Solicitors fined £30k for letting down property clients


SRA: Solicitors have changed systems

Two solicitors have been fined more than £30,000 between them for not considering conflicts of interest and not acting in clients’ best interests.

The fact that the more junior of them, Alexa Kordowicz, followed the lead of partner Zachariah Reynolds was part of why her fine was more than half the level of his.

Mr Reynolds, who qualified in 1998, worked at London firm Child & Child from March 2016 to June 2019 and at Allium Law – the firm set up after a management buy-out of Child & Child – until November 2022. He was the firm’s designated partner, director, and compliance officer for legal practice and for finance and administration.

In November 2022, Allium Law was acquired by Child & Child Law Ltd, where Mr Reynolds has continued to work. He was a director for 14 months to March 2024 and does not hold any compliance roles.

Alexa Kordowicz, qualified in 2013, had the same working history at the firms – the pair were both previously at Streathers – but has not held any compliance roles. According to LinkedIn, she became a partner in May 2022.

Mr Reynolds’ misconduct related to two matters involving ‘Mr A’, a property developer and business owner who had been a client of the firm since 2016, and ‘Mr B’ and ‘Ms C’, an estranged couple. Mr A was married to Mr B’s sister.

Ms Kordowicz was the recorded fee-earner on the first transaction; Mr Reynolds was the matter partner and heavily involved.

They acted on a loan agreement between Mr B and Ms C and a finance company for a £112,500 loan, secured with a second charge on a property held in their joint names. But the intention was that Mr A and his business would use the funds.

A broker instructed Mr Reynolds, with his email copied to Mr A but not Mr B and Ms C – there was nothing on the file to confirm that they had provided authority for the broker or Mr A to provide instructions to the firm on their behalf, the SRA said.

The charge said Mr B and Ms C were entering into the agreement wholly or predominantly for the purpose of a business they carried on, but there was no evidence of this either.

The file showed “a lack of clear instructions from” Mr B and Ms C and “a lack of consideration by Mr Reynolds to the risk of a conflict of interest existing between Mr A, Mr B and Ms C” – including the fact that, as Mr B and Ms C were estranged, their interests may not be aligned.

There was also no evidence of a client-care letter sent to Mr B and Ms C. The matter completed in October 2018 and loan funds were sent to Mr A.

The SRA said it appeared that the transaction was not in Mr B and Ms C’s best interests as their property could have been at risk had Mr A defaulted.

In the second matter, Mr Reynolds acted alone for Mr A in obtaining a £50,000 loan from a different finance company, secured in part by a mortgage on the same property.

He arranged for Mr B and Ms C to receive independent advice from another solicitor at the firm but later acknowledged it would have been better coming from a different firm.

Though they were not the clients here, it was “reasonable” for Mr Reynolds to take into account their interests, the SRA said, particularly as he knew they were securing yet more funds against their property to benefit Mr A – but he did not “act in a manner which was consistent with their interests”.

The solicitor admitted multiple rule breaches as a result. In mitigation, he expressed “regret and remorse” at his failings, co-operated with the investigation, had a clean regulatory record and “explained how improvements have been made to his working practices as a result of the lessons learned from these matters”.

The agreement said: “In future he will ensure clear instructions and written authority regarding who can provide instructions is obtained from clients and that this is recorded clearly on the client file, including when acting for couples who are estranged.

“In future he will ensure that the potential for conflict of interest is considered and that this is clearly recorded on the file.”

Mr Reynolds said Child & Child Law now requires “further review and approval” from its risk and compliance function of any client instruction where there is a risk of potential conflict of interest.

The SRA said a fine was appropriate to mark conduct which showed “a reckless disregard of the risk of harm and Mr Reynolds’ regulatory obligations”.

Application of the SRA’s fining guidance led to a fine of 16% of Mr Reynolds’ gross annual income, resulting in a figure of £23,653. This was reduced to £21,287 to reflects his early admissions and expressions of regret.

There was a third matter in 2016 for which Ms Kordowicz had sole conduct, acting for Mr A on the purchase of a property for £785,000. The purchase was to be a joint venture with a limited company (Company E), of which Mr F was the sole director.

Mr F paid £80,000 into the firm’s client account from his personal bank account for the deposit, but there was no evidence that any source of funds check was conducted.

Mr F and Company E were new clients and, while Ms Kordowicz recalled that the funding had come from the company’s profits, there was no evidence of this on the file.

Her mitigation was the same as Mr Reynolds’, except she pointed out that she had followed his approach on the first matter and would in future ensure that source of funds checks were recorded on the file.

“While she was not a new solicitor and was five years qualified, she was working with a more senior colleague on Matter A and her own experience at the time was less,” the SRA agreed.

The fining guidance indicated a figure of 11% of her gross income, leading to a fine of £10,399, reduced to £9,359 in the same way as Mr Reynolds’.





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