Court ordered the regulator to make a £200,000 interim payment after Dentons’ success in the AML misconduct dispute
The Solicitors Regulation Authority (SRA) has been ordered to pay 65% of Dentons’ costs after the Court of Appeal ruled in the law firm’s favour in a dispute over anti-money laundering (AML) misconduct.
In Dentons UK and Middle East LLP v Solicitors Regulation Authority Ltd, the Court of Appeal restored an earlier Solicitors Disciplinary Tribunal (SDT) finding that breaches of the Money Laundering Regulations do not automatically amount to professional misconduct.
The case arose from Dentons’ representation of a politically exposed person following its acquisition of Salans LLP’s London office in 2013. The SRA alleged the firm failed to conduct adequate source-of-funds and source-of-wealth checks under the 2007 Money Laundering Regulations.
The SDT found that while breaches had occurred, the conduct was not sufficiently serious or reprehensible to justify a finding of professional misconduct. The High Court later overturned that decision following an appeal by the SRA.
However, the Court of Appeal rejected the regulator’s argument that any breach of the regulations automatically constituted misconduct, holding instead that a seriousness threshold must still be met before disciplinary liability arises.
Following Dentons’ success in the appeal, the three judges concluded that the SRA should pay 65% of the firm’s costs in the High Court and Court of Appeal proceedings.
Dentons’ costs schedules showed the firm incurred total legal costs of £793,679.60 during the High Court and Court of Appeal proceedings, nearly four-and-a-half times higher than the SRA’s own costs of £179,837.67.
In their costs ruling, the judges said: “The matter was no doubt of considerable importance to Dentons, but the question of assessment of costs payable between litigants is not whether it was reasonable to Dentons to choose to instruct such expensive solicitors and counsel, but whether it is reasonable for the resulting cost to be imposed on the SRA.”
The court added: “Given the enormous amount of their costs for a matter that lasted a day in the High Court, and involved substantially a repeat of the same arguments at a hearing of less than two days in the Court of Appeal, a substantial discount is appropriate.”
Subject to detailed assessment if not agreed, the SRA was ordered to pay Dentons £515,891.74, with an interim payment of £200,000 due within 21 days.