Owner who 'blended' client and office monies fined by SRA

A law firm principal has been fined £8,000 by the SRA after using the client account to pay his staff.

David Lundy, owner of Yorkshire firm Lundy’s, blended office money with client money and then paid out of these funds to pay employees.

According to an SRA decision notice, he did this because it was easier to pay his staff this way and he was effectively using the client account as a banking facility. He did this for almost two years until February 2022.

At one point, use of client money to pay staff caused a shortage of £1,461, although this was remedied after 21 days by Lundy replacing the money with his own. There was no evidence of any client being harmed by this conduct.

The SRA also found that on at least five instances, Lundy retained large sums of money in the client account which belonged to expectant beneficiaries. In some cases these were held for years and could and should have been remitted sooner.

Lundy was fined £8,000 and his conduct deemed to be serious, during to the potential misuse of client money, Lundy’s direct responsibility for the conduct and the failures persisting for a long time.

The SRA considered in mitigation Lundy’s unblemished regulatory history, his ceasing inappropriate use of the client account before the SRA investigation of the firm, the replacement of the shortage of the client account before the SRA inspection, his early admission of the breaches, and frank insight into his misconduct once the breaches were drawn to his attention and the remedial steps he took.