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“Despicable” partner used client money to prop up firm

Client account: £247,000 shortfall

A partner who abused his position of trust “in the most despicable way”, raising false bills and using client money to “prop up” his law firm, has been struck off.

Alexander John Marks made improper transfers from client to office account and between clients at former central London firm Alexander Marks, leading to a shortage on client account of over £247,000.

The shortage only came to light when the firm, which was set up in 2006, merged with two other firms in October 2015. The misconduct had gone on throughout the firm’s existence.

Mr Marks, admitted to the roll in 1980, was a director of the successor firm before he agreed to resign in March 2016 when his previous activities were discovered.

The successor firm notified the Solicitors Regulation Authority (SRA) about breaches in the accounts rules, triggering an investigation.

The Solicitors Disciplinary Tribunal (SDT) said [1] the facts “demonstrated a pattern of behaviour in using client money to bolster office account and even to make payments in personal matters” – such as his mortgage.

The SDT said Mr Marks billed one client £127,000 for work worth a maximum of £32,000 and charged another £22,000 having estimated his fees at £4,500.

“He was raising false bills and using client money to prop up the firm, which was clearly in a parlous state. The partners were using business credit cards to cover drawings and there were multiple loans which came due at the end of every month.”

The tribunal said Mr Marks “breached the trust” of people who had died and entrusted their last wishes to him.

In one case, involving an estate which had already been mishandled, the SDT said the solicitor “continued to abuse his position of trust in the most despicable way”.

In another case, where the firm received £179,000 from a client, instead of the correct sum of £179 to pay penalty interest on late completion, Mr Marks “dipped into the money available on client account for a number of different transfers totalling nearly £64,000”.

The SDT said Mr Marks attempted to conceal his law firm’s true financial position from his merger partners by paying £40,000 into office account the day before the merger took effect.

The tribunal said it was “calculated and despicable” for Mr Marks to pass on to another law firm his liabilities from a near 10-year exercise of ‘teeming and lading’ – allocating one client’s payment to another in order to make the books balance and hide what was going on.

The merged firm was left with a “massive bill” and reputational damage, while the harm caused to the profession was “extreme”.

The solicitor denied acting dishonestly, but the tribunal found his behaviour in causing the cash shortage and the teeming and lading was “repeated, calculated and consciously carried out over a long period of time”.

The tribunal found that Paul Elliott, the bookkeeper at Alexander Marks between September 2006 and September 2015, was “fully involved” in the teeming and lading activity, going “beyond obeying orders” and undertaking “some of the creative transactions independently”.

He was found to have undertaken or assisted in the improper transfers, failed to identify the overpayment, and acted dishonestly.

Mr Marks was struck off and ordered to pay costs of £16,900.

Mr Elliott was banned from working for law firms, subject to the SRA’s approval, under a section 43 order and ordered to pay costs of £8,400.

Sheldon Marvyn Leaman, a former partner at Alexander Marks, was fined £2,000 by the SRA under a regulatory settlement agreement in March this year, after admitting that he failed to ensure the firm complied with the accounts rules.