Case study: Vetting law firm employees

January 2014

These case studies demonstrate how failure to manage the key risks can lead to a negative impact on the regulatory objectives. Names and other details have been changed to protect identities, but the overall narratives of the case studies reflect real events.

Scenario 1: Lack of screening leads to multiple conduct issues

Mr Smith practised as the principal solicitor of A. Smith & Co. In 2009, the firm laterally hired a partner, Mrs Green, who had twenty years' experience in immigration work. The firm did not ask Mrs Green to sign a contract of employment, and Mr Smith failed to obtain any evidence of Mrs Green's credentials before employing her.

Shortly after Mrs Green started working for A. Smith & Co, an employee of the firm carried out an internet search on her. He discovered that, three years previously, Mrs Green had been suspended from practice for five years. When Mr Smith was informed of this, he confronted Mrs Green about the matter. Mrs Green initially denied the charge but, when challenged with the evidence, admitted that it was true. However, the firm continued to employ Mrs Green.

Over the next few months Mr Smith became dissatisfied with Mrs Green as she would often miss appointments with clients. Many of these clients claimed that they had made payments to Mrs Green, but the sums they indicated were significantly greater than those recorded in the accounts. In addition to this, a number of clients raised concerns about the lack of progress made on their cases. This led to a second confrontation with Mrs Green, and Mr Smith decided to terminate her employment with the firm.

The firm notified the SRA about the misappropriation of client money and the SRA visited the firm to conduct an investigation. During the investigation, the SRA examined a number of conveyancing transactions that were unrelated to Mrs Green. The transactions displayed multiple breaches of the Council of Mortgage Lenders' Handbook and the Solicitors Code of Conduct 2007, and disregard to the Law Society's guidance on Mortgage Fraud.

All of these transactions had been conducted by Mr Mayer, an unadmitted person who had been with the firm for five years, under the supervision of Mr Smith. Further investigation by the SRA revealed that Mr Mayer had been dismissed by the law firm he had previously worked for due to similar misconduct issues. Mr Smith had not been aware of this as he had again failed to complete any pre-employment checks.

The case was brought before the SDT where all the allegations were upheld. The Tribunal found that Mr Smith had shown a severe lack of duty in the running of his practice, particularly in regard to the manner in which he hired and supervised staff. His lax recruitment and supervisory practices had allowed his staff to take advantage of vulnerable clients and place them and their funds at risk.

Mr Smith was ordered to pay costs, was suspended from practising for a set period, and conditions were placed on his practising certificate to prevent him from working at any firm without approval from the SRA.

Scenario 2: Bogus solicitor hired through legal recruitment agency

Mr Grey completed his training contract in 2008 but did not complete the admissions process. As such, he was never admitted to the Roll and consequently did not have the right to claim to be or act as a solicitor.

Mr Grey sought employment through a legal recruitment agency. He posed as a qualified solicitor and falsified details of his employment history on his Curriculum Vitae (CV). The public body, Greenfeld, subsequently hired him as a solicitor. The decision to offer Mr Grey an offer of employment was made on the basis of the qualifications and the extensive experience cited on his CV. Greenfeld omitted to carry out any checks to confirm the authenticity of Mr Grey's CV, with the implicit assumption that the recruitment agency had completed this.

Mr Grey proceeded to carry out legal work for Greenfeld, which involved working extensively with vulnerable clients. This continued for almost six months, during which period Mr Grey’s employer became increasingly suspicious of him. This was partly due to the poor quality of the work he produced. In response to their concerns about him, Greenfeld decided to ask both Mr Grey and the recruitment agency for a copy of his practising certificate. This brought to light the fact that Mr Grey was not an admitted solicitor, and resulted in his dismissal from Greenfeld.

Mr Grey then went on to seek employment with another public body by again claiming to be a qualified and experienced solicitor. However, he proved unsuccessful as Greenfeld had circulated an alert to notify a number of public bodies of Mr Grey's misconduct.

The matter came to the attention of the SRA via a series of reports raising concerns about Mr Grey’s status and competence as a solicitor. The SRA conducted an investigation and discovered that Mr Grey had acted as a solicitor on fifteen occasions, in violation of s.1 of the Solicitors Act 1974. As a consequence, the SRA instigated criminal proceedings against Mr Grey.

Mr Grey admitted to all the charges brought against him. The judge commented that "custody was an inevitable starting point for this type of offence", and Mr Grey was sentenced to several prison terms relating to the different offences, amounting to several years.

Scenario 3: Top firms fail to screen litigator

In the year 2001 Mr Layton, an ambitious litigator, exaggerated his academic and professional qualifications on his Curriculum Vitae (CV) to boost his career prospects. This proved to be a successful strategy and, over the next eight years, Mr Layton secured employment in a number of prestigious roles.

Throughout this period My Layton worked in at least five medium to large reputable firms, not one of which had carried out due diligence prior to recruiting him. This allowed him to continue his deception for so long.

Mr Layton was employed by the firm Sample & Co. When his dishonesty was discovered. He had been with Sample & Co for approximately one year, during which time he had played a key role in directing the firm’s strategy. As with previous roles, his likeable personality and competence in the law averted any suspicions and ensured that his employer failed to carry out any checks to verify his credentials.

In 2009, Mr Layton decided to seek a new role with the firm Kaid Law. This proved to be his downfall as Kaid Law had a robust recruitment policy which mandated that pre-employment due diligence checks were carried out on all new recruits. As a consequence, the firm finally discovered Mr Layton's dishonesty and he was reported to his regulator.

The regulator successfully brought disciplinary proceedings against Mr Layton and he was suspended from practice for a number of years.

Mr Layton was not found to have caused any detriment to any of the firms that had employed him. However, it is important to note that he had held roles of significant responsibility and this had presented him with opportunities to cause a negative impact to these firms and their clients. Furthermore, his dishonest and discreditable actions have direct implications on the public's confidence in the legal profession.

This case demonstrates that poor recruitment policies are by no means limited to small firms. It highlights the need for all firms to check out their employees before entering into any contracts.