Accounts: Panel did not explain reasons for its findings
A solicitor has had a rare success in successfully appealing a rebuke issued by the Solicitors Regulation Authority (SRA), which had found him vicariously responsible for errors by his bookkeepers.
The Solicitors Disciplinary Tribunal (SDT) also awarded Seamus Andrew costs of nearly £38,000 after finding that the SRA adjudication panel had provided insufficient reasons for upholding the decision of the original adjudicator.
Mr Andrew founded the law firm Andrews in 2004 and merged it with Madrid-based law firm Ontier in 2016 to become Ontier LLP, based in the City of London. He was head of legal practice and of finance and administration until the end of 2020, when he retired.
The SDT heard that the solicitor undertook the bookkeeping for the firm’s office account between May 2015 and December 2016, after which accountants Moore Kingston Smith (MKS) took over until August 2018. Mr Andrew also undertook the bookkeeping for the client account during this period.
From August 2018, he employed a practice manager who took over the bookkeeping. The SRA investigated after MKS produced qualified accountants reports for 2018, 2019 and 2020.
An SRA adjudicator recommended a rebuke after finding that Mr Andrew had caused or allowed three shortages on Ontier’s client account: £93,600 between May and July 2017, £13,969 between June and September 2018, and £10,000 between April and August 2018.
Mr Andrew asked an adjudication panel to review this but it upheld the decision and Mr Andrew appealed to the SDT. Ahead of the hearing, the SRA accepted that it had erred in finding the first shortage.
In relation to the £13,969, Mr Andrew and his expert accountant witness argued that it was caused by MKS’s bookkeeping errors.
The adjudication panel, however, said he could not “avoid responsibility”; MKS acted as the firm’s agent, “and in the last analysis, Mr Andrew is responsible for the way he and his firm handle client money, even through agents”.
Even if the original transfer was the result of an error, it went on, “the continuance of that error for three months or so ought to have been picked up by Mr Andrew”.
“For a senior solicitor, and a HOLP and HOFA to ‘blame the bookkeepers’ (which is in effect Mr Andrew’s position) is unattractive and we do not accept it.”
The SDT ruled that the panel “did not explain why Mr Andrew was not entitled to rely on professional bookkeepers or why he was not entitled to blame them when they had made a mistake”.
It continued: “The adjudication panel did not give a reason as to why they did not accept Mr Andrew’s explanation. They described it as ‘unattractive’ but did not explain why.
“There was reference to his HOLP and HOFA roles but the reasoning does not make clear why that meant that, effectively, Mr Andrew was vicariously liable for all actions undertaken by professionals whom he had engaged to do this work.”
Similarly, the panel did not explain how Mr Andrew ought to have picked up the error.
The £10,000 figure related to money provided for court fees which were eventually not paid. The money was not returned for months and the panel held Mr Andrew responsible for this delay “for the reasons already explained”.
It went on: “Either he should have personally attended to the matter or, if not, put in place arrangements that did. But he did not.”
But, the SDT said, the reasons “had not been adequately explained and were not further elaborated”.
Again, the panel did not explain what arrangements Mr Andrew ought to have put and why failing to do so meant he was personally culpable.
The SDT concluded: “The tribunal found that the reasons given were inadequate which represented a serious procedural irregularity. As such, the decision of the adjudication panel was overturned and the appeal was allowed.”
The SDT said costs should follow the event, which the SRA accepted. Mr Andrew sought costs of nearly £62,000, but the SDT allowed £38,000 after applying the guideline hourly rates and reducing by a third to £27,000 the amount allowed for counsel.
Leading regulatory barrister Greg Treverton-Jones KC was instructed but the SDT said the case “could have been dealt with by a senior junior”.
It added: “Mr Andrew’s was entitled to instruct whomever he wished, but the profession should not necessarily be expected to fund that choice without limit.”
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