A sole practitioner who claimed to be “unable to distinguish right from wrong” has been fined £10,000 by the Solicitors Disciplinary Tribunal (SDT).
Rejecting her claim, the SDT said Claire Flood’s decision to transfer money from client accounts to pay her tax bill lacked “moral soundness, rectitude and a steady adherence to an ethical code”.
The tribunal went on: “She was running a business during this time, she knew she had to make payments to HMRC and she had formulated a plan to meet those payments.
“She knew she had not maintained accounting records, and although she had raised bills on some files, she did not take any steps to check whether there were funds on those client ledgers before making the transfers necessary to meet her liability to HMRC.
“There were other files where no bills had been raised at all, and on one no instructions received, yet still the respondent made transfers without any proper checks being carried out to ascertain if funds were available.
“The tribunal was satisfied that the respondent’s conduct in making these transfers did lack moral soundness, rectitude and a steady adherence to an ethical code.”
The SDT heard in SRA v Flood (case no.11444-2015) that a forensic investigation officer from the SRA visited the sole practitioner after her accountant listed a serious of breaches of the Accounts Rules and marked his report as qualified.
The officer reported in June 2015 that Ms Flood had misappropriated over £10,000 from her firm’s client bank account “to settle her tax liability to the Inland Revenue”.
Ms Flood admitted three allegations made against her by the SRA. These were that she failed to remedy breaches of the Accounts Rules promptly on discovery, failed to keep proper accounting records and failed to conduct client account reconciliations.
She also admitted breaching the accounts rules and SRA Principle 6 (“you must behave in a way that maintains the trust the public places in you and in the provision of legal services”) by “withdrawing money from general client account on client ledgers when no money was held on behalf of that client”.
However, Ms Flood did not accept the allegation that by doing so, she had acted with a lack of integrity.
The SDT said: “It was clear to the tribunal that the respondent’s accounting records were chaotic and no books of accounts or client reconciliations had been maintained for a lengthy period of time from May 2013 to September 2014.
“Bills had not been properly entered into the accounting records and the situation had become progressively worse.
“The tribunal accepted that during this period the respondent had suffered an unusually large number of personal difficulties.”
However, the SDT said that Ms Flood was “not so severely affected that she did not know what she was doing” and said it was satisfied that she had acted with a lack of integrity.
On sanction, the tribunal said: “The aggravating factors in this case were that the respondent had caused a shortage on client account by improperly transferring funds to her office account for her personal use.
“Her actions had been repeated over a long period of time and she had taken advantage of her position by improperly transferring funds from the client account of a potential client who had not yet confirmed instructions.
“The respondent ought to have known her conduct was in breach of her obligations to protect the public and the reputation of the profession.
“The mitigating factors were that the respondent had rectified the shortfall prior to the start of the SRA investigation. She had co-operated with her regulator and had a long, previously unblemished career.
“She had made early admissions and the tribunal particularly took into account her very difficult personal circumstances over the material period of time.”
Ms Flood was also ordered to pay costs of £13,000.