Two well-known law firms have accepted fines from the Solicitors Regulation Authority (SRA) for accounts rules breaches – one for allowing its client account to be used as a banking facility and the other for holding disbursements in its office account.
South-west firm Ashfords has been fined £16,200 fine after admitting to holding more than £1m in its client account without providing any underlying legal services.
According to a regulatory settlement agreement published by the SRA, the firm became aware in 2018 of what it had done when the fee-earner involved attended an internal training session. The firm then self-reported.
It acted for a client in connection with seven separate building projects and had an arrangement where third parties paid funds relating to the works into its client account. Ashfords held the money until a stage of work was completed, at which point it was paid to the client.
In some cases, monies were held for over a year – in all, more than £1m was involved.
This breached the accounts rules, although the SRA found no money laundering concerns about the transactions.
In deciding a fine was appropriate, the SRA acknowledged that Ashfords reported the matter to the SRA and accepted the allegations at the earliest opportunity, no client suffered any loss, and the firm took “substantive steps” to change and improve its procedures
This mitigation was why the SRA applied the maximum 40% reduction in the fine – which it had calculated at £27,000 – to settle on £16,200.
Meanwhile, in a separate agreement, Wilmslow firm Hilary Meredith Solicitors – best known for its work seeking compensation for military personnel – has been fined £8,000 after admitting that it incorrectly retained £700,000 of unpaid professional disbursements in its office account over a period of three years.
The disbursements should either have been paid or transferred to the client account by the end of the second working day.
Hilary Meredith self-reported after it discovered the failure and ensured that the client account cash shortage was fully replaced.
The SRA noted that the firm accepted the allegations at the earliest opportunity and remedied the breaches, and updated its procedures to prevent a recurrence. No clients suffered any actual loss.
Hilary Meredith was fined 0.4% of its turnover, £13,333, less the maximum 40% discount, reducing the penalty to £8,000.