Sheila Kirkwood, a founding member of Lawyers for Yes. AN EMPLOYEE of the Law Society of Scotland who sat on a committee considering the case of a solicitor linked to SNP MP Michelle Thomson’s property dealings - was also a leading pro-independence activist.
And, papers reporting brief details of the meeting feature no declarations of interest by Kirkwood or any other members of the Committee which then decided to refer the matter to prosecutors.
Sheila Kirkwood, secretary of the same Guarantee Fund Sub-Committee which eventually took the decision to refer the matter of Christopher Hales to the Crown Office in July 2015 – four years after the event – has since been identified as a founding member of Lawyers for Yes – a pro-independence group set up ahead of the Scottish independence referendum held last September 2014.
Kirkwood also endorsed Michelle Thomson on her Facebook page.
Within the minute of the meeting in which Kirkwood was present as secretary of the Guarantee Fund Sub-Committee, there is no mention of any declarations of interests by members of the committee - including Kirkwood.
Facing calls to explain a significant & potential conflict of interest, Lorna Jack, Chief Executive of the Law Society of Scotland, said she was “confident there was no conflict of interest”.
Chief Executive of the Law Society of Scotland, Lorna Jack, issued the following statement at a press conference held at 3.15pm, 1 October 2015:
“The Law Society’s number one regulatory priority is to protect the public from any wrong doing by solicitors. As I have previously commented, following a routine inspection of the accounts of law firm Grigor Hales of Gorgie Road, Edinburgh in July 2011, we believed Christopher Hales had not met the required standards of professional conduct.
“We therefore took action to protect the public by suspending Mr Hale’s practising certificate in September 2011. There is a duty on us as a regulator to report suspicious activity quickly to the appropriate authorities. Such reports and timings or information about the report are confidential by law.
“I want to stress that Law Society employee Sheila Kirkwood has not acted unprofessionally or inappropriately at any time. Sheila is a hard-working, dedicated colleague. She had no involvement in taking papers on the Christopher Hales case to the Law Society Guarantee Fund sub-committee and in no way delayed these papers being taken to the committee. Sheila’s role as secretary to the committee is to write the minute.
“The names of Christopher Hales’s clients were not included in any Law Society papers that Sheila handled. The first time Sheila realised Michelle Thomson was involved in the Christopher Hales case was from recent media reports.
“Sheila is entitled to her personal political views. The Law Society is a non-partisan organisation. However, we do not stop our staff from holding or expressing their own views in their personal lives. People in Scotland are legally entitled to express their personal opinions.”
“I am confident there was no conflict of interest in relation to Sheila’s role at the Law Society.”
However – Lorna Jack could not explain why the minute of the meeting released by the Law Society (published below) contains no recusal or declaration of interest of those in attendance.
Minute of Meeting of the Guarantee Fund Society of Scotland held at 26 2 July 2015 at 9.30am
GRIGOR HALES, EDINBURGH - 20732
Date Considered 2 July 2015
Sub-Committee Members Present 6 solicitors; 5 non-solicitors
Papers considered by Sub-Committee None. This matter was the subject of a verbal report.
The Sub Committee reminded itself that it had previously withdrawn the Practising Certificate of Mr Christopher Hales and that he had subsequently been struck off by the Scottish Solicitors Discipline Tribunal (SSDT). Mr Hales had been the sole partner at the firm which had also ceased. The Sub Committee were asked to consider whether comments made by the SSDT justified a referral of the matter by the Law Society of Scotland to the Crown Office.
Sub Committee's Deliberations
It was noted that the SSDT decision states that "Mr Hales must have been aware that there was a possibility that he was facilitating mortgage fraud" and that "it must have been glaringly obvious to the Respondent that something was amiss when cash backs of £27,000 or £28,000 from the seller to the purchaser were involved".
Sub Committee's Decision
The Sub Committee decided that given the statements made by the SSDT following a complaint arising from a Financial Compliance inspection, that the matter should be referred to the Crown Office for investigation.
To refer the above matter to the Crown Office for investigation
The Guardian newspaper reported: The row over the official handling of the case deepened further after the Law Society confirmed that its head of investigations, Ian Messer, had received a detailed report from the Scottish Solicitors’ Discipline Tribunal (SSDT) naming Thomson, her husband Peter and Thomson’s business partner Frank Gilbride in July 2014.
Messer first informally told the Crown Office in December 2014 that Hales had been struck off by the SSDT for suspected mortgage fraud, during a routine quarterly meeting between the two organisations. Crown Office lawyers asked Messer to provide them with detailed case files but failed to get them.
At the next meeting on 28 April 2015 – a week before Thomson was elected as MP for Edinburgh West – the Crown Office asked again for the Hales case files. They were not submitted to the Crown Office until 3 July 2015; six days later, the Crown Office alerted fraud officers at Police Scotland, who launched a formal investigation.
Those fresh details emerged when the Law Society’s chief executive, Lorna Jack, took the unusual step of arranging a hurried press conference to defend her organisation’s handling of the affair, and the conduct of Sheila Kirkwood, who is secretary to the society guarantee fund sub-committee which handled the Hales case but had delayed handing the papers over to the Crown Office.
It emerged that Kirkwood was, with her husband and fellow solicitor Paul Kirkwood, a founder of the pro-independence campaign Lawyers for Yes, and as an active nationalist had attended dinners for Thomson’s pro-independence campaign Business for Scotland. Kirkwood had also “liked” Thomson on her Facebook page.
Jack insisted that Kirkwood had had no direct say over the Law Society’s handling of the case against Hales, but she admitted that no independent investigation had yet taken place into whether Kirkwood was aware that Thomson was linked to Hales’s property dealings.
Jack said she had taken Kirkwood at her word that she first became aware of that link when Thomson was named in the media earlier in September.
“I want to stress that Law Society employee Sheila Kirkwood has not acted unprofessionally or inappropriately at any time,” Jack said. “Shelia is a hard-working, dedicated colleague. [I] am confident there was no conflict of interest in relation to Sheila’s role at the Law Society.”
Although it took until July 2015 before the Crown Office and police were handed the case files against Hales, Jack confirmed that the Law Society first became alerted to Hales’s mortgage dealings with Thomson in July 2011 during a routine inspection of his firm’s books.
He was suspended in September 2011 “to protect the public”, she said. “The Law Society’s No 1 regulatory priority is to protect the public from any wrongdoing by solicitors,” she added.
Jack implied too that the Law Society would also have alerted the police to any suspicions because of its legal duties under the Proceeds of Crime Act, but she repeatedly refused to elaborate on whether and when that had been done with the Hales case.
“Under the Proceeds of Crime Act, there is a duty on us as a regulator to report suspicious activity quickly to the appropriate authorities. Such reports and timings or information about the report are confidential by law,” she said.
The “Guarantee Fund” of the Law Society of Scotland is possibly one of the murkiest self protection mechanisms operated by the legal profession’s in-house self regulator.
The Guarantee Fund is tasked with paying out compensation to victims of corrupt or rogue solicitors.
However, the Guarantee Fund has racked up numerous accusations of obstructive tactics and deliberate falsification of facts to prevent financially ruined clients securing full compensation for their losses to rogue Scottish solicitors.
Claims against the Guarantee Fund are known to be in the millions of pounds annually.
Shockingly, the percentage of compensation eventually secured as a payment from the fund where some cases can take 5-10 years to be heard - can be as little as 5% to 10% of a client’s total financial losses to rogue solicitors.
The ‘aims’ and functions of the Guarantee Fund sub-Committee as claimed by the Law Society of Scotland, but rarely fulfilled in reality, are:
oversee the fulfilment of the statutory obligations of the Law Society of Scotland regarding the Guarantee Fund and financial compliance
ensure that risks to the Guarantee Fund are managed to an agreed and acceptable level
ensure that Guarantee Fund operations are in accordance with stated Guarantee Fund policy
protect the Guarantee Fund, the profession and the public interest by dealing properly and promptly with significant cases of non-compliance with accepted financial compliance standards (eg accounts rules/money laundering regulations)
influence strategic developments regarding financial compliance and the Guarantee Fund to ensure that processes remain up to date and fit for purpose
enable effective communications with the profession, public and other stakeholders regarding financial compliance standards and Guarantee Fund claims
benefit the Guarantee Find/financial compliance processes by acting as a source of expertise on relevant working practices and issues within the legal profession
monitor financial compliance activity (planning, progress, quality & approach)
review outputs from financial compliance activity (including the conducting of interviews) and where appropriate (eg as a result of breaches in accounts rules or money laundering regulations), refer matters of professional conduct to the Scottish Legal Complaints Commission and Complaints Investigation Team for investigation or recommend other actions (eg interventions, judicial factories etc) in accordance with the scheme of delegation
monitor the consistency and quality of Guarantee Fund claims and intimations processing
decide upon Guarantee Fund claims (as detailed in the delegated powers) or refer to the Professional Conduct Committee, as appropriate.
consider and approve strategic policy matters related to financial compliance and Guarantee Fund matters
consider the continuing adequacy of accounts rules and other guidance to protect the Guarantee Fund, the profession and the public, monitor the development of new or amended rules and recommend these for approval.
review financial compliance activity to inform and influence the profession, public and other stakeholders about relevant financial standards, compliance requirements and claims issues
monitor Guarantee Fund risk management procedures and approve
key policies related to insurance arrangements, financial reserve levels, investment decisions and firms which pose a risk to the fund
monitor the financial position of the Guarantee Fund and recommend approval of the annual budget and annual subscriptions to the Council
be made aware of operational developments in the workings of the financial compliance and Guarantee Fund functions