[1]Slater & Gordon: Extensive self-reporting
Slater & Gordon (S&G) has accepted a fine of nearly £82,000 for historic shortcomings in the legal services business it acquired from Quindell.
It represents possibly the last of many wounds suffered by Slater & Gordon following the 2015 deal, which almost sank the law firm altogether.
A regulatory settlement agreement published by the Solicitors Regulation Authority (SRA) just before Christmas acknowledged that, following the acquisition, the new management of the business “identified and self-reported to us a number of matters under our reporting obligation”.
The agreement related to the fast-track matters that occurred prior to the acquisition “or arose from the systems and processes that pre-dated the acquisition”.
The SRA said: “We accept that, since the acquisition, the firm has not only made extensive self-reports but has also taken substantial steps to improve its compliance and risk management procedures. The start of this work pre-dated the majority of our investigations that led to this agreement.
“Nonetheless, the firm accepts that, given the continuity in its ABS license, it is appropriate for us to impose a financial penalty for these historic matters, which continued for a period after the firm’s new ownership structure took effect.”
S&G admitted to ineffective controls for identifying, monitoring and managing risks to client money between September 2014 and June 2020 in relation to matters handled by Gareth Evans, Angela Drinkwater and another fee-earner.
Mr Evans was struck off last year [2] after telling a client that her case was ongoing when it had actually settled and using some of the money to pay other clients damages they were not entitled to.
Ms Drinkwater was a paralegal who did the same, leading to a conviction for fraud by abuse of position in 2018. She was sentenced to 16 months’ imprisonment, suspended by 24 months, and in 2019 was banned from working for law firms without SRA permission.
The other, unnamed fee-earner ran two cases where clients’ damages were retained for more than three years.
S&G also admitted that, between October 2014 and June 2020, failures in its supervision system led to:
- 18 cases dealt with by the five fee-earners (only naming Mr Evans) that were not progressed for a “significant period of time”;
- 21 cases dealt with by the same fee-earners where court directions were not complied with, leading to some being struck out;
- 20 cases dealt with by four fee-earners – Mr Evans, Ms Drinkwater and two of the unnamed fee-earners – where court proceedings were discontinued without clients’ instructions or notifying them;
- Other cases in which clients were not informed of, or were misinformed as to, the progress of their matters; and
- 660 matters began between November 2017 and December 2018 where clients were wrongly told that after-the-event insurance was in place. The firm subsequently resolved the issue with no loss to clients.
The SRA said the cases represented less than 0.18% of all matters handled by the firm in that time.
In deciding a fine was appropriate, the regulator said there was no evidence that the breaches caused any “significant” harm, while there was “a low risk of repetition, particularly in light of the improved systems which the firm has since put in place”.
The fine was set at 0.15% of S&G average turnover for the period of nearly £91m – £135,980 – with the maximum 40% discount to reflect the mitigating factors then applied to reach £81,588. S&G also agreed to pay costs of £16,350.