The fallout from the collapse of Liverpool claims firm High Street Solicitors has continued, with the first sanction issued against a solicitor.
Sarah Kearney agreed a three-month suspension with the Solicitors Regulation Authority after admitting to failing to disclose details about the dire finances of the firm in 2023.
Kearney, admitted in 2012, was appointed as director of High Street Solicitors in March 2022. By that time, a creditor of the firm had already complained to the SRA that expert fees had not been paid. Checks by a debt recovery agency then found three unsatisfied county court judgments against the firm coming to more than £50,000.
The SRA sent an investigator into the practice in January 2023 and met Kearney and her fellow director Thomas Hardwick. The investigator recorded that no concerns were expressed about the firm’s finances and that they were assured any issues were ‘mainly historic’ and ‘from our point of view we are now doing very well’.
In a follow-up meeting with the investigator in April 2023, attended by Kearney, there was no mention that the firm was in serious financial trouble.
In fact, by that stage, two winding up petitions had been issued and the firm was six weeks away from going into administration. The firm had total liabilities of more than £5.3m by the end of 2022 and borrowed around £17m. No details of any funding arrangement borrowing were disclosed to the SRA investigator at the January 2023 meeting.
In a statement of agreed facts between Kearney and the SRA, it was said that the solicitor had been presented with the opportunity to disclose material details relating to the firm’s business and financial management, but had chosen not to do so and ‘instead concealed the reality from her regulator’.
When asked earlier why the SRA had not been informed about the winding up petition, Kearney had stated there was ‘definitely nothing intentional’ and there was ‘just probably a lot going on at the time’.
In mitigation, Kearney said that no advantage had been sought or gained by her conduct and she offered her sincere and genuine apology for admitted breaches. No allegation of dishonesty had been raised.
The Solicitors Disciplinary Tribunal approved her suspension and a costs order for £12,842.
The SRA has already barred Hardwick from the profession and disqualified Victoria Powell, former head of finance and administration, from being a manager or head of legal practice at any firm.
High Street Solicitors is currently in the hands of a liquidator. An administrator’s progress report from January this year showed that 18 claims had been made for £9.5m from unsecured creditors who are unlikely to receive any dividend.
