• Application 11440-2015
• Hearing 31 October-4 November 2016
• Reasons 13 December 2016
The SDT ordered that the first respondent (admitted 1986), the second respondent (admitted 2007) and the third respondent (admitted 1982) should each be suspended from practice as a solicitor for 12 months from 4 November 2016. The SDT made no order against the fourth respondent (admitted 2012).
The respondents had acted or permitted Sanders & Co LLP to act for Ecohouse Developments Limited in relation to a complex overseas investment scheme, and concurrently for some 849 individuals who had invested in the scheme, where there was a conflict, or a significant risk of conflict between the interests of (1) Ecohouse (2) each individual investor and (3) the firm or the individual interests of the third respondent. Each of the respondents had thereby acted in breach of principles 3 and 4 of the SRA Principles 2011, and further, the first, second and third respondents had each acted in breach of principles 2 and 6.
The first and second respondents had involved themselves and the firm in a complex overseas investment scheme that was outside their or the firm’s area of expertise and experience, and where there was no legitimate need for the involvement of a firm of solicitors. They had thereby acted in breach of principles 4 and 6.
The first and second respondents had permitted payments into, and transfers or withdrawals from, the firm’s client account which were not related to an underlying legal transaction, or a service forming part of their normal regulated activities. They had thereby acted in breach of principles 2, 4 and 6.
The overall level of culpability of the first and second respondents was the same, albeit for distinct reasons. Their misconduct was aggravated by the fact that it had taken place on numerous occasions, as reflected in the repeated complaints which the firm had to deal with.
There was an element of concealment which had arisen by the very nature of the conflict, namely being unable to disclose the documents and not telling the investors that the firm was conflicted.
Matters were mitigated by the fact that there had been an element of concealment by the third respondent, which had contributed to the first and second respondents’ misconduct.
The first and second respondents had closed the firm at minimal inconvenience to clients, other than those involved in the scheme, and their staff.
While a professional obligation, the fact that it appeared to have been achieved with diligence pointed to their integrity where it had been found wanting elsewhere.
The third respondent’s motivation was financial. His actions were not spontaneous and there was an element of planning involved. There had been a breach of trust in respect of the investors and, as the facilitator of the scheme, he had had direct control and responsibility for the circumstances giving rise to the misconduct.
His culpability was greater than that of the first and second respondents, but it had taken place over a shorter period and he had only faced one allegation.
There was no motivation behind the fourth respondent’s misconduct as she had been doing her job under the supervision of the first and second respondents. She had had no level of control over the circumstances giving rise to the misconduct.
The fourth respondent, at the very start of her career, had been swept along by more experienced solicitors. In those circumstances, it was appropriate to make no order against her.
The first, second and third respondents were ordered to pay costs of, respectively, £35,000, £17,500 and £10,000.