A sole practitioner who handled personal injury claims while he waited for a legal aid contract – then held back clients’ compensation – has been struck off.

Michael Healey, a solicitor for 15 years, was awarded a criminal contract with the Legal Aid Agency due to start in July 2015, but the start date was postponed to October 2015 and then January 2016.

While he waited, in a bid to prop up his ailing practice, Healey undertook litigation for personal injury and flight delays.

But he failed to set up a recognised client account and misappropriated more than £31,000 into the office account by holding back clients’ compensation. He told two clients, who had asked for an update on their cases in early 2016, their claims had yet to be settled even when compensation payments were received months earlier.

The Solicitors Disciplinary Tribunal heard Liverpool-based Healey continued to draw on the office account – which held clients’ compensation – to spend around £3,000 a month on outgoings. He withdrew £3,690 for a holiday in Wales and for 27 online bets coming to £1,305.

In a judgment published this week, the SDT said Healey wanted keep the firm afloat, fund his living expenses and to stave off the consequences of his personal debts and financial difficulties.

The SRA, which was alerted to Healey’s misconduct when he was declared bankrupt in May 2016, found six PI matters, with total damages of £14,107, where payments had been made to the firm but not passed on to clients. A further 15 flight delay claims, coming to almost £11,000, were unpaid. Investigators found 28 PI matters, where monies were received from third party insurers for medical reports, which had not been paid.

Healey, who did not appear at the one-day hearing last month, had explained to the SRA he delayed paying compensation owed to clients due to financial problems at the firm. The monies were retained to cover office expenditure.

In interviews, he admitted failing to provide a proper standard of care for clients and failing to protect their money. He admitted all eight allegations against him, including dishonesty in relation to three allegations.

Healey accepted that he should have wound the firm down when the first contract was postponed, but this was his ‘dream, and neither common sense nor the stark reality was hitting home’. He resorted to delaying tactics to buy time for himself, but by the time the legal aid contract started his health had deteriorated and he spent time in hospital.

He was struck off and ordered to pay £12,152 in costs.