Solicitor used disbursement cash to keep firm afloat

SDT: Solicitor had county court judgments against him

A solicitor who used disbursements meant for experts and counsel to keep his firm afloat – and lied to his regulator about the debts he was being chased for – has been struck off.

Chidi Umezurike told the Solicitors Regulation Authority (SRA) that he did not have any county court judgments against him, and that the firm had not received notices in relation to its debts, when in fact there had been at least three judgments and six sets of proceedings issued against the firm.

Admitted in 2005, he set up Kent firm CK Law in 2010, employing two fee-earners and a bookkeeper, and working mainly in child and criminal law.

Its turnover for 2017/18 was £136,000 but such was the firm’s financial position that Mr Umezurike also worked at least two days a week at a bank, doing what he described as “financial crime”.

The SRA began investigating in 2017 after a report from a law firm acting for a former consultant solicitor at CK Law.

The regulator was unable to establish the firm’s liabilities to clients, because it held on to monies received for professional disbursements and did not pay them out. These included £17,300 from the Legal Aid Agency.

The longest unpaid disbursement the SRA found was 523 days old and it estimated the client account shortage at a minimum of £20,400.

There were also 14 improper client-to-office transfers, but for 11 of which the firm would have exceeded its £15,000 overdraft limit.

Further, there were retrospective changes to client ledgers and cashbooks, while Mr Umezurike did not deliver to the SRA by the deadline all the documents he was required to under a statutory production notice.

The Solicitors Disciplinary Tribunal (SDT) found that he retained the money to pay for office expenses.

All the allegations against Mr Umezurike were proven, and in relation to all but the production notice the SDT determined that he had acted dishonestly.

In mitigation, the solicitor argued that he had not been personal enriched by his misconduct, had been upfront with the SRA about some of the breaches, and that the accounts rules problems arose during “a difficult period” when he struggled to keep on top of his regulatory duties.

The tribunal concluded that Mr Umezurike’s motivation for his misconduct was to keep his firm trading, and this was aggravated by his dishonesty.

“His misconduct was deliberate, calculated and repeated over a period of time. He had attempted to conceal his wrongdoing by retrospectively amending his financial records.

“[He] knew that his conduct was in material breach of his obligation to protect the public and the reputation of the profession.

“His conduct had had a direct impact on experts and counsel, some of whom had to issue proceedings in order to be paid monies that [he] had improperly and dishonestly retained.”

Mr Umezurike was also ordered to pay costs of just under £40,000.

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