Two law firm directors who admitted struggling to run their new firm have been fined a total of £15,000 by the Solicitors Disciplinary Tribunal.
Nato Zondagh and David Carvalho, managers of the Fulham, London, firm Excelsior Solicitors, admitted failing to keep accounting records properly written up from June 2011 to November 2014.
They each admitted failing to run their business effectively and failing to record dealings in office money.
They retained client monies of £25,000 in the office account for a year – in breach of SRA rules – and failed to submit accountants’ reports in time over a five-year period up to 2015.
The tribunal heard that the firm started in 2010 and quickly ran into difficulties fulfilling regulatory tasks. A laptop containing accounts information was lost in June 2011 and no back-up was in place.
Zondagh, the compliance officer, told the tribunal the experience of running a firm had been a ‘big learning curve’ and he had started to submit outstanding accountants’ reports.
Carvalho said he found himself in an ‘incredibly difficult position’, taking on his first management role while still a junior solicitor just three years after qualification.
The tribunal said both directors had been ‘naïve’ and that Zondagh in particular had put his client work and his business first, with his administrative duties second. Carvalho was said to have ‘perceived that he had an ability to manage his responsibilities which was misplaced’.
‘The accounts rules were in place to protect the public,’ added the tribunal. ‘They were the “first line of defence” in the protection of the client account and any member of the public would be concerned if those rules were not being followed.’
Zondagh was ordered to pay a £12,000 fine and Carvalho ordered to pay £3,000. They were also ordered to pay a total of £11,000 in SRA prosecution costs.
The prosecution was published a day after the SDT annual report noted an increasing proportion of cases related to failings by solicitors to run their firms in line with compliance rules.