- Application 11672-2017
- Hearing 19 December 2017
- Reasons 12 January 2018
The SDT ordered that the first respondent (admitted 1991) should be struck off the roll; and that the second respondent (admitted 1978) should be suspended from practice as a solicitor for five years from 19 December 2017.
The first and second respondents had caused or permitted unauthorised debit balances to exist on client account, and the first respondent alone had caused or permitted client account shortages to exist, in breach of rule 20.6 of the SRA Accounts Rules 2011 and in breach of principles 2, 4, 5, 6 and 10 of the SRA Principles 2011. The first respondent had acted dishonestly.
Unallocated transfers had been made from client account to office account in breach of rule 1.2(a) and (c) and rules 20 and 21.1 of the rules, and of principles 2, 4, 5, 6 and 10. The first respondent had acted dishonestly.
The respondents (second respondent to the extent of the period when he was a partner) had failed to carry out adequate client account reconciliations and to maintain proper accounting records and systems and books of account, in breach of rules 29.12, 29.13, l.2(e) and l.2(f) of the rules and principles 2, 4, 5, 6 and 10.
The respondents had failed to rectify breaches promptly on discovery, in breach of rule 7.1 of the rules and principles 2, 4 and 6. The first respondent alone had additionally breached principle 5.
The respondents failed to run their business or carry out their roles in the business effectively and in accordance with proper governance and sound financial and risk management principles, in breach of principles 2, 4, 5, 6 and 8, and had failed to achieve outcome 7.4 of the SRA Code of Conduct 2011.
The respondents had failed to protect client money and assets, in breach of principles 2, 4, 5, 6 and 10 and had failed to achieve outcome 7.4.
In his capacity as the compliance officer for finance and administration of the firm at the material time, the first respondent did not report the breaches of the rules to the SRA, in breach of rule 8.5 of the Authorisation Rules 2011 (AR) and in breach of principles 2, 7 and 8, thereby failing to achieve outcome 10.3.
From November 2015 to March 2016, the first respondent had carried on business as a sole practitioner without first applying to the SRA for recognition as such in breach of rule 25 of the AR and rule l.l(a) of the SRA Practice Framework Rules 2011 (PFR) and in breach of principles 7 and 8.
In his capacity as the compliance officer for legal practice of the firm at the material time, the second respondent did not report the breaches of the 2011 rules, the AR and PFR to the SRA, in breach of rule 8.5 of the AR and in breach of principles 2, 7 and 8, thereby failing to achieve outcome 10.3 of the code.
The first respondent was motivated by his desire to keep the firm afloat.
The harm caused by his misconduct was considerable. As at 7 December 2017, claims on the SRA Compensation Fund amounted to £902,668.02, represented by 40 individual payments.
The instructions of the first respondent were not to put forward any exceptional circumstances to seek to justify a lesser sanction than a strike-off.
The second respondent had, to a significant degree, abdicated his responsibilities in respect of the firm’s financial management. His culpability was less than that of the first respondent, but he was culpable in terms of having failed catastrophically to fulfil his responsibilities as the COLP.
A term of suspension would punish the second respondent and act as a deterrent to others whilst being proportionate to the seriousness of his misconduct.
The respondents were each ordered to pay 50% of the costs of £10,100.