COFA sanctioned for “misappropriating” £120,000 from firm
SRA: rare agreement with non-solicitor
A compliance officer for finance and administration at a Lincoln law firm has agreed to have his activities in the profession restricted after admitting to misappropriating £120,000.
Ian Potter worked as a cashier at Dale & Co in 2013, and over 10 months transferred the money from the firm’s office account to his personal bank account.
In a rare regulatory settlement agreement involving a non-solicitor, the Solicitors Regulation Authority (SRA) said that the firm reported Mr Potter’s actions, which also included a failure to carry out reconciliations between June and October 2013.
Mr Potter admitted the allegations, and that he had behaved dishonestly. As mitigation he said that he had repaid £57,000 into Dale & Co’s office account, and that he continues to pay back the outstanding £63,000 balance at £150 per month.
At that rate, it will take him 35 years to restore the money in full, without interest.
Under the terms of the agreement – which means that a referral to the Solicitors Disciplinary Tribunal is avoided – Mr Potter is subject to an order under section 43 of the Solicitors Act 1974, which prevents anyone regulated by the SRA from employing, remunerating or going into business with him without approval from the regulator.
He also agreed to pay £15 a month for the next two years as a contribution to the SRA’s costs.
A section 43 order plus costs is the primary sanction that the tribunal is able to issue to non-solicitors.
Meanwhile, in another newly published regulatory settlement agreement, three solicitors have each been fined £2,000 for various accounts rule failures.
Deborah Geraldine Adler, Sarah Annabel Ades Lerner and Christopher John Wilson were members of East London firm Hereward & Foster until 30 September 2014, when it closed. The firm had entered into a five-year company voluntary arrangement (CVA) in June 2013.
They were found to have had a number of matters with credit balances on the office account, totalling £142,559 as at 21 May 2013.
The agreement stated: “The firm advised that the credit balances had arisen as a result of professional disbursements received into the office bank account from the Legal Services Commission (now the Legal Aid Agency) which had not been paid or transferred to the client bank account…
“The firm had difficulty in providing a clear schedule of the client matters with unpaid professional disbursements and the [SRA’s forensic investigation] report noted that there were a number of discrepancies with the amounts and dates involved. As a result, it was not possible to ascertain the full extent of the unpaid disbursements.”
This failure to keep accurate records was also a breach of the accounts rules, as was a separate failure to undertake proper client account reconciliations, leading to items described as outstanding lodgements of £18,000 and outstanding postings of £34,729.
In mitigation, the lawyers said they had informed the SRA that the firm was in serious financial difficulty and prepared the CVA to be presented to the creditors. Under this, the professional disbursement creditors took precedence for payment, and sufficient monies were paid into the CVA to repay them in full. There were no credit balances as at 30 June 2015.
The solicitors said the reconciliation problems came about because they were handling the process – alongside heavy workloads and the pressure of the firm’s financial situation – following the “prolonged and sporadic absence” of their practice manager through illness.
In addition to the fines, the trio agreed to pay £10,000 in costs over the course of the next five months.
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