Four former members of a now-defunct firm have been prosecuted after the regulator found evidence of undeclared kickbacks from ATE policies and the retention of disbursements.

Lucy Allen, who was a director and owner of Brighton-based LA Law Limited, was fined £18,000 and banned by the Solicitors Regulation Authority from managing or working for any other legal practice.

According to a decision notice published by the SRA, Allen acted for PI clients where there was a ‘significant’ risk of a conflict between her obligations to act in their best interests and in her own financial interests.

Her clients were required to take out a particular after-the-event insurance policy for which her separate business received commission. This arrangement carried on for almost two years between 2015 and 2017.

Allen failed to tell clients how much commission from the sale of ATE insurance she received through her separate business.

The SRA said that Allen also allowed money for professional disbursements to be paid into the office account where it remained for several months. She failed to ensure proper governance of the firm, leaving inadequate systems and controls for monitoring financial stability. The firm went into administration in December 2017, resulting in the loss of 24 jobs.

Allen, a non-solicitor, was found to have breached six SRA principles and was also ordered to pay £4,818 costs.

Solicitor Donna Prested, a manager and head of legal practice at LA Law, was found to have failed to carry out a sufficient investigation into the connected business and failed to identify the risk of conflict. She also failed to inform clients of the commission received by the separate business and details of the firm’s relationship with that business.

Prested was also found responsible for the firm holding onto disbursements and found to have failed to run the firm effectively.

She was fined £18,000 and ordered to pay £3,000 costs.

Meanwhile, two other non-solicitor former members of the firm were disqualified from the profession and fined for their role in the firm receiving disbursements and failing to pay them to the appropriate people.

Mary Guerin-Warrick, formerly head of finance and administration, was fined £13,500 and ordered to pay £1,875 costs, while Lynda Slaughter, who held the same position, was fined £9,750 and ordered to pay £1,875 costs.

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