Chaotic Lawyer Barred By SRA for Conduct During Firm Closure

In mid-February 2023 the Solicitors Disciplinary Tribunal handed down its judgment to a legal professional which prevented the person from operating within the esteemed profession for twelve-weeks. The matter was taken so seriously by the regulator because the provider of legal services appears to have been in the process of shutting its commercial operation. However, evidence emerged down appearing to show that at the time the provider was in the process of closing, it had opened in excess of one hundred files.    

What Happened In The Case…

The SDT found that the legal professional had agreed to new conditions in connection with the provision of insurance covering it in respect of the professional services offered by the firm from 2019 to 2020. However, evidence was lacking demonstrating that the legal professional ensured the premium was paid. Owing to the lack of insurance coverage the provider signed up to a long further insurance agreement which covered it to provide legal- services until early October 2019. In the meantime, it attempted to secure insurance coverage. After the month time period had expired, the legal professional’s premium was still outstanding and the insurance company communicated that the provider was due to begin a cessation period and attached regulatory guidance to the correspondence. The regulatory paperwork communicated with the provider that it was not permitted to open any client files during this time and would be shutting down in November 2019. 
However, the provider had:

• not notified any clients of its impending standing down of operations
• put in place any provision relating to insurance for run-off and
• approximately nine thousand client legal documents held in its vaults.  

Be Sure Your Sins Will Find You Out…

Normally, legal professionals would comply and avoid opening further files until shut down. However, the professional opened approximately three-hundred-and-fifty-thousand files and held approximately one million pounds. When the SRA investigated events from January 2020 the professional had commented on social media indicating that the provider would be shutting-down and a financial credit facility which would potentially cover it for six months. The following day, an SRA investigator observed his emotional state. The legal professional attributed the lack of insurance provision to mental health. The Regulator shut down the provider.  He later claimed that he had been unsuccessful in applying for a credit-facility owing to the apparent theft of his identity resulting in an increased insurance premium and had a detrimental impact on his credit-rating.  The matter reached the regulator when clients complained about paying over fifty-thousand pounds to the provider but no activity was carried-out before shutdown. However, on balance, nothing indicated that client monies were being used improperly.  
Feet to the Fire
The professional held his hands up to not communicating with the regulator that it commenced the protected period and opened new client files whilst closing. Despite pleading for leniency the regulator found that the provider was run chaotically. The regulator commented that the legal professional with three-decades of expertise should have been cognisant of his responsibilities and had pressurized.service users from taking a leadership role indefinitely.    

Lessons Learned?

Lawyers should be learning the lessons from this case and taking the following action: 

• communicating with the regulator if their provider enters a period of cessation or extended indemnity period
• ensure that the provider is closed professionally and
• follow the Law Society approach of the Law Society to reduce the risk of further incidents.  

If you have experienced something similar, or have an opposing viewpoint, please kindly leave a comment on the article or contact us.  

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