The findings published by the Solicitors Regulation Authority (SRA) in relation to the agreement reached with leading law firm, Mishcon de Reya, on 20 December 2021 have been widely picked up today, 6 January, by the national press. Not a great start to the year for any reputable professional services business.

Law firms continue to struggle to bridge the gap between commerciality (offering services their clients are asking for) and meeting compliance standards. These standards are not only increasingly high, but notably they are also being increasingly enforced.   

What happened? 

According to the regulatory settlement agreement, Mishcon de Reya admitted a number of failings, all of which are related in one way or another to the anti-money laundering regulations (AML) set by the EU.  Some of the breaches, such as holding client money without doing related legal work, are UK-centric rules set by the SRA. But at their heart they are all essentially about having adequate systems and controls in place to spot potential criminals, and to know what to do if suspicions are reasonably aroused.

What to learn for lawyers?

These lessons are layered. First of all, for management it is vital to train people to have the tools and the ability to spot red flags. There must be a strong line of defence - a compliance team - and a culture of zero tolerance for illegal activities.  

For lawyers and staff not responsible for management, it is to take the role of being a professional so seriously that the questions of 'what am I really doing, for whom and why' cut through every engagement. Lawyers can be too client focused to take the time to ask these basic questions and all too often fail to engage with the systems and controls that do exist. 

Lawyers need to understand what they are being asked to do, by whom, and why.  If that doesn't stack up, press the alarm by talking to a peer, the MLRO and/or external advisors. The consequences of getting things wrong are increasingly grim.