A firm specialising in representing members of the armed forces has been fined £8,000 after allowing a massive build-up of unpaid professional disbursements.
SRA inspectors found a client account shortage of £700,000 at north west based Hilary Meredith Solicitors after looking at the firm’s books in 2017.
The firm should have either paid the professional disbursements – for example to counsel or medical experts – or transferred the sum to its client account after two days, in according with accounts rules.
According to a regulatory settlement agreement published by the SRA, Hilary Meredith’s accounting systems and internal controls failed to ensure compliance for approximately three years, before the matter was discovered and reported to the SRA.
The shortage was made good by January 2018 and the firm has since reviewed and updated its accounting systems and internal controls to reduce the risk of similar breaches happening again.
The SRA said a fine was appropriate because the misconduct continued over a long period of time, and the firm was directly and solely culpable. The regulator said it was ‘mindful of the need to create a credible deterrent’ to the firm and others, and considered a basic penalty of £13,333 (0.4% of the firm’s annual turnover) to be appropriate.
The fine was reduced by 40% to take account of the firm’s early admissions, its cooperation with the SRA investigation and that it remedied the breach promptly. The firm will also pay £2,750 SRA costs.