Compliance Update July 2026

Welcome to our quarter three risk and compliance update, bringing you the latest practical guidance and regulatory insights…

 

New rules and guidance from SRA

SRA Effective Supervision Guidance – updated post-Mazur

The SRA finally updated its Effective Supervision Guidance on 12 June following the Court of Appeal’s decision in Mazur (expanding it from 9 pages to 24). By way of a reminder, the Court of Appeal concluded that it is lawful for an unauthorised person to carry out work amounting to the ‘conduct of litigation’ under the Legal Services Act 2007 (LSA) as long as they are doing so ‘for and on behalf of an authorised individual’ under their genuine and effective supervision.  The detail of what effective supervision looks like was left to the SRA (and other legal regulators).  This updated guidance sets out the SRA’s position and expectations in relation to supervision generally but also providing much-needed clarity on the role of non-authorised staff and delegation of litigation tasks (including a helpful list of litigation-related work unlikely to fall within the definition of the ‘conduct of litigation’). It also includes practical examples of what effective (and ineffective) supervision looks like in practice.

Key points for firms to consider

• Effective Supervision is Mandatory: Whilst the catalyst for the update to the guidance was the Mazur judgment, and there is a much bigger focus on reserved legal activities, in particular the ‘conduct of litigation’, it also emphasises the requirement for effective supervision more generally in order to comply with the SRA standards and regulations.
• Adopt a Risk-Based Approach: There is no single model for supervision or for who can be a supervisor. The intensity and level of supervisor will depend on the complexity of the matter, whether it is a reserved legal activity under the LSA, the experience of the staff members involved, and the potential impact on the client if errors occur.
• Active Oversight Required: Supervisors must have sufficient contact with staff and effective knowledge of their cases. Work should be checked at various stages, not just the final product.
• Document everything! Firms are expected to record their rationale when designing supervision systems and delegation arrangements, as well as supervisors/ supervisees expected to keep records of supervision in action. Proportionate audit and quality assurance measures are also expected. (The starting point is usually a programme of internal file reviews.)
• Enforcement: The SRA will take enforcement action where the supervision arrangements are ineffective, including if it finds unauthorised persons are effectively taking responsibility for litigation while an authorised person is allocated in name only.

Recommended Action

Review your firm’s current delegation arrangements and supervision records to ensure they align with these expanded expectations, particularly those with teams of paralegals or non-authorised fee earners.  Read our full article on the updated guidance here.

Terminating a retainer

The SRA published a new guidance note on 14 May 2026 entitled, ‘Terminating a retainer’, with related case studies, providing practical advice to solicitors and firms to clarify the circumstances in which they may be entitled to terminate an existing client retainer.  It does not address the termination of a client retainer by the client themselves.

Whilst the question of whether a client retainer can be terminated is primarily a matter for the common law, the SRA also looks at it from a regulatory risk perspective. There must be a ‘good reason’, with the client being given ‘reasonable notice’ of the intention.  This new guidance sets out some examples of what a ‘good reason’ might be (with the two case studies focusing on failure to pay costs on account and failure to follow legal advice) and reminds us that ‘reasonable notice’ will depend on the circumstances, but an important consideration will be the period needed for the client to instruct a new solicitor.  The guidance is definitely worth a read as part of a review of your current policies and procedures in this space.

Use of AI to bypass identity checks

At the end of April, the SRA published a reminder to be aware of clients using AI to bypass identity checks. According to the National Economic Crime Centre (NECC), AI has been detected in various parts of the CDD process, including to manipulate or create identity documents and produce deepfakes to deceive liveness detection tests.

The SRA’s top tips are:

• Be aware of the risk posed by AI tools – deepfakes can be very convincing and very difficult to spot.
• Consider whether relying solely on video calls/ electronic due diligence to identify and verify your client is sensible.
• Explore software solutions to assist in detecting deepfakes. (We covered the Government’s guidance on the use of digital ID verification and the new DVS register in our blog in March)

And it’s not just identity checks that can be impacted by deepfakes. Payment diversion fraud has also been made significantly easier for criminals with the help of AI. See our April Compliance Update for our advice on how to try to combat this.

Guidance from the Law Society

Rights of audience

The Law Society updated its practice note on the exercise of rights of audience, a reserved legal activity under the Legal Services Act 2007 (LSA), on 26 May, covering who can appear before and address a court, reserved rights and exemptions, consequences of breaching the LSA and practical steps for firms to take.  Worth a read if this is relevant to your firm.

Hot topics

HMRC Tax Adviser Registration

HMRC’s digital tax adviser registration system went live on 18 May 2026, meaning firms who interact with HMRC about someone else’s tax affairs and get paid for it, are required to register with HMRC as a tax adviser, even if you do not see yourself as providing ‘tax advice’ in the usual sense.  ‘Interaction’ with HMRC includes contact by phone, post, email, via the HMRC website or app, as well as sending returns, claims or other documents or making payments to HMRC on behalf of clients.

HMRC published substantive guidance on who the regime applies to on 1 June (see here), confirming that conveyancers who submit SDLT returns or make payments to HMRC on behalf of clients, or interact with them about their clients’ SDLT (or any other tax related) liabilities will be caught by the new requirements.  But it is not just conveyancers who are caught – anyone dealing with HMRC in relation to other taxes, such as CGT or IHT, will also be impacted.

If you haven’t already taken steps to register, we recommend you do so asap as, from 18 August 2026, HMRC will not accept communications on a client’s behalf from anyone not registered with an Agent Services Account. See our full blog on the latest HMRC guidance here.

SRA – Importance of Ethics

Professional Ethics has been a hot topic for some time, prompted initially by the Post Office/ Horizon scandal and reinforced by the subsequent scandals surrounding Axiom Ince, SSB Law and PM Law. The SRA has come under significant pressure from the Legal Services Board (LSB) on the back of the latter scandals to take steps to strengthen lawyers’ ethical standards.  In response, the SRA published in tandem at the end of April, a blog on driving high ethical standards in the legal profession (which we summarised here) and a consultation into strengthening its continuing competence requirements, emphasising its concern that “many solicitors focus their learning and development on maintaining technical legal knowledge rather than the wider skills need to maintain competence”, namely ethics and keeping up to date with SRA Warning Notices and guidance. The main proposals in the consultation are:

• Mandatory training records.
• Mandatory annual ethics ‘discussions’/ training (at least 3 hours, with tight parameters around who can facilitate these discussions and how they can be run).
• Formal declarations from solicitors confirming compliance.
• Greater SRA powers to mandate training where concerns arise (for solicitors and non-solicitors alike).

Whilst many of the proposals make sense, the implications for law firms, particularly around the mechanics (and likely cost) of the annual ethics ‘discussions’ could be greater than they might appear at first blush.  The consultation is open until 15 July 2026 and firms are encouraged to get their thoughts in before possibly impractical solutions are set in stone. (The link to respond is here.) For further details of what the consultation means and what you can do, see our blog here.

Anti-money laundering, sanctions & financial crime

Amendments to the Money Laundering Regulations

Last summer we were all excited (well maybe not all of us!) by the promise of a “clearer and more proportionate AML regime”, with the government recognising AML checks as a major burden to law firms.  Following their consultation last September, the changes intended to relieve “unnecessary regulatory burdens” came into force on 30/6/26. Sadly, they are perhaps not as ground-breaking as some may have hoped, but here are the key changes impacting law firms (for full details about the changes see our blog post here):

• High-Risk third countries and Enhanced Due Diligence (EDD)
  The term ‘high-risk third country’ is replaced by ‘FATF call for action country’. Mandatory EDD (Regulation 33(3A)) now only applies to ‘black list’ countries (currently North Korea, Iran, and Myanmar). However, don’t fall into the trap of thinking you can ignore ‘grey list’ countries going forwards – do so at your peril!  Geographical risk factors must still be considered (Reg 33(6)(c)). Our advice: EDD should still be the default approach, albeit with some likely wriggle room in terms of the EDD steps you take.
  Action: update your Firm Wide Risk Assessment (FWRA) and AML policies and procedures to reflect this change, train staff, and ensure fee earners document their EDD/ reasoning if EDD is not carried out.
• Unusually complex and unusually large transactions
  The trigger for EDD in relation to transactions has been refined from ‘complex or unusually large’ to ‘unusually complex or unusually large in each case given the nature of the transaction’.  This allows firms to avoid automatic EDD for transactions that are complex but routine for their specific practice.
  Action: update your FWRA and AML policies and procedures to reflect this change, focusing on defining what constitutes ‘unusual’ for your business, and ensure fee earners document their reasoning for their determinations at matter level.
• Pooled Client Accounts (PCAs)
  The government’s intention was to make it easier for banks to provide organisations with PCAs. However, in so doing, the likelihood has significantly increased of banks requiring firms to provide information about the underlying beneficial owners (your clients) of the funds held in your client account.  How often banks will exercise this right is unclear but given the onus will be on them to justify a risk assessment of law firms (and other pooled client account holders), in order to protect themselves, it seems likely they will do so (although it is worth noting that the new rules are only meant to apply to newly created client accounts).  The regulations confirm that providing this information does not breach confidentiality, and legal professional privilege is explicitly protected.
  Action: consider how such requests from your bank will be assessed, documented and responded to, and check that your engagement terms refer to your obligation to provide CDD information about clients to your bank on request.
• Trusts Registration Service (TRS)
  The categories of trusts required to register beneficial ownership information with the TRS have been expanded; the categories of ‘relevant taxes’ that trigger trust registration have been amended to remove Stamp Duty Reserve Tax; and the category of excluded trusts (which do not have to be registered) has also been expanded to cover certain small, low risk trusts by way of a de minimis exemption.
  Action: If you advise on trust creation or administration, review the amended regulations in full, and update your client guidance and alert those now brought into scope of the TRS (or indeed taken out of scope) and ensure deadlines for registration are met.
• Trust & Company Service Providers (TCSPs)
  Firms providing services related to the sale of ‘off the shelf’ companies are now officially classified as TCSPs, triggering full Regulation 27 CDD requirements.
  Action: If you provide these services, update your FWRA and AML Policies and procedures accordingly, and train your staff.

For retainer clients, if you would like any assistance with updating your AML PCPs to reflect the amendments to the MLRs, please get in touch with your consultant. For anyone else, do reach out to discuss how we can help.

Financial Action Task Force (FATF) high risk countries

On the topic of high-risk countries, FATF updated it’s ‘grey list’ of ‘jurisdictions under increased monitoring’ on 19 June 2026 to add Bosnia and Herzegovina and Iraq, whilst it removed Algeria and Namibia.  As ever, remember to review your existing clients and matters and update/ carry out EDD as required by your AML policies and procedures, and don’t forget that just because a country is not listed on either of the FATF lists doesn’t mean they are not risky!  Using the Transparency International corruption perceptions index (here) is a useful tool to risk assess countries and consider whether EDD should be applied.

SRA AML & sanctions data collection exercise – July 2026

The SRA’s annual AML & sanctions data collection exercise opened on 29 June.  Firms have until 27 July to submit the questionnaire. COLPs should look out for an email from the SRA with the link to be able to do so.  Don’t leave it until the last minute to complete. Whilst the questionnaire may be familiar to many firms from previous years, it requires a significant amount of information to be collated.  Last year, regulatory action in the form of fixed penalty fines were levied against firms who were late (or failed) to complete the questionnaire on time.

A few key reminders:

• Check your mySRA login details and authentication app are working.
• Ensure an authorised role holder is available to submit the questionnaire.
• Even firms outside the scope of the Money Laundering Regulations may still be required to complete sanctions-related questions.
• Take the opportunity to ensure your AML and sanctions documentation, including your Firm Wide Risk Assessment, remains up to date.

AML supervision reforms – the move to the FCA – the next instalment!

The government’s response to its consultation focusing on the supervisory framework and additional powers the Financial Conduct Authority (FCA) will require in its expanded role as AML supervisor for professional services, including the legal sector, was published in June.  Whilst implementation is not expected until late 2028 at the earliest, it is worth being aware of what is coming. (For our details thoughts, see our blog here).

Key impacts for law firms

• FCA public register: All firms performing AML-regulated (in-scope) work must be registered.
• BOOMs and the ‘Fit and proper test’: All Beneficial owners, Officers, and Managers (BOOMs) will face a more rigorous ‘fit and proper’ test, allowing the FCA to assess integrity, competence, and compliance history, moving beyond the current focus on criminal records checks.
• Proactive Intervention Tools: The FCA will be equipped with an ‘intervention toolkit’, including the power to mandate ‘Skilled Person Reports’. These inspections are conducted by third parties (like accountants or lawyers) at the firm’s (often significant) expense.
• Privilege: The FCA will not be able to use its powers to require the disclosure of privileged documents but there are still a lot of routine AML documents the government does not see as privileged. Be ready for arguments about the definition of ‘privilege’!
• LSAG guidance: It looks like this will stay in one form or other with the government acknowledging the importance of practitioner-led guidance (“where practicable”). The FCA will take over approval responsibilities with HM Treasury (HMT) retaining a limited oversight and veto role.
• Enforcement: To address the fear of ‘double jeopardy’ (e.g. action by both the SRA and FCA in relation to the same thing), HMT has emphasised the need for coordinated enforcement action, but there is no detail about what this will look like yet.
• Regulatory Costs: Firms will fund the new regime through fees charged on a ‘full cost-recovery basis’. No further detail is provided and, so far, there is no confirmation of a corresponding reduction in existing regulator fees.
• Transition and supervisory coordination: There is a lot of talk about minimising additional regulatory burdens but no detail on what this means as yet.

What now?

• Maintain Current Standards: Do not “drop your AML guard”. The SRA are still watching and inspecting! Being prepared for the SRA will be a big help when it comes to being prepared for the FCA.
• Do what it says on the tin: Ensure that the practices described in your FWRA and AML policies are accurately reflected in daily operations and properly documented. (Think file reviews and independent audits).
• Refine Data Collection: The FCA is a data-driven regulator. Look at your data processes now. Can you easily distinguish between ‘in-scope’ and ‘out-of-scope’ work?
• Stay Engaged: Monitor forthcoming consultations regarding the transition roadmap and the specific fee structures to be implemented.

Source of funds – do you marry up accounts’ information?

Everyone knows the importance of carrying out source of funds checks in transactional work and the SRA’s expectations in this regard (nicely set out in their Source of Funds Thematic Review in November 2025), and whilst the SRA acknowledges that awareness of source of funds obligations has improved their statistics show that there is still quite a long way to go before firms are fully compliant with their obligations.

As part of the AML audits we conduct on a regular basis, one thing we have noticed (which correlates with the SRA’s findings) is that the final piece of the puzzle can often be overlooked.  Having asked your questions, made sense of the client’s story, reviewed their evidence in support, and reached your conclusion that you are happy to accept the funds and proceed with the transaction, are you checking that the funds which arrive in your client account are in fact the funds you expected (i.e. the funds/ accounts you have done your checks on)?  Ongoing monitoring obligations require firms to repeat checks where the source of funds change during the course of the transaction. Unless you are working with your accounts team to verify that the funds received marry up with expectations, how would you know if there has been a change?  What are your procedures for working collaboratively with your accounts team?

UKFIU SARs reporter booklet

The UK Financial Intelligence Unit (UKFIU) (part of the National Crime Agency (NCA))’s SARs reporter booklet published roughly every quarter is a useful read if you need a reminder as to why Suspicious Activity Reports (SARs) are so important (even if you sometimes feel you are sending them into a void).  The latest one, published in June, reminds us that SARs are a critical intelligence resource and have been instrumental in identifying sex offenders, fraud victims, murder suspects, missing persons, people traffickers, fugitives and terrorist financing.  It includes case studies setting out the sorts of red flags you might come across when conducting your source of funds/ wealth checks, which are worth a read.

FCA report on sanctions systems and controls

In June, the SRA posted about the FCA’s report (published on 28/5/26) into financial services firms’ systems and controls for financial and trade sanctions. They highlighted it as it contains useful and relevant information for law firms with examples of good and poor practice. The key points the SRA focused on are:

• Sanctions are not just about Russia! There are an increasing number relating to Iran and North Korea.
• Prompt reporting needs to improve. The Office of Financial Sanctions Implementation (OFSI) take this very seriously.
• Ensure staff understand what the sanctions-screening outputs are telling them and who is responsible for ongoing monitoring.
• Fuzzy logic searches can prevent failing to identify sanctioned individuals where different spellings/ alphabets can cause problems.
• Sanctions training, together with stress-testing systems is vital.

The full FCA report can be found here.

Sanctions breaches – hefty penalties dished out

It is always worth remembering that sanctions breaches are viewed dimly by the government and two recent cases provide a timely reminder, including the importance of prompt self-reporting.  Whilst neither of the companies involved are law firms, it shows a direction of travel which is worth remembering when considering your sanctions policies and procedures.

The first is the largest ever fine by OFSI of £1,000,920.59 imposed on a UK-registered company, Sabre Global Technologies Ltd, for making funds and economic resources available to a designated person between May and December 2022, and circumventing prohibitions by seeking to find alternative payment routes to avoid the sanctions known to be in place.  This massive fine took into account the company’s voluntary disclosure of the breaches and subsequent cooperation with OFSI with a 20% discount applied.

The second is small in comparison, with a fine (well actually an agreed settlement sum known as a ‘compound settlement’) of only £569,157 😬, this time by HMRC in relation to another UK-registered company, Petrofac Facilities Management Ltd (PFML), for breaching trade sanctions. PFML made sanctioned industrial goods available to and provided technical assistance in respect of the goods to a person connected to Russia while they were winding down their operations in Russia in 2022 and 2023.  PFML has the dubious honour of being the first company to be publicly named by HMRC for accepting such a penalty.

US and UK sanctions regimes – compared

If you deal with both UK and US sanctions, OFSI and the US’s Department of the Treasury’s Office of Foreign Assets Control (OFAC) have joined forces to create a ‘Comparative Overview’ to assist the private sector in understanding its obligations under both their respective sanctions regimes, comparing key aspects of both regimes and highlighting similarities and differences.  Sanctions is very much a specialist legal area, but this is a good starting point for a general overview.

Law firm management

SRA plans to protect client money

The SRA is going ahead with its plans to “strengthen protections around client money” following its consultation earlier this year. Although the proposals are still subject to the approval of the Legal Services Board (LSB) (which the SRA can’t take for granted given the LSB’s refusal to agree the SRA’s proposed complaints-handling rule changes in January), it is likely that we will see these in place by early next year.  In summary, the main changes are:

• Accountants’ reports: All firms required to obtain annual accountants’ reports (see Rule 12.2 SRA Accounts Rules) will be required to submit it to the SRA – a change from the existing rule whereby submission to the SRA only applies if the report is ‘qualified’.
• Separation of roles: Firms with a turnover of more than £600,000 or holding more than £2m of client money (at any point in the most recent reporting period) will no longer be able to have one person who can “unilaterally determine or direct significant management decisions” (i.e. managing partner or most equity partners/ LLP members, depending on their decision-making powers) also holding the roles of COLP or COFA. All three roles will have to be held by different people, unless the partial exemption for smaller sole owner-manager firms applies.

For further details, see our full blog post here.

Law firm mergers, acquisitions & sales – SRA consultation

Yup! Yet another SRA consultation – it’s getting difficult to keep up!  Still on the subject of protecting client money, and part of the SRA’s Consumer Protection Review launched in February 2024, this one relates to the SRA’s proposals to require law firms to notify them (note: not seek approval) in advance (probably at the heads of term stage, or equivalent) of any planned law firm sale, merger or acquisition, with fixed penalties applied to those who fail to comply.  (Currently, the only reporting obligations in this space are to notify the SRA within 28 days if a firm is closing as a result of a merger or acquisition or if the merger results in new owners.)

It is easy to see where this has come from, following the eye-watering amounts of client money lost by so-called ‘accumulator firms’ such as Axiom Ince and PM Law in recent years.  Knowing about these plans in advance will hopefully help the SRA to carry out suitable risk assessments (subject to having the people-power to do so) and take appropriate action to prevent harm if necessary.  Hopefully a case of shutting the stable door before the horse has bolted🐎.

Separately, the consultation proposes to require firms to notify the SRA within 28 days of starting to receive or hold client money (when they haven’t done previously), rather than the current position where notification of such a change is only required during the annual renewal process.

The consultation closes on 17 August so if you wish to be part of the decision-making, make sure you get your comments in on time. The link to respond is here.

SRA and Whistleblowers

The SRA has been designated as a prescribed person under the Public Interest Disclosure Act 1998, meaning that anyone who works for or with an SRA-regulated individual or firm, will be protected when making a report to the SRA where they ‘reasonably believe’ they are acting in the public interest.  The SRA’s hope is that this will encourage more people to come forward if they have any concerns about potential misconduct.

Data protection complaints

From 19 June firms have been required to have a statutory complaints handling framework in place for data protection complaints as introduced by the Data (Use and Access) Act 2025 (DUAA). The right for individuals to complain directly to the Information Commissioner’s Office (ICO) (soon to become the “Information Commission” (IC)) remains, but the idea behind the legislation is to provide a formal route for internal complaints before escalating to the ICO (to reduce the burden on the ICO).  Many firms probably already do this under their existing complaints policies but something more formal is now expected.

The new law requires organisations to:

• give people a way of making data protection complaints to you;
• acknowledge receipt of complaints within 30 days of receiving them;
• without undue delay, take appropriate steps to respond to complaints, including making appropriate enquiries, and keep people informed; and
• without undue delay, tell people the outcome of their complaints.

Further information can be found on the ICO website here. Retainer clients will already have received our updated template documents to address these requirements, but do reach out if you need any assistance.

Legal Ombudsman (LeO) Consultation

Now LeO is at it too….another consultation!  Who has time for the day job with all these consultations to digest and respond to?🤦‍♀️

This consultation opened on 10 June and closes on 2 September 2026, focusing (ostensibly) on trying to reduce LeO’s workload. We have been hearing a lot about the significantly increasing volume of complaints for months and LeO’s inability to cope with them. The proposal (at least in the short term) appears to be to make law firms pay. Under the current system, a £400 case fee is charged to firms when a complaint goes against them when they could have done more to resolve it themselves (at the first-tier complaint level).  The consultation proposes that all cases dealt with by LeO will incur a case fee, increasing depending on when the complaint is resolved throughout the process (£200 early resolution; £750 after LeO investigation; £1,500 after a final decision by LeO), unless it is resolved in the firm’s favour (or dismissed) and LeO is satisfied that the firm took all reasonable steps to resolve the complaint at first-tier level.

Other proposals include:

• firms being charged an additional £400 fee where they are found not to have issued a final response within 8 weeks of the complaint being made (irrespective of whether or not the complaint is upheld)
• unacceptable behaviour from a firm/ lawyer in their dealings with LeO will be treated as a conduct issue and referred to their regulator
• all LeO final decisions will be considered for publication on their website
• amendments to the Scheme Rules designed to support clearer expectations for LeO’s customers, more proportionate decision-making, and more efficient resolution of cases.

If you wish to be part of the conversation, don’t forget to respond to the consultation which you can do online here: https://forms.cloud.microsoft/e/9DGu0p815X or by emailing: consultations@legalombudsman.org.uk

LeO and how to avoid conveyancing complaints

On the subject of complaints, given that conveyancing complaints (according to LeO) accounted for 36% of accepted complaints in Q3 2025/26, LeO’s ‘Spotlight on: Residential Conveyancing’ is worth a read for firms providing such services. It looks at where complaints most often arise – issues with communication, unclear or unrealistic expectations, and unexplained delays – which, in LeO’s experience, tend to cluster around “three critical junctures”: Instruction and early expectation setting; Managing ‘no news’ periods; Completion and closing communication. The guidance also includes case studies for firms to learn “from real experiences”.

 

Tribunal trends and cases of interest

When solicitors slip up… big and small-time

 

 

• The SDT has fined a solicitor and his law firm £4,500 after they failed to comply with the SRA’s transparency rules for around two years, despite repeated regulatory intervention. The tribunal found the misconduct damaged the reputation of the profession, highlighting the solicitor’s lack of engagement with the SRA rather than any client harm. Although he cited financial pressures, limited technical expertise and post-pandemic challenges, the SDT ruled these did not excuse prolonged non-compliance. The firm was also ordered to pay £15,000 in costs.
• A personal injury solicitor has been suspended for 18 months after abandoning his firm while struggling with health issues and addiction, leaving an unqualified office manager to run the practice. Client money was misused to keep the firm operating, causing a £161,800 shortage. The SDT found he acted without integrity and imposed conditions on any future return to practice.
• A senior City partner has been suspended for two years after instructing a client to destroy evidence subject to a High Court search order. The SDT described his actions as a “spontaneous act of colossal stupidity”, rather than a conspiracy, but found they undermined the administration of justice and public confidence in the profession.
• A law firm owner has received a 12-month suspension, suspended for two years, after the SDT found he bullied and harassed five junior female colleagues. His misconduct included intimidation, inappropriate comments and sexually motivated behaviour towards an intern. He was also barred from recruitment and disciplinary roles for two years.
• A South London law firm has been rebuked by the SRA after failing to comply with a property transaction undertaking for almost two and a half years. Despite citing unforeseen circumstances, the delay had a significant impact on the purchasers. The firm eventually resolved the issue, cooperated with the SRA’s investigation, and was ordered to pay £1,350 in costs.
• A senior associate solicitor has been struck off after misleading clients and colleagues for months to conceal his failure to meet an appeal deadline. He created and backdated documents and emails to cover up the mistake before eventually admitting the deception. The SDT approved the agreed outcome, and he was ordered to pay almost £17,000 in costs.
• Two solicitors have become the first to face SRA disciplinary proceedings linked to the Post Office Horizon scandal. One is accused of failing to cooperate with the public inquiry, while the other faces allegations relating to client care, costs, confidentiality and inappropriate correspondence. The allegations remain unproven and will be determined by the Solicitors Disciplinary Tribunal.
• A law firm owner has been fined £15,000 and ordered to pay £20,000 in costs after admitting multiple Accounts Rules breaches, including providing misleading estate accounts and mishandling client money. The SDT increased the proposed penalty due to the seriousness of the misconduct and the solicitor’s disciplinary history. He was also made subject to seven years of practising restrictions.
• Artificial Intelligence hallucinations are in the legal press again, this time concerning international firm, Pinsent Masons. A judge in the Insolvency and Companies Court concluded that the firm had misled the court twice: once by providing case references made up by AI and then again by using AI to produce an explanatory letter that still misapplied the law.  Pinsent Masons has referred itself to the SRA following the judge’s comments and an investigation is underway.  The judge made the following observation: ‘AI has the potential to be wholly unreliable. AI may of course provide a jumping off point for research and legal reasoning but it does not, at least at present, do away with the need for proper research and thought on the part of a legal professional, even a very junior legal professional.’ And commented that the junior solicitor at the heart of the case seemed “to have almost entirely outsourced the thinking process to the program”. This case provides another warning about the perils of relying on AI without checking its output carefully.