Commercial lawyer fined for providing banking facility to client

SDT: Solicitor did not understand rule

A solicitor at a commercial law firm in Cardiff has been fined £24,000 for recklessly providing a banking facility for a client over a period of almost two years.

Sion Tudur, 43, admitted the misconduct, but said both he and the firm, Capital Law, failed to “understand the application of the rule prohibiting use of the client account as a banking facility”.

However, the issue was pointed out to him during the period and his continued failure to comply with it meant that he acted without integrity from that point. Mr Tudur also admitted to acting recklessly.

The Solicitors Regulation Authority (SRA) said in an agreed outcome that Mr Tudur, admitted in 2005, joined Capital Law in December 2013 as an associate solicitor and brought with him a client, ‘Mr E’.

Following the settlement of litigation, Capital Law received £2m on behalf of Mr E in February 2014, which was paid out over a period of nine months.

Mr E also retained Capital Law in relation to the building of three nursing homes, funded by commercial loans.

This resulted in 53 payments, totalling over £1m, being made out of client account between December 2013 and November 2015.

Of these payments, 47 went to an account in the name of Mr E’s wife and six to associated companies.

The law firm’s finance director queried the payments in November 2014, noting that the firm “appeared to be providing banking facilities to Mr E”. Mr Tudur replied “and no further action seems to have been taken by the firm”, the SRA said.

The finance director again queried the position in January 2015, because payments were being made to creditors, rather than to Mr E. Mr Tudur responded by saying they related to loan repayments.

Mr Tudur was given a copy of the SRA warning notice on the improper use of client account as a banking facility the same month and the finance director reminded him of the ban soon after.

Among the payments were nine to Mr E’s creditors, including five to third-party companies, three for expenses relating to his developments and one involving “a payment for a car which was a personal expense of Mr E”.

Mr Tudur resigned from Capital Law in April 2017 and is currently a partner at Loosemores in Cardiff.

He admitted providing banking facilities for his client, allowing funds to remain in client account without proper reason, and that his conduct was reckless.

In non-agreed mitigation, the solicitor said he considered his original retainer with Mr E to encompass both the receipt of the settlement money and the discharge of his liabilities – including personal ones – as instructed.

As he had been instructed in relation to Mr E’s personal loans to fund the litigation, he believed that discharging them formed part of the retainer.

Similarly he advised Mr E in raising finance for the nursing homes, and the negotiation and drafting of a number of the loans.

Mr Tudur said he now accepted that in the case of payments made in respect of loans with which he had no involvement, payments relating to Mr E’s personal expenses and to third parties, there was no underlying legal transaction.

The solicitor said that at the time the £2m settlement money was received from Mr E, he “did not understand” rule 14.5 of the accounts rules, which bans law firms from using their client accounts as banking facilities, and neither did his employer.

But he accepted that, the issue having been raised by the firm mid-retainer, he was on notice of a risk and should have been “even more careful” about payments.

Working in a “very busy corporate department at all hours of the day”, he expected his employer to guide him “on matters of compliance”.

Approving the agreed outcome, the Solicitors Disciplinary Tribunal said the misconduct was “very serious” and a fine alone would not adequately protect the public.

Conditions were imposed on Mr Tudur’s practising certificate preventing him from being a compliance officer and from holding client money or acting as a signatory on client account without SRA approval.

He was ordered to pay £22,000 in costs.

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