Two directors at a Liverpool personal injury practice have each been fined £10,000 after failing to notice serious issues with the firm’s accounts.
The Solicitors Disciplinary Tribunal said Michael James Paul Wilson and Sean James Rogers, of High Street Solicitors, had not asked enough questions about cash shortfall in the accounts.
The tribunal found that during monthly finance meetings, the firm’s leaders had only discussed growing the business and its profits, with no suggestion they considered compliance with their regulatory obligations.
It was no defence to say they relied entirely on outside companies to ensure compliance, and they failed to make any enquiries that would have uncovered issues. The tribunal also found Wilson and Rogers were not absolved from responsibility or blame just because a third respondent, non-solicitor Victoria Kinsella, was the firm’s compliance officer for financial matters.
The tribunal added: ‘They were not expected to check each and every piece of work undertaken by the finance team, however they should have checked the product of that work in circumstances where non-compliance would be found to be a material and thus reportable breach.’
The tribunal heard that Solicitors Regulation Authority inspectors had found a large number of unreconciled items, consisting of unpresented cheques and unprocessed electronic transfers, in the firm’s account. Most items related to unpaid professional disbursements and ATE insurance premiums.
The SRA submitted that but for the unpresented items, the firm’s account would have exceeded its overdraft limit each month by up to £300,000 – in effect, the items were propping up the firm.
Wilson and Rogers said they had delegated accounts matters to Kinsella, who in turn had relied on an accountant with access to the firm’s systems, as well as the services of a regulatory compliance consultancy. None of the external consultants had raised any issues with what was happening.
The tribunal accepted as mitigation that no client money was lost and Wilson and Rogers had made good the shortfall. They had shown genuine insight and had cooperated fully with the investigation.
Kinsella, who was not represented during the hearing and did not attend, accepted she failed to take adequate action over the disbursements and ATE premiums and allowing client money to be held improperly. She had not reported matters to the SRA because she was ‘blinded’ by loyalty to the firm. She was barred from working in the profession without SRA permission.
Wilson, Rogers and Kinsella were each ordered to pay £20,000 in costs.