A solicitor has been sanctioned for sending a client a cheque for his damages which bounced.
Daniel Reuben Klein had assured the owner of the cheque-cashing business who paid the money out that it would be honoured, only for it not to be.
Mr Klein is a former sole practitioner at DK Solicitors in Manchester – which closed in October 2013 – and has reached a regulatory settlement agreement with the Solicitors Regulation Authority (SRA), under which he has been rebuked and fined £2,000 – the most the regulator can sanction a solicitor without referring them to a disciplinary tribunal.
The agreement recorded several rule breaches that arose after he accepted a new client instruction in June 2014 to act for ‘Mr N’ on a personal injury matter claim. The firm did not have professional indemnity insurance cover because it had closed.
In June 2015, Mr N’s matter settled and his damages were paid into the firm’s office account, which was overdrawn.
Mr Klein issued a cheque from its client account to Mr N for £3,750 without checking there was enough of Mr N’s money in the client account to honour the cheque.
Soon after, Mr N presented the cheque to the cheque-cashing business. During a telephone conversation, Mr Klein assured the business owner, ‘Mr D’, that the cheque would be honoured, but three days later Mr D was informed by his bank that the cheque had been dishonoured due to insufficient funds.
In 2016, Mr Klein agreed a repayment plan with Mr D. He made two £100 repayments before reneging on the plan. In February 2018, Mr Klein repaid a further £100. In August and September 2019, Mr Klein paid Mr D the rest of the sum he was owed.
Mr D complained to the SRA but Mr Klein did not co-operate with the investigation and failed to provide information the SRA requested from him under statutory production notices.
As part of the agreement, Mr Klein admitted various breaches of the SRA principles, including failing to maintain the trust and confidence in him and in the delivery of legal services, and other rules.
The SRA said the rebuke and fine “reflects the seriousness of Mr Klein’s conduct and the length of time for which it persisted, but recognises that he accepts the breaches and has now remedied the situation”.
In mitigation, Mr Klein said he has been experiencing difficult personal circumstances for several years, including during the period of his misconduct, and that the damages were paid into the firm’s office account by mistake.
The regulator has published three other settlement agreements. Charlie Zean Shiung How was rebuked after pleading guilty to drink driving last Boxing Day. He was fined £375 and ordered to pay prosecution costs of £85 and a victim surcharge of £37.
Mr How was disqualified from driving for 12 months, reduced to nine months after he successfully completed a drink drive rehabilitation course.
In mitigation, Mr How said he has shown remorse for his actions and cooperated fully with the police and courts, admitting the offence at the first opportunity.
He also pointed out that this was an “isolated incident that was out of character”, and referred to the leniency shown by the court having heard the full circumstances of the case.
In the next case, James Macwhirter, who was a partner and non-executive director of Malletts Solicitors in King’s Lynn, Norfolk, agreed to a fine of £2,000, costs of £7,500 and conditions on his practising certificate that prevent him from being a manager, owner or compliance officer of an SRA-regulated firm.
He was sanctioned as a partner at a firm where accounts rules breaches were found, even though in mitigation he said he had no involvement in the day-to-day management of the business, and took “no positive action” that caused the breaches – indeed, he did not know about them until the SRA’s investigation.
However, he accepted liability as he was in a managerial position at the firm at the time.
The firm experienced financial difficulties between 2014 and 2016, and entered voluntary liquidation in November 2016.
The SRA uncovered improper transfers from client to office account, payments recorded on client ledgers that were not actually made, and client accounts being overdrawn.
Finally, Good & Co Yorkshire LLP in Bradford has been rebuked and fined £2,000, while Mohammed Abid was rebuked and fined £1,000 as one of two partners and the COFA.
The agreement said that, from October 2014, the firm failed to record all its dealing with client and office money in its books of account, leading it to hold £200,000 of office money in the client account some two years later, and £6,620 of client money in its office account. It also kept clients’ money longer than it should have.
The firm’s monthly client bank account reconciliations between October 2014 and October 2016 recorded that it was holding less on behalf of clients than it should have been; it only investigated these discrepancies when the SRA asked it to do so and then established that the firm did hold enough money in its client account.
“The issue had been caused because the firm’s books of account were inaccurate. The firm brought its books of account up to date and has since introduced more robust accounting systems,” the agreement noted. Clients did not suffer any losses.
The firm admitted to the accounts rules breaches and Mr Abid to failing in his duties as the COFA, because he did not report any of these issues to the SRA.