By Gabriel Princewill-
The Solicitors Regulation Authority (SRA) has began conducting spot checks on law firms to ensure they are complying with the sanctions imposed on Russian individuals, companies and ships.
The SRA is acting in response to allegations that British firms are helping individuals included on the sanctions list negate the punitive measures and undermine the collective will of the British parliament.
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The British government joined over a dozen other countries in imposing wide ranging punitive measures against the Russian regime and all its enablers or potential enablers, after the country under the leadership of Vladimir Putin, unilaterally decided to invade Ukraine.
The move comes in response to inquiries by Mps in relation to questions about the measures being taken to investigate and penalize law firms that may seek to enrichen themselves by taking up cases in defense of Russian oligarchs singled out for sanctioning by the Uk government.
Chief Executive Officer of the SRA, Paul Philip said that the SRA has started visits involving a sample of firms to assess their compliance with financial sanctions.
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Philip said: ‘We expect that this will continue to get significant attention in the coming weeks with further announcements from government expected on economic crime legislation and the sanctions regime.’
The SRA admitted there will extra costs for this work which will need to be covered in this and next year’s budgets. The main costs will be in setting up a system to check firms’ clients against the financial sanctions list.
It has also warned firms to ensure their duties to clients do not override their public interest obligations given concerns over so-called SLAPP suits – strategic litigation against public participation.
Updating its position on Russian sanctions, the regulator said firms must have policies in place to ensure compliance with sanctions legislation and carrying out regular checks of sanctions lists, given how quickly they were being updated at the moment.
“If your firm is using an electronic verification system for customer due diligence and sanctions checks, check they are refreshing sanctions lists with sufficient frequency,” it added.
The SRA said it was now “commencing a process of spot checks on firms to assess compliance with the financial sanctions regime”.
Under its new mission, firms will be targeted on a risk basis, drawn from a combination of its own data and other intelligence. This would give the SRA access to a list of their clients, aiding the regulator to identify those that have been sanctioned by the government.
The SRA says it has received questioned from solicitors under its jurisdiction, seeking to know whether they are prohibited from representing Russians
The SRA said: “The rule of law and our legal system provides that there is a right to legal advice and representation for all. However, you must ensure that proceedings are pursued properly and that their duties to your client don’t override their public interest obligations and duties to the court.
“That means not bringing excessive or oppressive proceedings; or mislead or take advantage of others.”
“We recognise that many firms will wish to review their client lists and consider who they feel comfortable acting for,” it said.
“When it comes to terminating an existing retainer, you will need to consider your position in contract law: case law dictates that you should not do so ‘without good reason’.
“Each case will be different. For example, it could be a good reason for withdrawing services if the firm felt there were risks in continuing to do so, for example, around money laundering.”
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