Lawyer Struck Off For Using Disbursement Monies To Stabilise Legal Services Provider

In late February 2023, the Solicitors Disciplinary Tribunal disclosed to the public’s consciousness news of its decision to remove a legal professional from the role of solicitors in connection with evidence suggesting that he had directed monies that were supposed to be used for the payment of disbursements on client files to financially support the legal services provider. The lawyer has also reportedly neglected to communicate with the Solicitors Regulation Authority that the legal services provider was in financial difficulties.    

What Happened In The Case?

The case centered around a legal professional who had achieved his admission into the roll of solicitors in the late nineteen nineties and in the late 2000s he seemingly felt as though he had sufficient experience to establish a legal services provider employing a twenty-strong workforce. The legal professional appears to have been running the provider successfully for approximately eighty-five months and all was progressing well. However, matters escalated around 2015 when the firm collided with a tidal wave caused by Government regulatory changes and the insolvency of its insurers, meaning that the legal services provider had a significant financial blackhole in an amount just shy of half a million pounds. The legal professional attempted to put the provider in a stable financial position by steering the firm into cavity wall litigation. However, most of the files opened had no reasonable prospects of success based on the gathered evidence. 
Reportedly the provider had purchased an outgoing lawyer’s workload. However, when the legal professional analyzed the files, they discovered numerous difficulties with them including but not limited to: 

  • having no reasonable prospects of success  
  • being complicated
  • excessively long-running times
  • not justifying the carrying out of further work after all the monies sunk into purchasing the caseload and
  • appearing to have been exacerbated by the skyrocketing professional indemnity insurance payments. 

When the Regulator reviewed the matter it did not uncover any regulatory issues.  

Be Sure Your Sins Will Find You Out…

However, when the legal services provider investigated the matter they found that it did not have adequate monies to pay its financial obligations. It appears that a legal professional had recommended representing the monies as disbursements. However, an independent person within the provider was signing off the payment to paper-over-the-cracks short-term. However, by late September 2020 over three hundred entries amounting to approximately one-hundred-and-seventy-five thousand pounds. Fifty-per-cent comprised fees in respect of: 

  • insurance
  • draftsperson
  • barristers 
  • medical and 
  • treatment. 

It also uncovered that the legal service provider was overdrawn by approximately half-a-million pounds. In March 2021 the legal services provider had racked up pounds in debt. Despite claiming not to have wanted to cause upset to the clients by committing acts of theft, he intended to return the monies at some point in time when the legal services provider was sold to another prospective buyer. However, the legal professional was unable to do so.       

What Did The Solicitors Disciplinary Tribunal Say?

The SDT whilst seemingly empathizing with the legal professional’s predicament was critical of him for putting the legal service provider before their clients and neglecting its duty to communicate with it regarding the precarious financial position it found itself in.   

Lessons Learned?

Have you ever stopped to think about why legal professionals find themselves in such trouble? One area they need to focus on is putting the clients ahead of the legal services provider from a regulatory perspective. 
If you have experienced something similar, or have an opposing viewpoint, please kindly leave a comment on the article or contact us.  

ASSESSING FIRMS

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