Three partners from a national firm – and the firm itself – have been fined for allowing client accounts to be used as a banking facility.
In an outcome agreed with the Solicitors Regulation Authority, Laytons Solicitors LLP accepted a £20,000 fine after transactions traced back as far as 1999 were identified where funds coming to around £850,000 were handled by the firm.
The three solicitors – Patrick Kelly, Ian Burman and Marc Selby – all admitted to allowing money to be paid in and out of the client account where no underlying legal transaction had taken place.
The Solicitors Disciplinary Tribunal heard each of the solicitors had previously enjoyed ‘exemplary’ careers and the firm had never experienced any regulatory issues in its long history.
Kelly, 67, had a client which was a network of law firms located across Europe. As treasurer for the group he looked after funds generated by subscriptions, meetings, conferences and training events. From 1999, the client ledger had received payments coming to around £443,000, and this arrangement continued until the firm’s accountants raised it as an issue in late 2016. A company was subsequently set up to handle the administrative functions of the group.
Burman, 56, allowed around £393,000 to be paid into a client account over five years, with the firm receiving £1,000 per quarter in fees.
Selby, 64, was a founder member and treasurer of the Stamp Taxes Practitioners Group and he allowed group payments coming to £28,000 to be held in the firm.
None of the matters raised involved any risk of money laundering, which is one of the reasons for rules preventing client accounts employed as banking facilities.
The tribunal heard the firm and the three individuals all accepted their professional responsibilities as solicitors and partners, but at no point did any professional adviser, accountant or auditor take issue with the manner in which the monies were being handled.
As soon as an auditor did raise the issue, all those involved self-reported the matter to the SRA without delay, prompting the regulator to begin an investigation.
The tribunal agreed to fines of £7,500, £5,000 and £2,000 for Kelly, Burman and Selby respectively. The total joint costs were agreed at £5,000.