Solicitors running a Midlands practice have been fined after allowing an employee to prop up the ailing business with client money. Five individuals from GPB Solicitors, based in Stratford-upon-Avon, were sanctioned after investigators found a client shortfall of almost £1.7m through 82 client to office transfers.
In an outcome agreed with the SRA and approved by the Solicitors Disciplinary Tribunal, the members admitted misconduct after failing to do enough to protect client money.
Four solicitors, Simon Newbold, Zakia Khalid, Roy George and Adrian Organ, who were also members of the firm, admitted failing to ensure systems were in place to prevent client account shortfalls. Khalid was also subject to a charge of failing to ensure accounts rules were met in her role as compliance officer.
A fifth individual, Tony Kirton, the managing partner and later chief executive of the successor firm, was charged with failing to ensure the firm’s finance systems were properly controlled. He also failed to remedy client shortfalls promptly after they were discovered.
Daniel Clarke, finance co-ordinator from September 2010 until his resignation in May 2013, was not a party to the agreed outcome.
The firm was established in October 2009 and was predominantly involved in debt recovery on behalf of banks and other financial institutions. Work was split between Kirton managing the firm while the others devoted their time to client matters. It ceased practice as Geoffrey Parker Bourne Limited in August before transitioning into GPB Solicitors LLP, becoming an alternative business structure in February 2013.
The tribunal heard that Clarke admitted in his resignation letter to improperly using client money for the firm’s outgoings. His letter stated that in order to keep the firm running he had ‘gone above and beyond the remit of my role and consistently utilised client’s monies to pay bills, wages and anything that kept the firm going’. Clarke confirmed he acted alone and ensured no-one knew what he was doing.
The matter was immediately reported to the SRA and the members made a claim under the firm’s professional indemnity policy. The SRA intervened into the firm in October 2013.
Auditors appointed to assess the firm’s finances confirmed the position set out in the letter, and also reported that client ledgers were concealed from them when they were preparing accountants’ reports for 2011 and 2012. Clarke confirmed that client ledgers with a negative balance were removed by him and those lines deleted.
None of the individuals charged had knowledge of Clarke’s activities until after his resignation and they pleaded in mitigation they were willing to spend more than normal on senior management to ensure the firm was properly managed. All had cooperated fully with the SRA investigation.
Kirton was fined £6,000 and will require SRA permission to work for a law firm again. Newbold was fined £12,500, Khalid £7,501, George £5,000 and Organ £1,000. The parties will jointly make a £53,000 contribution to SRA costs.