Lawyers Covered - March 2026

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered! Welcome to our March 2026 edition of our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

Mazur appeal concluded

The Court of Appeal has reserved judgment following the hearing of the appeal of the High Court's decision in Mazur. The appeal, brought by CILEX, concerns the question of whether a non-authorised person may lawfully conduct litigation under the supervision of an authorised person under the Legal Services Act 2007. The Court heard submissions from a number of parties, including CILEX, the SRA, the Law Society, the Legal Services Board and the Association of Personal Injury Lawyers.

CILEX argued that the High Court's decision was wrongly decided and has generated uncertainty across the profession. Its position is that it is lawful to delegate tasks involved in litigation provided that an authorised person retains responsibility and accountability. It was argued that the Legal Services Act 2007 does not provide for delegation because it is implicit that solicitors can delegate.

The Law Society submitted that it must be the authorised solicitors who are directing and controlling the litigation, with unauthorised staff assisting only.

The SRA argued that legal executives can offer significant assistance and individual tasks could be delegated, but entire caseloads and the conduct of cases could not be delegated.

The High Court's decision continues to cause concern across the legal sector, particularly for high-volume litigation practices where non-authorised staff undertake a substantial proportion of the work under the supervision of a relatively small number of solicitors. The Court of Appeal’s judgment is now awaited, with the profession looking to it to provide greater clarity on the scope and limits of delegation in the conduct of litigation.

Worse than worst case for LeO

The Legal Ombudsman (LeO) has published its Q3 2025/26 complaints data. It says it is experiencing a "sustained and accelerating demand for its help". To the end of Q3 of 2025/26 the number of new complaints received by the LeO increased by 29.8% year-on-year - exceeding LeO’s worst-case projections.

The data shows record complaint volumes and high uphold rates, particularly in residential conveyancing, personal injury, and wills and probate. The data shows that poor communication, delay and weak first-tier complaint handling remain systemic issues.

The total remedies awarded in Q3 stood at £869,300. Where poor service was found, in 82% of cases the LeO awarded compensation for emotional effects. The LeO noted that emotional distress compensation is often an overlooked remedy at first tier complaint handling. It suggests that a "significant number of complaints may have been resolved earlier had appropriate compensation for emotional effects been offered when service failings were acknowledged".  

Law Society warns the SRA against its plans to separate compliance roles in firms

The Law Society has stated that the SRA needs to rethink its proposals on compliance officer changes, which it sees as "impractical and unlikely to prevent the perceived risks."

The SRA has been consulting on how best to protect client money held by solicitors. The most recent consultation ended on 20 February 2026, and sought views on improvements to the accountants' reports regime and strengthening checks and balances provided by compliance officers.

In a response on 23 February 2026, the Law Society expressed "serious concerns" about the SRA's proposals relating to restrictions on appointing compliance officers (COLPs, responsible for legal practice and COFAs, responsible for finance and administration). The SRA has proposed that within firms that meet specified risk thresholds (£600,000 a year in turnover and/or £500,000 held in client money at any point in the most recent reporting period) any individual that can unilaterally determine or direct significant management decisions cannot be a COLP or COFA. There is a specific exemption for sole owner manager firms in some circumstances. These proposals come after collapses of firms where the same person was responsible for monitoring financial and legal practice.

The Law Society believes that the proposed thresholds to determine the separation of roles are set too low and will negatively impact a significant number of firms, especially small-to-medium sized firms. Regulatory costs would be passed on to clients, and impact access to justice. The Law Society believes that the SRA's plans are not based on evidence, and think a better option would be to better utilise the data in the SRA's possession, to consider relevant factors like late filing, sudden fluctuations in client account balances, and ownership changes etc.

The Law Society welcomes engagement with the SRA to ensure that meaningful client protection can be ensured, but without damaging the diversity and accessibility of the profession.

Criticism for firms using AI for legal research

The Upper Tribunal Immigration and Asylum Chamber has criticised firms for using AI to conduct legal research and draft court documents: see here. The judgment records that the Upper Tribunal received grounds of appeal which included non-existent case law authorities, which had likely been hallucinated by AI. The solicitor involved also admitted uploading emails he had drafted for the client file to ChatGPT to improve them and confirmed that he had uploaded documents from client files to ChatGPT to assist in summarising them for clients.

In the past year, we have seen a significant increase in litigants in person, and even law firms, providing documents that appear to have been drafted (either wholly or in part) by AI. AI tools are not a replacement for legal research and there is a significant risk of AI tools hallucinating case law authorities that do not exist. As the Tribunal flags, uploading client data to open-source AI tools places that data in the public domain, breaching client confidentiality and waiving legal privilege. As a result, practitioners who have uploaded client information to open-source AI will need to consider whether a self-report to the ICO and SRA is needed.

Lawyers’ liability, when is a claim "brought" and limitation traps

The decision in Lukins v Quality Part X Ltd Ravensale Ltd [2026] EWHC 301 (KB) is a stark illustration of how procedural missteps around electronic filing can expose solicitors to lost litigation claims.

The defendants sought summary judgment on the basis that the claims were out of time for limitation purposes.  The claimants resisted the applications on the basis that the claims were brought when the court received the claim form, or in the alternative, the Court should exercise its power to remedy any error of procedure pursuant to CPR r.3.10.  The Court granted summary judgment against the claimants.

For a more detailed analysis of the decision, see here.

Regulators set out concerns regarding AML disciplinary action

We have previously reported on the UK government's plan to give the Financial Conduct Authority (FCA) a much larger role in supervising anti-money laundering (AML) compliance for selected professional services, including the legal and accountancy sectors, in respect of which it is to become the single supervisor.

The current oversight body for the legal and accountancy sectors is the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which will be abolished once the FCA takes over. OPBAS' role is to oversee the AML activities of the nine legal and thirteen accountancy regulators in the UK, and to ensure that these professional body supervisors (PBS) are supervising robustly and consistently.

In its recent 2024/2025 supervisory report published in March 2026, OPBAS has expressed concern that some PBS "aren't taking consistent, proportionate and sufficiently dissuasive disciplinary measures in circumstances where it would be warranted and justifiable".

The report suggests that PBSs report common breaches of inadequately documented policies and procedures, customer due diligence, client assessment or records and no or inadequate firm-wide risk assessment. OPBAS' view is that these "continued failures call into question the consistency and effectiveness of PBS supervision" and that samples of file reviews demonstrate that some PBSs take an "overly member-centric approach or assisted compliance view", which hinders robust AML supervision and might be linked to an "assisted compliance" culture found within some PBSs, whereby OPBS focus on working with firms to correct failures.

Whilst OPBAS states that there are limited circumstances in which assisted compliance may be appropriate, this should not be the default preference. Its view is that more effective practice includes balancing guidance provided to a PBS' supervised population with a demonstrable track record of taking enforcement action when appropriate.

OPBAS' report states that despite the above concerns, standards at PBSs have improved, providing a strong foundation on which to build a new regulatory model.

Hong Kong: Anti-Money Laundering – Law Firms required to complete Online Compliance Form

A Law Society of Hong Kong circular dated 2 January 2026 notified all law firms and sole proprietors in Hong Kong that they had to complete an online anti-money laundering and counter-terrorist financing (AMLCTF) "Compliance Self-Assessment Form" on or before 2 March 2026. The Law Society is the designated AMLCTF regulatory body for solicitors and registered foreign lawyers in Hong Kong, pursuant to the AMLCTF Ordinance (Cap. 615).

The AMLCTF Compliance Self-Assessment Form came as no surprise – for example, law firms were required to complete an AML Questionnaire in the Autumn of 2022 and informed that the Law Society would be "sharpening its supervisory oversight of member firms in relation to AMLCTF compliance". At the time, the Financial Action Task Force (FATF) – the intergovernmental body responsible for assessing compliance with AMLCTF global standards – was preparing a follow up a report on Hong Kong for 2023, with particular focus on (among other things) FATF Recommendation 28 ("Regulation and Supervision of Designated Non-Financial Businesses and Professions – DNFBPs").

The AMLCTF Compliance Self-Assessment Form had to be completed online by a partner, money laundering reporting officer or compliance officer or sole proprietor. Completion of the form was mandatory. The AMLCTF Compliance Self-Assessment Form should not have been difficult to complete. It focuses on four main areas for the year ended 2025: (i) type of legal practice (e.g., nature and size); (ii) type of business activities; (iii) client identification and due diligence measures; and (iv) AMLCTF compliance measures – such as recordkeeping, policies, procedures and training.

At the time of writing, it is understood that, of the approximately 1015 local and foreign law firms in Hong Kong (928 and 87, respectively) only a dozen or so failed to complete the AMLCTF Compliance Self-Assessment Form by the deadline – an impressive return rate. Those firms are likely to be granted a short extension of time; a failure to comply with that could be treated by the Conduct Section of the Law Society as a matter of professional conduct requiring investigation.

Law firms and sole proprietors in Hong Kong can expect more AMLCTF regulatory activity in the coming years, in the run up to the FATF's next mutual evaluation for Hong Kong (2028-29). FATF Recommendation 28 (DNFBPs) requires effective regulatory supervision and monitoring. The Law Society's AMLCTF unit within the secretariat will proceed to review the data from the self-assessment exercise before offering more support for law firms and sole proprietors through training, including on-site initiatives.

With thanks to additional contributors: Sally Lord , Aimee Talbot, Charlotte Thompson and Alice Tittensor