Two high profile Solicitors Disciplinary Tribunal rulings have been cited in a High Court appeal brought by the Solicitors Regulation Authority against the acquittal of international firm Dentons of money laundering breaches.
At a six-day hearing last year, the SDT dismissed allegations that Dentons had breached money laundering regulations through its retention of a client. The firm’s ‘inadvertent’ breach ‘fell within the small category of cases where wrongdoing did not amount to professional misconduct’, the tribunal found.
In the appeal before Mrs Justice Lang, the SRA said yesterday that, if permitted to stand, the acquittal 'might send a very unhelpful message to the profession - that law firms can fail in their obligations under the MLRs 2007 and get away without any regulatory sanction'.
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However in written submissions, Richard Coleman KC, for Dentons, said the tribunal’s approach did ‘not undermine the money laundering legislation, or send the wrong message to the profession, any more than the SRA’s own enforcement and reporting policy could be said to do the same’. He said that there was ‘no basis for the suggestion that the tribunal’s decision encourages non-compliance with the MLRs’.
‘The firm has not come out of the regulatory process unscathed. It is left with a published finding that it breached the 2007 MLRs, following a prolonged and costly regulatory process and a public hearing.’
Paul Ozin KC, for the SRA, raised the high profile rulings in Beckwith v SRA [2020], in which the court considered the application of the principle of integrity to a solicitor's private life, and SRA v Leigh Day [2018], in which the Divisional Court considered the relationship between rule breach and misconduct in the SRA's regime. Ozin argued Beckwith ‘is authority that the SDT should not ask itself, as a free-standing, additional or threshold question, whether any factual allegations they find proven are sufficiently serious to amount to ‘professional misconduct’.
‘Instead, the SDT’s function is to determine whether the 2011 Principles or the 2011 Code were breached. There is no additional or threshold requirement that such a breach is serious enough to amount to "professional misconduct"’.
He continued: ‘We would respectfully submit that Beckwith is of greater assistance in answering questions that your ladyship is enjoined to grapple with in this case because it directly addresses it, whether Leigh Day was dealing with if [the] language used amounted to such a challenge. In Beckwith there was such a challenge.’
Coleman, for Dentons, said ‘binding precedent, legal principle, the statutory framework and the SRA’s own guidance all support the tribunal’s approach’.
‘The short issue in the appeal is whether the tribunal was entitled to assess the seriousness, culpability and reprehensibility of the breach of the 2007 MLRs for the purposes of determining whether the allegations of breaches of Principle 7 of the SRA Principles 2011 and Outcome 7.5 of the SRA Code of Conduct 2011 should be upheld. The firm submits that it was.’
Coleman said: ‘The test to be applied was whether the breach was serious, reprehensible or culpable such that it amounted to professional misconduct. The tribunal did correctly direct itself in that. The SRA recognises not all breaches require regulatory action and sanction, only serious breaches do.’
He told the court that the SRA, in bringing allegations against Dentons, ‘did not follow its own guidance’.
Judgment was reserved.
