was paid out of the law firm’s client account in four payments to accounts purporting to be in the name of Client A, his wife and his daughter.

Ms Arshad authorised the third and fourth payments, but by this time they could not have been made on the instructions of Client A and his wife as they had both died.

There was no record of who authorised the first two payments. One was rejected and formed part of later payments.

In the second transaction, Arrans was instructed by Client B, also in December 2017, to act in the sale of a property for £200,000.

The following month all but £25 of the purchase money was paid out in four payments authorised by Ms Arshad.

The SRA said the Land Registry refused to register the transfer and documents seen by an SRA investigation officer “indicated that the identification document held by the firm for Client B was forged, and that the signature on that identification document did not match that which appeared on the transfer deed” for the property.

The payments made in both transactions represented a shortage on client account totalling over £384,470. “Although that money was ultimately replaced, it was not replaced for several months.”

The regulator said of Ms Arshad: “Her conduct was not deliberate, was not motivated by dishonesty, and did not display a lack of integrity nor a reckless disregard for her obligations. Her actions were as a result of her efforts to help the firm and its principal, Mr Waters, at a difficult time.”

Ms Arshad was rebuked and agreed to pay £600 in costs.

In 2019, Saisha Zaheer, a paralegal at Arrans, was banned from working in the profession after acting in two conveyancing transactions between December 2017 and February 2018 “which bore the hallmarks of fraud”, and then providing false information to an SRA forensic investigation officer. Her conduct was found to be dishonest.

Mr Waters was suspended for six months in November last year by the Solicitors Disciplinary Tribunal. The tribunal found that a consultant employed by Arrans, Rodney William Noon, had practised while suspended, for which Mr Noon was struck off.

The tribunal found that Mr Waters had made “no effort” to ensure that Mr Noon complied with the terms of his suspension.

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