Law firm fined after building up £105k in residual client balances

Curwens: All breaches rectified

A North London law firm that allowed £105,000 of residual client balances to build up over 13 years has been fined £14,000 by the Solicitors Regulation Authority (SRA).

Curwens in Enfield was sanctioned for other accounts rules breaches spanning several years as well after it self-reported in 2021.

Among the inadequate procedures to deal with residual client balances on inactive or closed matters between 2008 and 2021 was the failure to send annual letters to clients on the amount of money held on their behalf. “Had the firm done so, this may have raised a red flag,” the SRA said.

The regulator also found that, for eight years, the firm’s systems and processes did not identify and allocate unidentified receipts in client account, “leading to an improper use of a suspense ledger with a significant unresolved balance of £34,453”.

Further, it used its client account as a banking facility for a decade by receiving, holding and transferring £103,000 in relation to rent and rent deposits received in relation to the firm’s offices – which were owned by partners, ex-partners and connected parties – where there was no underlying transaction or regulated service being provided.

In a regulatory settlement agreement published yesterday, the SRA said in took into account the fact that Curwens self-reported, “expressed remorse that the firm’s compliance systems and processes were not sufficiently robust”, and fully rectified the problems.

The firm put in place a financial compliance action plan and taskforce to improve compliance and provided the SRA with regular updates, while also training staff to improve awareness of the accounts rules.

The regulator said a fine was the appropriate outcome: “The conduct showed a disregard for the firm’s regulatory obligations and whilst the breaches have been rectified the misconduct continued for longer than was reasonable.

“There was no lasting significant harm to clients or third parties but there was the potential there would have been if the misconduct had continued.”

The firm’s records were good, which enabled Curwens to identify and return funds to its clients, with interest.

The SRA’s penalty guidance indicated a fine of £16,607.60, based on the firm’s turnover, which it reduced to £14,116.46 to reflect the mitigation.

Curwens also agreed to pay costs of £600.

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