“Shambolic” solicitor suspended over disorderly closure of firm

SDT: Solicitor missed several opportunities to do the right thing

A solicitor who ran his law firm in a “shambolic fashion”, taking on more than 100 new cases when it should have been in the process of closing down, has been suspended for three months.

The Solicitors Regulation Authority (SRA), which closed Terence Donnellan’s Hertfordshire law firm, said the solicitor was homeless and receiving help from The Solicitors’ Charity.

The Solicitors Disciplinary Tribunal (SDT) heard that Mr Donnellan set up The Walkers Partnership in 1987, based in Royston and specialising in private client and conveyancing. The firm employed one assistant solicitor, a legal executive and three other members of staff.

Mr Donnellan accepted renewal terms for his indemnity insurance policy for the 2019/2020 indemnity year but failed to pay the premium.

As it did not have cover, the law firm entered the 30-day extended indemnity period (EIP) on 1 October 2019, during which it could continue to practise while trying to obtain indemnity insurance.

When, by the end of the month, Mr Donnellan had still not paid his premium, his broker warned him that the firm would enter the cessation period (CP) and “copied and pasted” the Law Society guidance on this into an email to him.

Firms are not allowed to take on new work during the CP and The Walkers Partnership “ought to have been closed” by the end of it on 29 December 2019.

“Instead, the firm’s matter list showed 345 matters held by the firm and a client balance of £1,152,580.

“The firm had no run-off insurance, it had not communicated to its clients that it was closing, and it had approximately 7,500 wills and 1,400 sets of deeds in storage.”

Early in January 2020, the day before he was visited by the SRA – which had been kept up-to-date by his insurance broker – Mr Donnellan “posted a message on Facebook intimating that his firm was to close, and seeking a six-month loan”.

The SRA’s investigation officer reported that the solicitor “appeared visibly emotional, very upset at times, very anxious, unable to focus, and tearful”.

Mr Donnellan confirmed that the firm had no insurance and said this was because “he suffered from stress and anxiety”. Later that month, the SRA closed the firm.

The SRA received 28 reports from clients relating to the closure of the firm and the Compensation Fund made seven grants, totalling £53,500, to reimburse clients where the law firm had received funds but not done any work before it was closed. There was no suggestion the funds were misused.

In an agreed outcome with Mr Donnellan approved by the SDT, the SRA said he had informed it that he was unable to find a loan to pay his insurance premium, which had been increased from £32,000 to £49,000, because he had “recently been the victim of identity theft, which had affected his credit rating”.

He admitted failing to notify the SRA that the firm had entered the EIP and CP, and allowing the firm to accept about 105 new matters whilst in the CP. He also failed to achieve an orderly shutdown of the firm.

The SRA said Mr Donnellan had “suffered severe financial hardship” as a result of his firm’s closure, having had a landlord “changing the locks to his room without his knowledge”, and being “physically assaulted by members of the public” while in council housing.

Having being deemed a vulnerable adult by Cambridge City Council, he remained homeless.

The SDT found that Mr Donnellan had run his business “in a shambolic fashion”. A solicitor with 30 years of experience “ought to have understood his professional obligations” and had caused “considerable stress” to clients.

The misconduct was “spontaneous and reactive” and there were no allegations of dishonesty or a lack of integrity. “Mr Donnellan missed several opportunities to do the right thing,” the SDT said.

“The tribunal did, however, take full account of the personal mitigation put forward, including the health issues that Mr Donnellan was experiencing. There was no doubt that the fall-out from the intervention and closure of the firm had hit him hard.”

He was suspended for three months and banned for an “indefinite period” from acting as a manager or owner of a law firm, or a compliance officer.

The tribunal made no order for costs given the solicitor’s financial situation.

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