SRA: Solicitor acted as she did for client’s convenience
A solicitor who successfully released money frozen in a client’s bank account then broke the accounts rules by having it transferred into her firm’s client account, from which various payments were made.
The Solicitors Regulation Authority (SRA) fined Sally Hutchings, a legal director at south London law firm Morr & Co £13,500 for allowing its client account to be used as a banking facility.
She told the regulator that she thought the money was akin to the proceeds of litigation.
A regulatory settlement agreement published yesterday recorded that, in January 2021, Ms Hutchings acted for ‘Client A’ in a dispute with its bank, which had frozen their account.
She sent a letter before action requesting its immediate unblocking, arguing that the bank had no reasonable belief the account was being used for fraudulent purposes and that proper notice and reasons must be provided for any withdrawal of banking facilities.
After a series of letters, Ms Hutchings made an application for an injunction to the High Court. The proceedings concluded when a consent order was agreed which saw the bank pay more than £1.5m into the firm’s client account.
Ms Hutchings said this was because Client A had instructed her that it had no bank account to which the released funds could be sent, its account having been frozen.
The funds were used to settle the firm’s fees of £109,000 and over the following weeks the rest was transferred to a third party in four tranches, at the client’s request.
Ms Hutchings admitted in the agreement that she allowed the client account to be used as a banking facility, as there was no underlying legal transaction.
The SRA said she had done this “for no other reason than the convenience” of the client.
“By allowing Client A to use the firm’s client account as a banking facility and transferring the proceeds of an account that had previously been frozen to a third party when the purpose of the retainer had come to an end, she risked harming the reputation of the profession,” it said.
In determining the sanction, the SRA said it took into account that Ms Hutchings had regarded the funds as being akin to the proceeds of litigation.
Prior to this incident, she had had an unblemished career, while she had “demonstrated remorse and insight into her conduct”.
Her error was serious but not such that required a referral to the Solicitors Disciplinary Tribunal.
In addition to the fine, Ms Hutchings agreed that within six months she would complete courses relating first to anti money laundering, and second to the SRA accounts rules, including handling client money.
Ms Hutchings also agreed to pay costs of £10,000.
