Lawyers Should Follow The Account Rules Or Suffer The Consequences

The Solicitors Disciplinary Tribunal ruling in the case of Philip Browell is a lesson for all legal professionals to follow the Solicitors Account Rules and not use client monies for any other purposes.

On the evidence in front of it the esteemed Solicitors Disciplinary Tribunal concluded that there was indeed strong information which led it to suspect that there was a case for the now former solicitor to answer regarding his professional conduct as a legal professional. It alleged that the solicitor had breached the Solicitors Accounts rules by behaviour which involved facilitating the incorrect transfer of monies which were designated as client monies to the office account. The matter did not end there for the solicitor as the Solicitors Regulation Authority also alleged that he was responsible for his law firm retaining residual client account balances.

The Solicitors Regulation Authority understandably and quite rightly took the allegations of a breach of its seemingly sacred Account Rulesextremely seriously and rightly so. When the decision by the Solicitors Disciplinary Tribunal emerged, it became very clear why the Regulator had taken the action it had done in not permitting him to hold any senior compliance roles with a law firm during its investigation.

During the course of its investigation the Regulator uncovered damning evidence of flagrant and serious breaches of the Solicitors Accounts Rules. The solicitor had serious questions to answer over his decision to contact the Solicitors Regulation Authority to request permission to donate just shy of £10,000 worth of residual balances. Details emerged from back in 2018 when the solicitor made three payments with the cumulative total of £140,000 from the designated client account to the office account. Under normal circumstances the payment of staff is recorded by way of an entry on the business account leger and the monies are paid as agreed. Amazingly the solicitor did not follow the established methods and decided to use these client monies to make outstanding wage and tax payments for his firm’s staff. The solicitor attempted to justify his decision by claiming that he had apparently been unable to put aside enough time to access the money. The SDT found more contravention of the rules as the firm had neglected its duty to communicate with clients about the balances on their respective conveyancing transaction accounts on a yearly basis.

By way of sanction the regulator imposed conditions onto his practice certificate. The SRA handed down a monetary fine in the amount of £20,000 and ordered him to pay costs amounting to £25,000. The high level of fine was handed down because his conduct brought the profession into disrepute. To his credit the solicitor recognised his error, did all he reasonably could to mitigate against the risk and described client monies as ‘sacrosanct’.

This case must focus the mind of all legal professionals especially those from businesses experiencing financial difficulties and added pressure from colleagues where bills need paying and where the money is ring-fenced in a specially reserved client account. Some lawyers may be tempted to incorrectly pay bills and tax from monies held in client account..

However, if such firms and individual lawyers make a conscious effort to adhere to the Account rules, avoid paying the bills of the firm from designated client accounts and ensuring they keep themselves up to date with their Continuous Professional Development regarding the Code of Conduct, Solicitors Account Rules and other related training to reduce the risk of finding themselves in hot water with the Regulator.

ASSESSING FIRMS

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SOURCES USED WHEN WRITING THIS ARTICLE

[1] Hyde, John – Owner fined for dipping into client funds to pay the bills – 8 March 2022 - Owner fined for dipping into client funds to pay the bills | News | Law Gazette

[2] Rose, Neil – Solicitor used residual balances to pay salaries and VAT bills – 8 March 2022 - Solicitor used residual balances to pay salaries and VAT bills - Legal Futures

[3] SRA Accounts Rules - SRA | Accounts Rules | Solicitors Regulation Authority

[4] Solicitors Regulation Authority – Philip Browell – case number 123788 - SRA | Browell, Philip - 123788 | Solicitors Regulation Authority