Client cash: Multiple rule breaches
Two solicitors and a registered foreign lawyer at an immigration firm in north-west London have been fined by the Solicitors Disciplinary Tribunal (SDT) for misappropriating client money.
The tribunal said there was no evidence that the foreign lawyer, Liaqat Hussain, despite being sole owner of Marks & Marks in Harrow, had “taken an interest in the financial running of the firm” and he had previously been fined for accounts rule breaches.
The SDT said Rene De Silva, a salaried partner, had “made the actual transfers” which led to deficits on client account ranging from £14,300 to £47,100.
“At the time, he did not appear to have a grip on the finances of the firm despite the fact that he was managing the business”.
Amara Kayani, an associate solicitor and the firm’s compliance officer for finance and administration (COFA), “acquiesced to what was going on”.
The debit balances were caused by the transfer of monies from client account to office account when there were insufficient funds held on behalf of the individual clients.
The transfers took place at the time bills were raised by the firm irrespective of whether there were sufficient monies in client account to cover the transfer to office account.
The three lawyers admitted all the allegations against them, ranging from breaches of the accounts rules to lack of integrity and recklessness. They were not accused of dishonesty.
Sheraz Sultan, the firm’s non-lawyer bookkeeper, denied being responsible for an “act or default in relation to legal practices” by allowing debit balances to occur on client account which made it undesirable for him to work for solicitors.
However, the SDT said that despite a “lack of supervision”, Mr Sultan should have ensured compliance with the accounts rules and imposed a section 43 order on him, banning him from working for law firms.
The SRA launched an investigation into Marks & Marks in September 2016 “in response to concerns about immigration matters handled by the firm”.
The investigator’s report found that there was a minimum shortage of £14,300 on client account at the end of the previous month. The money was eventually made good and no client lost out.
On the issue of lack of integrity, the tribunal said the firm had allowed transfers from individual client accounts to the office account in excess of the funds held by clients and “had not safeguarded client money despite the fact two were partners in the firm and the other the COFA”.
The SDT said the three lawyers “turned a blind eye to the risk”, and failed to ensure compliance with the accounts rules.
“They had disregarded that risk by failing to effectively participate in the management of and checking of the firm’s accounts. They had clearly been reckless.”
Mr Hussain, Mr De Silva and Ms Kayani admitted breaching SRA Principles 2,6,8 and 10, along with the accounts rules, by making or allowing the improper transfers.
They also admitted failing to carry out proper reconciliations, failing to give or send bills of costs before withdrawing money from client account and recklessness.
Mr Sultan admitted backdating two invoices. “He accepted that he had done this to make the reconciliations work. He knew the debit balances existed.”
The SDT said this meant that it was “undesirable for him to be involved in a legal practice”.
Mr Hussain and Mr De Silva were each ordered to pay fines of £12,500 and costs of £15,600. Ms Kayani was ordered to pay a fine of £10,000 and the same amount in costs.
A section 43 order was imposed on Mr Sultan, preventing him from working for a law firm without SRA permission. He was ordered to pay £1,500 in costs.