Law firm facilitated £8m “cheque-clearing scheme”


Cheques: Firm transferred money before they had cleared

A partner who allowed her firm’s client account to be used as a banking facility in a £8m “cheque-clearing scheme” has been struck off by the Solicitors Disciplinary Tribunal (SDT).

Barbara Julia Gribbin told the SDT she knew the clearing scheme “was wrong and I still agreed to do it”, and admitted that when the cheques started to bounce, she used client money to make up the shortfall.

The tribunal found that between January 2016 and August 2018, over £8m was transferred out of the client account of her firm Iceblue Legal, based in Ormskirk, Lancashire, to two firms of costs draftsmen and to Mr AD, a director of both.

Mr AD deposited cheques into Iceblue’s client account on what became almost a daily basis, and the firm then transferred the same sums back to him usually on the same day, before they had cleared. There was no suggestion that Mr AD or the costs firms were clients.

Cheques began to bounce from May 2017, but the SDT said that despite being aware of the risks Ms Gribbin “continued to operate the cheque-clearing scheme”, leaving a minimum shortfall on client account of over £121,500 by the end of August 2018, when the firm was shut down.

This was two weeks after she reported the shortfall to the Solicitors Regulation Authority (SRA), admitting too that it had led to delays in making payments to clients. Some 61 payments to clients, worth £40,000 between them, were left outstanding while Ms Gribbin was “trying to juggle the client account”.

Ms Gribbin – born in 1965 and qualified in 1992 – said she met Mr AD when she was an articled clerk and he headed that law firm’s accounts department.

She became a sole practitioner but “found running a practice challenging”. She was about to close her firm, when she said Mr AD approached her and suggested she merge with Iceblue, which carried out personal injury work, wills and probate. The firm had “financial backing” from one of Mr AD’s costs firms.

When the cheques started bouncing, Ms Gribbin, by then the majority owner at Iceblue, “stated she had given Mr AD access to the firm’s online client account bank statements and that he had been involved in setting up the firm’s bank accounts as he ‘would be looking after all the financials’.”

She told the SRA she had not taken any drawings for months, had used personal savings and loans to keep the business going, but had “struggled to cope”. She said that on some occasions money was “put back in” by Mr AD.

The solicitor said she felt she had “basically been shat on from a great height” and Mr AD had been “probably playing me very well”.

Mr AD initially told her that he was going to sell a property to plug the shortfall but subsequently ignored her calls. When she went round to his home “to confront him”, she said he told her he had put his company into administration and that she would have to sell files to realise work in progress.

The tribunal ruled that, “while there may have been some truth” in Ms Gribbin’s assertion that she had been taken advantage of, she was an experienced solicitor who had been in practice for about 25 years, and was her firm’s COLP and COFA.

“When the cheques started to bounce and shortfalls started to arise on client account, her motivation was to keep the firm going in the hope that she would be able to somehow rectify the shortfall.

“However, during this period she had used client money to pay for her practising certificate fee and to make payments to HMRC.”

The tribunal said that there was clearly “some history” between Ms Gribbin and Mr AD, and her motivation for agreeing to the cheque-clearing scheme may have been to help his company, which she said had cash flow problems, but there was no evidence of any agreement.

Ms Gribbin was found to have breached several SRA principles and acted dishonestly in allowing her client account to be used as it was.

She was also found to have acted dishonestly in failing to return £39,700 of client money “promptly or at all”.

“It was quite clear [she] knew the client cheques she had been withholding were due to clients and she had made a deliberate decision not to pay that money to them.”

Ms Gribbin told the SRA these were for “small piddly amounts” which clients tended not to chase.

The SDT also found the solicitor acted with a lack of integrity in failing to replace a cash shortage in client account of at least £121,500, although in this instance she had not been dishonest, and also that she failed to ensure that client account reconciliations were completed every five weeks as required by the rules.

She was struck off and ordered to pay costs of £27,600.




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