A Solicitor Cover Up

A solicitor caught up in a fraudulent property transaction was cleared of dishonesty despite breaching the Money Laundering Regulations 2007 and subsequently trying to cover the matter up.

The case of Pemberton Greenish LLP v Henry [2017] concerned a claim brought by a firm of solicitors against one of its employed consultant solicitors.  

The consultant solicitor had unwittingly enabled a fraudulent property transaction whilst acting for one of the clients of Pemberton Greenish LLP. When the fraud came to light, the solicitor, upon reviewing her file, realised that she had not received the written authorisation permitting her to complete the property transaction.   She therefore decided to forge the client’s signatures and also deleted a number of emails created during the transaction.  

Pemberton Greenish discovered what had happened and reported the solicitor to the Solicitors Regulation Authority and to the police.  Following the police investigation, the solicitor accepted a caution for  an offence under the Forgery and Counterfeiting Act 1981.  The Solicitors Regulation Authority then commenced disciplinary proceedings against the solicitor. At the disciplinary hearing, the Solicitors Regulation Authority found that the solicitor had been dishonest and ordered that she be struck off the Roll of Solicitors.  

Pemberton Greenish then commenced proceedings against the solicitor in order to recover compensation from the solicitor. The claim was unsuccessful on the basis that prior to the detection of the fraud, the solicitor had had no reason to be suspicious about either the nature of the transaction or the circumstances giving rise to it.   The dishonesty came after the original fraud.  It was the fraud that gave rise to the losses, not the subsequent attempt at a cover up by the solicitor.  The dishonesty was a good basis for striking the solicitor off the Roll of Solicitors but there was no evidence that the solicitor was a knowing participant in the fraud and therefore responsible for the losses suffered by the firm.  

This was an unusual case where criminal, civil and regulatory issues converged.  Despite being penalised on the criminal and regulatory fronts, the solicitor managed to wriggle free of liability on the civil front.

This article features in the Hughes Paddison Property Disputes Update. View the newsletter here.