[1]Disbursements: Solicitor received five years of qualified accountants reports
A solicitor who held on to money meant for counsel, experts and others for several years so as to aid his firm’s cash flow has been struck off.
Martyn Robert Brown said he only paid those whose fees he had been put in funds for when they chased him for payment.
Mr Brown, born in 1967 and qualified in 1998, was a sole practitioner at Birkenhead firm Integrum Law, which he set up in 2009 having previously been a partner at another firm.
An inspection by the Solicitors Regulation Authority (SRA) in April 2018 that showed the firm was holding £49,000 of unpaid professional disbursements and £20,000 on unpaid after-the-event insurance premiums off the books.
The SRA shut the firm down in July 2018 after Mr Brown told the regulator that he intended to close the firm and was likely facing bankruptcy, with the shortfall on client account still unremedied.
The firm had previously received five years of qualified accountants’ reports, during which period the shortfall was “relatively static”, the tribunal said.
A sample of 22 files showed that some of the unpaid disbursements and premiums dated back to 2012.
In an interview with the SRA, Mr Brown accepted he had been aware of the issues and said: “I didn’t feel as though I was in a position to deal with it.” He said he should have sought an overdraft instead.
He said he had good relationships with counsel and experts, and most would wait for payment, although he would pay those who chased at least some of the money owing “to keep them sweet”.
Mr Brown admitted two charges – that he failed to remedy the breaches identified by the qualified accountants’ reports and failed to pay the disbursements once put in funds for them – and also that he had acted dishonestly.
In mitigation, he said he had no issues with the firm until 2014, when he was sued by his former partners in relation to a case which had been transferred between the two practices in 2009.
His insurer refused cover and Mr Brown had to fund the litigation himself, describing it as “aggressive and complex litigation” that is still continuing.
In addition to the costs of the case, he said the time he spent on it adversely affected his firm’s fee income, while the litigation meant he could not sell or merge the practice.
Mr Brown said he regularly took no drawings and injected his own money into Integrum on several occasions, and submitted that an order restricting what he could do as a solicitor – such as a ban on running a firm – would be an appropriate sanction.
The tribunal said it was “difficult to formulate conditions that could address dishonest conduct”, and noted that Mr Brown had been prosecuted before, in 2009, when found to have breached the accounts rules where an employee had misappropriated client funds. One of five respondents in that case, he had been fined £4,000.
“In light of his previous appearance, the tribunal would have expected [him] to be extremely vigilant and alert to compliance with the accounts rules,” it added.
The tribunal said that Mr Brown “did not care about the consequences of his actions for those professionals [whose money he kept], and had only thought about his own need for the money”. It was “quite extraordinary” that he had withheld third-party funds “for such a long period of time”.
It concluded that Mr Brown “could not be trusted” and presented a risk to the public.
“Cash flow issues were a common challenge which many practices dealt with on a daily basis, and could not be an excuse for the respondent’s behaviour.
“The respondent had effectively been stealing money from the professionals to whom that money was due in order to finance his firm. He certainly had no intention of paying it to them unless and until he had to.
“This was unacceptable behaviour, and to allow the respondent to remain a member of profession would undermine public confidence in it.”
Mr Brown was also ordered to pay costs of £9,000.