SRA: Regulatory settlement agreement
A former partner in a London law firm transferred almost £700,000 of his own money to a client company to avoid a negligence claim.
The Solicitors Regulation Authority (SRA) said a relative of John Charles Wright transferred a further £200,000 to Company A, which later paid back a larger sum including a “potential profit” of £10,500 for the solicitor.
Fining him £5,000, the SRA said Mr Wright accepted there was an own-interest conflict.
He had also previously been sanctioned for similar conduct – in 2023, the Solicitors Disciplinary Tribunal (SDT) fined him £32,000 for secretly working on a property purchase when his firm, Ashley Wilson Solicitors, was acting for the buyer.
In a regulatory settlement agreement with Mr Wright – avoiding another referral to the tribunal – the SRA said the solicitor, who qualified in 1991, was instructed by Company A in February 2019 on buying a property’s leasehold, to be followed by the freehold.
Company A was wholly owned by Person A and Mr Wright had acted previously for both.
Contracts were exchanged for the leasehold in March 2019. Mr Wright found out the following month that the annual ground rent was £33,000.
The SRA said there were discussions at Ashley Wilson in May 2019 between Mr Wright, one of his partners and Person A’s wife “about the implications of having not identified the correct ground rent and the possibility of a claim against the firm”.
The purchase was to be partially funded by a bridging loan but, on learning of the ground rent, the lender reduced what it was prepared to lend to £520,000, some £242,000 less than it had previously offered.
A relative of Mr Wright transferred £200,000 to Company A in June 2019, and the solicitor transferred £50,000. The purchase of the leasehold completed, after which Mr Wright paid the stamp duty and transferred more money to the company, including £550,000 from his personal account, to discharge the bridging loan.
The SRA said: “Mr Wright did not advise his client of the conflict of interest that existed, advise his client to obtain independent legal advice or satisfy himself that it was appropriate to act in circumstances where he had invested in the transaction.”
The solicitor worked on the purchase of the freehold title until he left Ashley Wilson in February 2020. Mr Wright received payments from Company A in June and July 2020 totalling over £905,000, leaving a “potential profit” for the solicitor of almost £10,500.
It was not until the following year that he told Ashley Wilson that he had put funds into the transaction to mitigate the loss to the client and protect the firm.
The agreement said that, by investing in the A transaction, “a conflict of interests arose as Mr Wright may have obtained a legal interest in Property A. Further, Mr Wright’s investments were made in the context of a potential negligence claim against him and/or the firm”.
Mr Wright admitted failing to maintain public trust. The SRA said his misconduct was “intentional, reckless and formed a pattern of misconduct”, which was “planned and repeated on several occasions over a period of five months”.
The conduct was motivated by an attempt to avoid a negligence claim, he failed to act in the best interests of his client and it had potential to cause significant harm to the client.
However, he had co-operated with the regulator. “The SRA considers that Mr Wright’s conduct was reckless but not grossly reckless. There was no actual loss to the client”.
On the basis of statements of means supplied by Mr Wright which indicated that he had “a limited gross annual income”, the SRA agreed with the solicitor’s proposed fine of £5,000. He was ordered to pay costs of £6,200.
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