A solicitor has been struck off after letting his firm be run by non-lawyers who then took more than £8m in funds supplied by the controversial Axiom Legal Financing Fund.
Christopher Tomos Hale is the fifth solicitor to be struck off because of involvement with the Axiom fund, with two others who were cleared facing an appeal against that decision.
Though the Solicitors Disciplinary Tribunal (SDT) found that Mr Hale’s motivation was not primarily for personal or professional gain – “he felt he was providing funding for those who were unable to litigate without it” – it said “his misconduct arose as a result of his inaction, naivety and passive nature”.
It continued: “The respondent had allowed himself to be misled by those that he trusted; he was lulled into a false sense of security and felt obligated to them. However, when he was given reason to distrust them, the respondent did nothing and allowed matters to get worse by his inaction.”
Mr Hale, who qualified in 2000, joined City firm Rohrer & Co in 2010. At the time it was a branch of Emmetts Solicitors, before becoming independent in 2011 and changing its name to Bracewell Law, and then to Rohrer & Co in 2012.
In 2011 he became a director of the firm and on 1 January 2012 took over ownership. Previously 60% of the shares were owned by Tim Schools, the now struck-off solicitor who set up the Axiom fund, which is under scrutiny over a potential fraud on its investors (see previous stories).
The firm obtained over £8m of funding from the Axiom fund pursuant to the terms of several agreements, including a litigation funding agreement signed by Mr Hale in May 2012. Little of it has been paid back.
The tribunal recorded that “substantial amounts” of the funding obtained were applied for general practice purposes – but the LFA said they would only be used for disbursements in a range of litigation cases.
As in previous cases, a ‘facilitation fee’ of 50% was charged by the fund’s investment manager, meaning that, with interest, the overall debt of the firm was over £13m.
Mr Hale allowed non-solicitors of “questionable integrity”, called Mr and Mrs H, to appropriate at least £1.5m of the funding for their own use. In one instance he personally authorised the transfer of £195,000 to them “despite admitting to not understanding why any monies were to be paid”, the SDT said.
Further, Mr Hale permitted the couple to invest £3m of Axiom funds in a “dubious investment scheme”.
The tribunal found that he failed to assert any control over the firm, “and permitted consultants retained by the firm and other third parties unconnected with the firm, who were non-solicitors, to exercise inappropriate control”.
The tribunal said the solicitor was on notice of the serious risk that Axiom’s investment manager was acting fraudulently, or committing some other serious breach of duty, towards the fund and its investors.
Mr Hale admitted the various allegations against him, and that he had been dishonest, saying in mitigation that he had had no previous experience of running a practice.
Deciding to strike him off, the SDT said that the harm caused by Mr Hale’s “proven and admitted misconduct was significant, both to the investors who lost money, and the reputation of the profession; members of the public would be extremely concerned to know that a solicitor had deliberately not asked questions and simply carried on, despite awareness that the reputation of those he was working with, and who were managing the practice, was questionable”.
It concluded: “The tribunal were impressed with the respondent’s insight into his misconduct and the large degree of remorse expressed by him in both his documents, and in person. The tribunal found this to be a sad case in which the respondent had accepted a position in a firm for which he was unfit and where he became the sole director and shareholder.
“These positions conferred additional responsibilities and duties upon the respondent which he did not appreciate nor fulfil. The tribunal considered that the public would expect a solicitor to have acted with greater caution and awareness in this regard.
“His firm was effectively controlled by persons which he later knew to be of dubious honesty. He allowed those persons to misappropriate client funds in excess of £8m, the vast majority of which remained outstanding.”