‘De-risking’ and financial exclusion
SRA v Siaw  EWHC 2737 (Admin)
The Solicitors Regulation Authority (SRA) has successfully appealed the Solicitors Disciplinary Tribunal’s (SDT) decision to not strike off a solicitor who was found to have received client fees into his personal bank account (Section 49(2) of the Solicitors Act 1974).
Mr Kwame Siaw (Mr S), a partner at Mountain Partnership Services in London, was directed by the Senior Partner to stop taking new cases and to not take any new pro bono matters without permission. The reasoning behind this direction related to suspicions arising in relation to ten previous matters where fees had been kept ‘off the books’. It was also agreed that once Mr S had finalised his existing files, he would then leave the firm.
Despite the agreement, Mr S took on a new client directly, without permission, and proceeded to take money from the client which he received into his personal bank account.
In evidence, Mr S claimed that the client was pro bono and that the fees he received into his account solely related to disbursements for a completed EEA form and for issuing the Judicial Review Claim Form. However, his oral evidence going to the issue of him paying a particular oral hearing fee was disproven between hearing days and he was required to withdraw his evidence on that point. During the course of evidence, Mr S was only able to substantiate £205 in disbursements compared to a figure of £555, which was £55 more than he had taken on account.
The client in question also gave evidence that Mr S had told them that his fees would be £1,500; and further that he should place £500 on account of costs into Mr S’s personal account.
Unusually, despite Mr S withdrawing his evidence about the receipt of funds from the client, and the other evidence which contradicted his original account, the SDT did not find Mr S had been dishonest. Instead, the SDT found that he had failed to act with integrity and in a way that maintained the public trust in him and the legal profession. He was fined £10,000 but the SDT imposed no other sanctions. The SDT reasoned that it found Mr S had a
“deep if misguided belief that he was acting privately to help a friend and that at least part of the money was his own”. (Judgement at )
The SRA appealed to the High Court on the basis that the sanction the SDT had imposed was too lenient.
The High Court concluded that the SDT’s finding that Mr S was not dishonest was at odds with a finding of a lack of integrity and the evidence it had before it. Mr S acknowledged that the money he had received should have been paid to the firm, as the client was the firm’s client (the client having signed a letter of authority for the firm to act on his behalf and correspondence for the client being sent on firm letterhead). As such, this factual matrix could only be consistent with a finding that retaining the money was dishonest. In short, Mr S could not have held such a “deep but misguided belief…”(Judgement at ).
Further, the Court stated:
…in relation to Allegation 1.1 that the clear finding made by the SDT at [30.36] that the respondent: “knew that either all or part of the money he received was costs and that he should pay it into the firm” is only consistent with a conclusion that his retention of the money was dishonest (Judgement at ).
…in relation to Allegation 1.2 that the finding at [31.10] that the answers given by the respondent to the SRA’s questions 4 and 5 were “untrue and misleading” is an unqualified finding that he had lied to and mislead the regulator…If that analysis were correct, it would be inconsistent with the SDT’s finding that there was a lack of integrity on the part of the respondent (Judgement at ).
While the Court determined Mr S was not required to pay the £10,000 fine the SDT had imposed, he was struck off the roll and ordered to pay additional costs.
In deciding to strike off M S, the High Court noted that while the amount of money might have been small, any dishonesty in respect of any client money is serious, and the fact that Mr S had lied both to the SRA and when giving his evidence before the SDT, aggravated the underlying conduct.
Adopting the definition of dishonesty pronounced by Lord Hughes at paragraph 74 of Ivey v Genting Casinos  UKSC 67, it is very difficult indeed to understand why the SDT did not find Mr S to be dishonest at first instance.
It is quite clear from Rule 13 of the Solicitors Accounts Rules that solicitors are not permitted to receive client funds into their personal accounts (Rule 13.1 provides: If you hold or receive client money, you must keep one or more client accounts (unless all the client money is always dealt with outside any client account in accordance with rule 9, rule 9, rule 15 or rule 16).) It would be wholly inconsistent with the public interest and public protection considerations if such conduct did not lead to a finding of dishonesty based on the factual matrix of this case.
Sophie Bolzonello is a Associate (Australian Qualified) in the Regulatory department and specialises in advising regulated professionals on compliance, in investigations and in respect of enforcement action. She also advises regulators on policy, governance, prosecutions and litigation.
For further information on the issues raised in this blog post, please contact a member of our Regulatory team.
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