Accounts: Solicitor made double payments and deductions
A solicitor who described himself as “unable to take control” of his firm’s accounts when he started receiving client money – he admitted not knowing interest should be paid to clients – has been fined £10,000.
Paul Michael Ireland admitted to a catalogue of accounts-related errors, including paying court fees twice and also paying them before receiving the money from clients, as well as taking payments from clients twice.
Approving an agreed outcome between Mr Ireland and the Solicitors Regulation Authority (SRA), the Solicitors Disciplinary Tribunal (SDT) heard that the solicitor was admitted in 2000 and since August 2013 has been principal, COLP and COFA of Paul Ireland Solicitors in Cheshire.
Mr Ireland started to hold client money in spring 2016, but failed to keep client ledgers, a cashbook or carry out reconciliations.
He recruited a bookkeeper in February 2018 to reconstruct the accounts, but it proved impossible with the cashbook. The SRA inspected the books in December 2018, leading to an investigation.
His firm was found to have had a cash shortage on client account of over £16,800 by the end of October 2018, while the HMRC was owed over £53,000.
The lack of a file reference system meant that in one case his law firm took a payment of £550 from one client but booked it against another with the same surname.
Other errors included the firm paying a court fee of £215 twice, taking a payment from a client account twice, and taking a payment of £1,200 from a client “once as a standalone payment and once as part of the overall end of-matter invoice”.
Mr Ireland also ended up “writing cheques out of the wrong cheque book” because of his failure to keep up-to-date ledgers.
“The firm used Excel to try to reconcile the accounts, rather than accounting software, which led the firm’s bookkeeper to say that it was impossible to reconstruct the cashbook for client account or the office side of client ledgers.”
On his ignorance of the rules about interest, the SRA said: “The public expects solicitors to keep clients’ interest for the benefit of those clients. [His] failure even to know about the accounts rules in this regard is likely to lower public confidence in him.”
The SRA said Mr Ireland “did not gain from his conduct”, other than receiving an additional £214 in interest over three years which should have been applied to client accounts.
Mr Ireland admitted he had failed to run his business properly.
In mitigation, not agreed by the SRA, Mr Ireland said he had now bought a new case management system and was bringing in experienced administrative staff.
He said the firm had been “unable to catch up” after it took in client money and he was “unable to take control”.
The SRA said that “in essence” Mr Ireland had not paid “proper attention to the firm’s accounts” and his misconduct had continued over a period of time.
However, he had “taken steps to replace client monies in full” prior to the SRA’s visit to his firm in 2018, he was open and frank with the regulator, had shown genuine insight into his misconduct, while no clients had suffered “any substantive loss”.
He was fined £10,000 and ordered to pay £10,000 costs. A condition was imposed requiring Mr Ireland to file an accountant’s report within two months of the six-month period ending 21 March 2021.