Red flags to look for when spotting financial abuse
Judgment date: 5 October 2012
Solicitors Regulation Authority uphold decision of Solicitors Disciplinary Tribunal to impose a fine and costs order against a managing partner of a solicitors firm, for breaches of rule 5.01 and 5.03 of the Code of Conduct.
M, Managing Partner at a firm of solicitors, was found guilty of failing to exercise appropriate supervision over unqualified staff in breach of rule 5.01 and 5.03 of the Solicitors’ Code of Conduct 2001 (“the Code”), and failing to ensure that material facts were disclosed to mortgagee clients in breach of rule 1 of the Code.
She was fined £2,000 by the Solicitors Disciplinary Tribunal (“the Tribunal”) and ordered to pay £10,000 in costs.
M had employed A, a non-solicitor, as Senior Conveyancer. In 2008, they acted for a family, and the respective lenders, in connection with five property transactions. In 2009, further to an investigation by the Solicitors Regulation Authority, it transpired that the lender clients had not been informed by M and/or A that the balance of the mortgage advance, following payment of the purchase price to the vendor, had been used to pay costs, fees and disbursements.
The Tribunal found that A’s twenty-six years’ experience as a conveyancer did not remove M’s overriding obligation under rule 5 of the Code to supervise her. It also said that failing to ensure the lenders were abridged of the material facts had the effect of depriving them of the chance to reconsider their decision as to whether or not to proceed with the transactions. The Tribunal considered that the appropriate sanction in the circumstances was a fine of £2,000, a reprimand not being appropriate and further, that M should bear the majority of the costs, given the lateness of her admission to the allegations.
M appealed on the basis, inter alia, that the sanction was excessive and that the Tribunal had not considered the lesser possible sanctions before deciding upon the fine.
Her appeal was dismissed. In finding the Tribunal’s decision appropriate, Cranston J confirmed the general principle that absent an error of law, the Court must pay considerable respect to the decision of the Tribunal, as the body best placed to consider and assess the professional misconduct of a Solicitor (see Bolton v Law Society  1 W.L.R 512 and Salisbury v Law Society  EWCA Civ 1285,  1 W.L.R 1286.) The Tribunal had properly concluded that a lesser sanction would not be appropriate. The misconduct merited the imposition of a fine and M had admitted the allegations very late in the day, which justified the costs order.
This case again emphasises the Courts’ reluctance to interfere with the decision of a professional regulatory body. Further, early admissions and insightful engagement in the regulatory process can get you a long way.
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