A probate manager who admitting making 140 “improper withdrawals” over a period of 11 years, resulting in a client account shortage of £730,000, has been banned from working for law firms.
John Philip Dunne, probate manager at Bury-based Butcher & Barlow for 34 years, told the Solicitors Disciplinary Tribunal (SDT) that every error was “sad and regrettable” but he had “not chosen to make improper transfers”.
A spokeswoman for Butcher & Barlow told Legal Futures that “all irregularities had been rectified without loss to any clients”.
Mr Dunne, a non-lawyer born in 1953, resigned from his post at the firm, which has 11 offices in Lancashire, Cheshire and Greater Manchester, in November 2012. The Solicitors Regulation Authority (SRA) launched an investigation the following January.
The SRA identified that “140 improper withdrawals from client account were made, to the value of £730,700.51, on 20 different client matters between November 2001 and November 2012”.
The regulator said all the client matters “were or had been under the control” of Mr Dunne.
“The majority of the improper withdrawals identified by the investigation related to payments to care homes for fees for clients of the firm from monies held on behalf of other, unrelated, clients of the firm.
“This caused shortages on the client ledger. The investigation identified that monies held for a number of clients had been used to fund payments for other unrelated clients, which then caused shortages on those client ledgers.
“In order to rectify the shortages on those client ledgers, monies held for other unrelated clients would then be used to make up the shortfall.”
At a meeting with three of the firm’s partners, in November 2012, the SRA said Mr Dunne admitted “payments had been made on the wrong files and explained that this due to pressure of work”.
The SRA said one of the matters which “exemplified” the way in which the withdrawals were made saw 21 payments to five different care homes, totalling over £111,000. Mr Dunne later admitted that the payments related to “care homes for other clients”.
In another case, 16 payments were made to a care home where the client had not been staying. A further £40,000 was transferred from his estate to a beneficiary of another, unrelated estate.
Giving evidence at the SDT, Mr Dunne confirmed that he was aware that it was wrong to use the money of one client for the benefit of another.
“The respondent maintained that on each occasion the transfer or payment was an error which was sad and regrettable.
“The respondent told the tribunal that he had had access to the firm’s accounts ledgers but he had failed to have proper control of the matters he was handling. He told the tribunal he had not chosen to make improper transfers.”
The tribunal heard in SRA v Dunne (case no. 11318-2014) that the probate manager was accused by the SRA, among other things, of making improper withdrawals, breaching the SRA Accounts Rules, failing to act in the best interests of clients, “compromising or impairing” a solicitor’s proper standard of work and the reputation of the profession, and behaving in a way likely to diminish public trust.
The SDT held that had there been “a handful” of inappropriate transactions it may have been possible to characterise his actions as “merely careless”, but the “scale of the misuse” and the long period of time could not be ignored.
It accepted that Mr Dunne did not have “any particular motive to make the incorrect transfers”, and that “he was working in a muddle or a mess and not checking files and the payments being made”.
But the SDT ruled that it “was difficult to comprehend” how Mr Dunne could have made some of the payments “unless he was dishonest or grossly reckless”. The simple step of comparing the invoice received against the client file would have avoided many of the transactions, it said. “[Mr Dunne] had, in effect, turned a blind eye to whether or not the payments he was making were proper.”
The tribunal concluded that the recklessness “amounted to a lack of integrity”, but not to dishonesty, because it “could not be sure” that his actions had been dishonest.
The SDT ordered, under section 43 of the Solicitors Act 1974, that no recognised body, solicitor or employee of a solicitor is permitted to employ or pay Mr Dunne for services without the SRA’s permission. Mr Dunne was ordered to pay costs of £5,500.
A spokeswoman for Butcher & Barlow said: “Over three years ago we identified that Mr J P Dunne had caused incorrect transactions to be recorded in our records.
“As a result of our internal audit procedures we discovered irregularities and immediately reported the matter to the SRA who fully investigated the circumstances.
“They found no fault with Butcher & Barlow or any other members of the firm and confirmed that all irregularities had been rectified without loss to any clients.”