Two solicitors, Mr. Zachariah Reynolds and Ms. Alexa Kordowicz, have faced significant fines totalling over £30,000 for their failure to adequately manage conflicts of interest and act in their clients’ best interests.
The case primarily revolves around two transactions involving a property developer known as Mr. A, and an estranged couple, Mr. B and Ms. C. Mr. A had maintained a client relationship with the firm since 2016 and was related to Mr. B by marriage. In the first transaction, the solicitors facilitated a £112,500 loan agreement secured by a property jointly owned by Mr. B and Ms. C. This transaction was intended to benefit Mr. A and his business. However, the file lacked clear instructions from Mr. B and Ms. C, and there was no recorded authority allowing Mr. A or a broker to instruct the firm on their behalf.
The Solicitors Regulation Authority (SRA) highlighted a lack of evidence indicating that the loan agreement was in Mr. B and Ms. C’s best interests, considering the risk to their property if Mr. A defaulted. Furthermore, no client-care letter was documented. Despite not being the direct clients, Mr. Reynolds was reasonably expected to consider Mr. B and Ms. C’s interests, a duty he failed to meet.
In a separate matter, Mr. Reynolds alone managed another loan transaction for £50,000, again associated with Mr. A, with similar shortcomings in addressing the interests of the estranged couple. Although independent advice was obtained for them, Mr. Reynolds acknowledged that advice from a different firm would have been more appropriate.
Ms. Kordowicz’s penalties arose from a separate 2016 transaction for Mr. A, where she failed to verify the source of funds for a property purchase. Despite this, she followed Mr. Reynolds’ approach, acknowledging her subordinate experience at the time.
The SRA’s fining guidance resulted in a fine of 16% of Mr. Reynolds’ gross income, adjusted to £21,287, reflecting his cooperation and remorse. Ms. Kordowicz was fined 11% of her gross income, reduced to £9,359 under similar mitigating circumstances.
Mr. Reynolds expressed regret over the breaches and has implemented changes to ensure clearer client instructions and consideration of potential conflicts of interest. His firm now requires advanced review of any instruction posing a conflict risk.
The fines underscore the critical importance of managing conflicts of interest and safeguarding client interests within legal practices. Both solicitors have taken steps to amend their practices, illustrating the necessity of adherence to professional standards in the legal sector.
