The Solicitors Regulation Authority (SRA) has discontinued disciplinary tribunal proceedings against two solicitors after they admitted multiple accounts rules breaches.
Bryn Martin and William Michael Strain were rebuked and fined £2,000 and £1,500 respectively – the SRA is unable to fine solicitors more than £2,000 without referring them to a tribunal.
When the tribunal does issue fines, they rarely at such a low level.
A regulatory settlement agreement entered into by the pair said that, last November, the SRA initially decided to refer them to the tribunal, but this would be “rescinded” as a result of the agreement.
This can be done without the tribunal’s consent if it has not yet certified that there is a case to answer. It does not happen frequently.
The solicitors were equity partners at what was then called Martin & Strain (now Martin & Associates) in Gwynedd, Wales until Mr Strain left in February 2017. Mr Martin held both compliance officers roles.
The SRA inspected the firm after its accountant’s report was qualified. Among the accounts rules breaches were that it had had a shortage on client account of £144,776, had had overdrawn ledgers ranging from periods of 18 to 1,339 days, delayed paying money into client account, and incorrectly used a suspense ledger.
The firm also failed to return balances on completed matters promptly, to carry out reconciliations, to show shortages on client account reconciliation statements, to properly record office account transactions, and to keep accounting records properly written up.
In mitigation, which the SRA said it did not adopt or necessarily accept, Mr Strain acknowledged his strict liability for the misconduct, but said he had no personal knowledge of the delay in paying a client cheque for £75,000 into their client account and had no personal knowledge of the suspense ledger or its use.
He said that, of the 93 files referred to by the SRA, he only had conduct and knowledge of two of them and rectified the breaches when he became aware of them.
“Mr Strain accepts his responsibility as equity partner of the firm and accepts in full his part in the difficulties. Mr Stain also accepts that matters should have addressed sooner.
“However, he says he did not regularly hold client monies on his own client matters and was not responsible for managing the firm’s accounting processes on a day to day, or partnership basis.”
In his mitigation, Mr Martin said the problems were caused by a new accounts manager and by changing accounts system.
“The firm had a proper accounting system in place, but it is accepted that it failed to ensure that this accounting system operated correctly and that proper control over the system was effected. The principals and COFA accept that they are responsible for these failures.
“Due to difficulties in entering data, it did not seem inappropriate to utilise a suspense ledger. Mr Martin now accepts that this was not correct in accordance with the rules.
“All glitches with the accounting system have been resolved. Mr Martin acknowledges that steps needed to remedy the issues were not taken soon enough.”
The firm now pays cheques received into the bank account on the same day.
Mr Martin also pointed out that no client actually suffered any financial loss. “Approximately half of the client debit balance sum of £144,776 was due to client monies being incorrectly entered in the ledgers.
“The total that the firm repaid from its own resources into client account was in the region of £75,000 and the other monies were sorted by corrective internal ledger transfers.”
The SRA said that, in light of the solicitors making their admissions, the sanctions imposed were “proportionate in all the circumstances”.
They also agreed to pay £600 each towards the SRA’s costs – a figure substantially lower than it would have been had the case gone to a tribunal.