Accounts: Reconciliation failures
A law firm owner’s failures turned his practice into a “complete shambles” which was “akin to a slow-motion car crash occurring over a number of years”, the Solicitors Disciplinary Tribunal (SDT) has found.
Such was Ifeolu Olumide Ogunshakin’s inability to manage his firm’s accounts – through which millions of pounds had passed – that “it was still not clear whether there had been a shortage on the client account”.
The SDT decided that, although in many respects he was “a competent and well-regarded solicitor”, his abilities did not extend to the oversight and compliance required to be a COLP, COFA or sole manager of a firm.
Mr Ogunshakin, who qualified in 2002, was fined £10,000 for his misconduct while running Mayflower Law in Birmingham and banned from holding those roles indefinitely, as well as from being a partner or having any control over client monies.
“The tribunal considered that this was a case where the respondent had ‘taken his eye off the ball’ and had got himself and the firm into a complete shambles from which he had found it difficult to recover.
“The respondent’s actions were neither planned nor spontaneous but had been akin to a slow-motion car crash occurring over a number of years.”
It was clear, the SDT went on, that he had put little in the way of “effective governance structures, arrangements, systems and controls in place” to ensure compliance.
He had paid a bookkeeper to work just seven hours a week, which had been “wholly inadequate to deal with magnitude of the accounting problems which had engulfed the firm”.
The problems at Mayflower Law came to light following a qualified accountant’s report in 2018.
The Solicitors Regulation Authority (SRA) carried out two forensic investigations over the next two years – during which matters only got worse, with millions of pounds worth of items unreconciled – before it closed down the practice in October 2020.
In deciding to intervene, the SRA adjudication panel said it was “not persuaded that Mr Ogunshakin has the commitment or the capability to resolve the issues facing his firm”.
It also identified a pattern of the solicitor “inappropriately delegating to unqualified members of staff tasks that should, in the circumstances, be his responsibility” – his wife, a speech therapist, was dealing with the weekly reconciliations and he had previously tasked a trainee solicitor with resolving the accounts problems.
The SDT said: “A solicitor of any level of experience would know the absolute importance of carrying out regular reconciliations as client money is sacrosanct and the solicitor its guardian.
“The firm’s accounting records, where they existed, could not be relied upon and the [SRA] could not form an opinion on whether the firm could meet its liabilities to clients. This put client money at risk and demonstrated a failure to protect client money.”
But the SDT found no evidence of direct harm to clients, although “this may have been a matter of luck”.
The tribunal concluded that the sanctions imposed “would be sufficient to mark the seriousness of the misconduct and provide adequate protection to the public from the risk of future harm” from Mr Ogunshakin.
He was also ordered to pay costs of £17,000.