“Manifestly incompetent” partner suspended over client cash

SDT: Return to practice will be subject to conditions

A “manifestly incompetent” partner, whose “neglect and carelessness” led to a shortage in her law firm’s client account of £214,000, has been suspended for 18 months by the Solicitors Disciplinary Tribunal (SDT).

The SDT heard that Elizabeth Teresa Gilmour, a solicitor for over 30 years, also provided incorrect information to her law firm’s indemnity insurer.

Ms Gilmour, who qualified in 1987, was a partner at TPC Solicitors in Manchester between 2004 and 2019. She was also its compliance officer for finance and administration (COFA) between October 2015 and January 2019.

The shortfall arose because client money to pay professional disbursements was held in the office account instead between 2014 and 2018. The problem was highlighted in two accountants’ reports, dated April 2017 and April 2018.

The Solicitors Regulation Authority (SRA) identified the full extent of what had happened in July 2018.

In an agreed outcome approved by the tribunal, the SRA said there was “no system” at her firm for ensuring that invoices for disbursements were paid, “no control” to ensure that signed cheques were actually posted to the professionals involved, and the law firm relied on its accounts manager “remembering to pay” once the money was in office account.

The tribunal said Ms Gilmour had “direct control” of her law firm’s finances, yet she failed to properly exercise it.

“Ms Gilmour’s conduct was, however, principally a result of neglect and carelessness rather than any planned course of action. Ms Gilmour’s culpability falls to be assessed on the basis that she was manifestly incompetent but not reckless.”

The SDT said there was no “direct harm” to clients because the shortfall on client account was rectified.

Ms Gilmour paid £5,000 into client account and fellow partner Shahida Mohammed £15,000 in July 2018.

However, £200,000 was paid off by new partner Rizwana Majid later that year.

The SRA said there was a risk to the money being held outside the firm’s client account for so long.

“Had the firm become insolvent, then the client money being held in the firm’s office account would not have been ‘ring fenced’. It would have potentially been treated as part of the firm’s distributable assets and would not have been repaid to the firm’s clients.”

Ms Gilmour admitted that she breached various rules and SRA principles, and showed a lack of integrity in the final year, which was when she said the accountants explained to her why they had qualified the accounts.

When completing an indemnity insurance renewal form in the summer of 2017, Ms Gilmour confirmed that TPC Solicitors had not “experienced any cash flow or any other financial difficulties in the last 12 months” and had sufficient working capital.

Despite being the COFA, Ms Gilmour failed to tell the SRA about the issues raised by the accountants’ reports.

She argued in mitigation, not agreed by the SRA, that “no concerns” were mentioned by the law firm’s accounts manager and said the accountants did not advise her that the money needed to be repaid immediately.

She “did not appreciate the ramifications or urgency of the situation”, she claimed.

On the issue of indemnity insurance, the former partner replied that “she only considered the position in relation to profit”. The solicitor was suspended for 18 months and ordered to pay costs of £7,600.

Once the suspension ends, her return to practice will be subject to conditions preventing her from being a partner in a law firm or sole practitioner, from being a COLP or COFA, from holding client money or being a signatory on client account.

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