Referring to the front page of the 17 June Gazette (the story about how the SRA is handling firms in financial trouble), it is incumbent on all members of the profession to question the SRA’s actions in relation to firms that are stated to be in ‘serious financial trouble’.
Surely interventions are only necessary where there is a question of dishonesty with client money or serious unprofessional conduct. The fact that a firm has been managed in such a way as to create serious financial trouble should surely be the responsibility of the partners and the firm’s lender.
If the legal practice is no longer financially viable the lender would normally have the power to appoint its own receiver or to take insolvency proceedings against the owners. In that situation, the receiver or the liquidator would have a duty to preserve client money. This is the position when any other business entity finds itself in serious financial trouble.
In the absence of dishonesty or unprofessional conduct, firms in serious financial trouble should not be a financial burden on those in the profession who have managed to run their practices without getting into that situation. Furthermore, a ‘raid’ on the compensation fund to cover additional expense for SRA interventions is contrary to the purpose for which the compensation fund is established; surely this is ultra vires?
A P Stephen, Greenways, Newquay; past-president and honorary secretary, Cornwall Law Society