The Solicitors Regulation Authority today urged firms to have an exit strategy in place to close down their firms properly, following a series of disciplinary hearings.
The Solicitors Disciplinary Tribunal fined five solicitors in April in cases brought by the SRA where the firms had failed to follow the correct procedure.
On 14 April, David Alan Eager was fined £1,000 and ordered to pay £13,000 costs. Eager was the sole practitioner at Lincolnshire-based Eager & Co, which dealt with criminal matters, the vast majority of which were legally aided.
The SRA claimed Eager failed to take out and maintain professional indemnity insurance but continued to practise and, as the compliance officer for legal practice, failed to ensure compliance and report material failures to the regulator.
According to the SDT judgment, the tribunal was informed at the commencement of the hearing that all the allegations were now admitted.
On 21 April Justin Philip Huntly Nelson was fined £2,500 and ordered to pay £5,200 costs. Nelson held a practicing certificate for 2013/14. According to the SDT’s judgment, Nelson was not currently practising as a solicitor but was operating as a limited company which provided non-reserved legal activities.
The SRA alleged Nelson failed to notify the regulator of the firm’s entry into the cessation period, failed to comply with an undertaking given to the SRA, continued to hold client funds without proper reason and did not prepare reconciliation statements in accordance with the SRA Accounts Rules 2011.
According to the SDT judgment, Nelson denied failure to keep records of his dealings with client money but admitted failure to prepare a final set of reconciliation statements. The allegation as originally drafted incorporated both. The SRA was content to proceed under the allegation only in respect of failure to prepare reconciliation statements and the allegation was amended.
Nelson admitted the other allegations, but said the fundamental facts underpinning the allegation he failed to comply with an undertaking given to the SRA and continued to hold client funds without proper reason were the same.
Meanwhile, on 15 April, John Bryon Sampson and Angela Susan Marshall were fined £2,500 and £1,000 respectively and ordered to pay £11,000 costs. On 23 April, Ian Robert Gannicot was fined £5,000 and ordered to pay £12,770 costs. The SDT’s judgments have yet to be published.
Gordon Ramsay, the SRA’s director for legal and enforcement, said firms’ professional responsibilities remained when a firm is closing down.
‘The need to think about the impact on clients becomes more important when the firm faces closure, voluntary or otherwise.
‘This is not an issue about affording run-off cover or finding a successor practice, which we know can often be a problem for those looking to close down. It is about ensuring the interests of clients and others are fully protected.’