A “grossly negligent” salaried partner has been suspended for a year after $2.2m in escrow monies belonging to the other party in a deal was “dissipated in a series of unauthorised transactions”.
The Solicitors Disciplinary Tribunal (SDT) said Queen Gladys Appoh had failed in her duties as partner and COFA and “caused a high degree of harm” to the client, who had lost a “huge amount in funds”.
The SDT went on: “Whilst her conduct was not deliberate, and it appeared she may not have been entirely culpable, she had been grossly negligent.”
The tribunal said it took into account that Ms Appoh was not a signatory on the client bank account, despite being the COFA, and did not have direct control over the circumstances leading to the misconduct.
The SDT said it appeared that she had been “misled to some extent” by ‘Solicitor X’, senior partner of Bilson Henaku, a high street law firm based in south London which was closed down by the Solicitors Regulation Authority (SRA) in February 2017 – but she should not have allowed this to happen.
Proceedings have been “stayed indefinitely” against Solicitor X on the grounds of ill-health.
An agreed outcome between Ms Appoh and the SRA said Ms Appoh was admitted in 2010 and joined the law firm as salaried partner in 2012.
Solicitor X acted for Company P in relation to a purported loan agreement with Company C. In December 2014, the firm received $2.4m from Company C under an escrow agreement; the money represented a success or arrangement fee rather than the actual loan itself.
The escrow agreement provided for the return of the monies if the loan was not made within 30 days. It was not and Company C asked for its money back. Though $200,000 was returned in November 2015, the rest was not.
The High Court ordered Solicitor X and the firm to return the money in October 2016. They failed to do so and Company C’s solicitors complained to the SRA. The judgment debt remains unsatisfied.
Ms Appoh became aware of the matter in June 2016. She admitted “failing to locate and safeguard” the monies, and that by aiding and abetting, or at least turning “a blind eye to Solicitor X’s misconduct in withholding them”, she had lacked integrity.
It was agreed that she was aware of the High Court order. But she took “no or no adequate steps” to ensure the firm’s compliance with it. This too lacked integrity.
“The respondent therefore bears culpability (albeit less than Solicitor X) for the firm’s failure to comply with the order and to satisfy the judgment for $2.2m.”
The SRA said its investigation officer “found no evidence” that the firm still held the $2.2m.
“Neither Solicitor X nor the respondent provided any information as to its whereabouts, hence the decision to intervene on 2 February 2017.”
The SRA said that after the firm was shut down, its investigation officer discovered that in the six months following receipt of the money from Company C, all but $1,300 was removed from the escrow account.
Separately, Ms Appoh admitted failing to challenge and stop the firm’s practice of charging clients £60 towards its professional indemnity insurance.
“She accepts that this was inappropriate and should have been challenged and stopped by her,” the agreement said.
Ms Appoh further admitted failing to maintain proper accounting records and to carry out her duties as a COFA “adequately or at all”.
She told the SRA that she was “a partner in name only”, had no authority at the firm and no access to books or other information: “She was really only a fee-earner at the firm.”
The regulator accepted that she “did not have an improper motive for her misconduct – her failings, while very serious, were failures of omission”.
The SDT said striking Ms Appoh off would be “unreasonable and disproportionate in light of the fact that Solicitor X was also involved in these allegations and that Solicitor X’s level of culpability could not be ascertained”.
When she returns to practice, Ms Appoh will also face conditions on her practising certificate preventing her from acting as a manager or owner of a law firm, COLP or COFA, or holding client money.
She was ordered to pay costs of £13,800, a quarter of the amount claimed by the SRA, on the grounds that she did not have any assets and had limited means.