The director of a former personal injury firm who admitted taking money from two different litigation funders for the same cases in an attempt to keep it operating “at all costs” has been struck off.
The Solicitors Disciplinary Tribunal (SDT) said London firm Seth Lovis & Co had employed 65 staff, “all of whom lost their employment when the firm collapsed and went into administration” as a result of the misconduct by Seth Lovis.
The Solicitors Regulation Authority (SRA) estimated that at the time of its closure the law firm owed ‘Funder A’ over £3.1m and ‘Funder B’ £1.1m.
Mr Lovis also admitted allowing sums received for professional disbursements to be transferred from his firm’s client to its office account and used for the firm’s purposes or paid to one of its funders.
The SDT said his “overt, deliberate and repeated misappropriation of client monies breached a fundamental tenet of the solicitors’ profession” to safeguard client funds.
“The tribunal did not accept the submissions made on his behalf that the respondent did not know that he was not entitled to use client monies in the manner that he did.”
The tribunal said Mr Lovis took a “conscious decision to manage the firm’s cashflow in this manner” and his misconduct was repeated “over a protracted period of time”, at least from 2016 to 2018.
“Weighing all of these factors in the balance the tribunal found that the respondent’s misconduct and the lack of integrity displayed represented a gross departure from the standards expected of a solicitor.”
His misconduct was “motivated by self-interest, namely to keep the firm operating at all costs”.
The tribunal heard that Mr Lovis, admitted in 1995, was a director and had a 61% shareholding in Seth Lovis & Co, which closed in March 2019 and went into administration 10 days later.
The firm used Funder A to provide advance payments of profit costs and disbursements in claimant personal injury cases and Funder B to provide advance payments of VAT and success fees.
The SDT said that Mr Lovis allowed payments to be received from more than one funder for the same case, even though this was prohibited in the funding agreements.
The SRA said that “duplicate claims had been submitted to both Funder A and Funder B in respect of 21 client matters”.
The SRA found that in three matters, money received from defendants to cover the cost of claimant’s ATE premiums had been transferred, either in part or completely, to the firm’s office account. In one case the entire amount was used to pay Funder A.
Mr Lovis admitted acting with a lack of integrity both in double funding cases and misusing money intended to pay professional disbursements.
Mr Lovis’s advocate said his decision to introduce double funding “was a ‘corporate’ one as opposed to a deliberate decision” to flout the accounts rules.
The solicitor viewed the “facilities from funders A and B as essentially lines of credit and he treated them as such”, and with financial controls in place the “overall picture was that the system worked well and as it should”.
Mr Lovis had only just been discharged from bankruptcy, had lost his firm, had not worked for over two years and was unemployable, the advocate, Gary Christianson of FSL Legal Solicitors, said.
However, there was nothing to suggest he was “not fit, proper or competent to run a file”.
But the SDT determined that the seriousness of his misconduct “was at the highest level” and that allowing him to continue practising, even under restrictions, “did not adequately reflect the seriousness of the harm” Mr Lovis had caused to the reputation of the profession
The solicitor was struck off and ordered to pay £35,000 in costs.