SDT: Solicitor failed to provide effective scrutiny
A solicitor who signed an inaccurate declaration that her law firm held £1m in its client account, triggering the release of a £1m Covid loan to a client, has been fined £15,000.
The Solicitors Disciplinary Tribunal (SDT) said Asiya Nasim Kaleem’s “pusillanimity” in failing to challenge her non-lawyer supervisor’s assurance that she could sign it amounted to a serious lack of integrity.
Ms Kaleem, who qualified in 2016, was at the time head of litigation at Sheffield firm Alison Law Solicitors and also its compliance officer for legal practice.
The Future Fund (FF) was a government loan scheme designed to support UK-based companies facing financing difficulties due to Covid-19.
To qualify, a borrower had to demonstrate that a third-party investor would match the funding applied for. The investor had to transfer the money to a solicitor’s client account before the loan would be transferred, and the solicitor had to sign a declaration acknowledging that they were holding the funds under irrevocable instruction from the investor.
Client A, the owner of Company A, instructed Alison Law in January 2021 in relation to a £1m FF loan and Ms Kaleem signed the declaration when the firm had not in fact received the investor funds.
Company A, the FF and the investor finalised a convertible loan agreement and the FF released £1m to Alison Law, which transferred the money to Company A. Under the scheme, the investor funds were then to be forwarded to the borrower too.
When the FF realised that the law firm was not holding the investor’s funds, it threatened to cancel the agreement and sent a termination letter.
However, the FF then agreed to give Company A an extension of time and Alison Law received the investor’s funds at the end of March 2021. The FF agreed not to cancel the agreement.
Ms Kaleem said the error was an “genuine mistake” – the investor had put £1m into Company A back in 2017 and she did not appreciate that the money needed to be in the firm’s client account for the loan.
She said she discussed the matter with her supervisor – a non-lawyer owner and partner of the firm – and “received his assurance that she could sign the declaration” on this basis.
The SDT said it was “abundantly clear” from the wording of the declaration that there had to be £1m in client account, meaning her actions damaged trust in the profession.
However, as Ms Kaleem accepted her supervisor’s explanation and “genuinely believed” she could sign the declaration, it could not be satisfied that her conduct was dishonest or reckless.
But the SDT concluded, and Ms Kaleem agreed, that accepting the supervisor’s explanation demonstrated a lack of integrity.
“In particular, as a solicitor, she was required to subject her supervisor’s explanation to scrutiny and could not simply accept it at face value. This was especially important in this case, due to the FF’s requirement for a solicitor’s undertaking to release £1m of public money and complete the transaction.”
Ms Kaleem “entirely failed” to provide effective scrutiny: “It should have been apparent to her that she could not accept her supervisor’s explanation at face value: he was not a solicitor, while she was a solicitor and head of civil litigation.
“[Her] pusillanimity here amounted to a serious lack of integrity.”
The tribunal said her conduct “could be seen as tantamount to a breach of a position of trust because the declaration was to be signed by a solicitor which implied that she would have carried out relevant checks”.
Although the harm caused was “entirely unintentional”, the tribunal was of the view that it “should have been foreseen”.
The SDT fined Ms Kaleem £15,000, and imposed restrictions on her practising certificate for two years that prevent her from being a sole practitioner, freelance solicitor, working for unregulated firm, being a partner in a law firm or a compliance officer. She was also banned from holding client money or being a signatory on client account.
The solicitor was ordered to pay £25,000 in costs as well.
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