[1]SRA: Lack of an “orderly and transparent wind-down”
The Solicitors Regulation Authority (SRA) has published its first decision fining a law firm for not closing down properly after failure to secure indemnity cover by the end of the extended policy period (EPP).
The regulator said that AJ Bond & Co, based in Bromley, Kent, had closed by the end of December last year, but continued to hold “live client files and monies” after that date.
The EPP gives firms that cannot find indemnity cover a further three months to try and secure it. AJ Bond & Co entered the EPP on 1 October last year.
Partners Anthony Bond, the firm’s COFA, and Nicholas Bond, the firm’s COLP, were rebuked and fined £2,000 in an agreed settlement with the SRA.
The regulator said the firm had an “obligation to close” if it could not find indemnity insurance for the year 2013-2014. The regulator inspected the firm in January this year and produced a report the following month.
This alleged that both Mr Bonds “failed to effect the orderly and transparent wind-down” of his firm’s activities under the SRA’s principles and code of conduct.
It was also alleged that they broke the Solicitors Account Rules, and that funds totalling £175,555 were held in the firm’s client account in respect of 29 closed client matters, the largest of which related to one individual and was for £131,860.
Anthony Bond admitted all the allegations, but in mitigation said that it was his intention to retire as soon as possible. He said he had been diagnosed with a chronic illness in 2011, which had worsened over time.
He apologised for the breaches, saying that clients had been contacted prior to the closure and none had complained, while all live matters had been transferred and outstanding residual balances returned to clients.
Nicholas Bond admitted the allegations, apologised for the breaches, and gave an undertaking that he would only act as an employed solicitor and not as a sole practitioner, sole director, manager or owner of a recognised or licensed body.
He agreed to deal with all outstanding residual balances remaining on the client account of AJ Bond & Co, provide evidence to the SRA confirming a nil balance had been reached on the client account and pay the regulator’s costs of £300.