Solicitor’s mismanagement combined with COFA’s incompetence

Accounts: Solicitor had no control

A very experienced solicitor whose “reckless mismanagement” of her law firm’s finances damaged the profession’s reputation has been struck off.

The Solicitors Disciplinary Tribunal (SDT) said sole principal Karamjeet Kaur failed to “execute her role as steward of client monies with any diligence”, while, in a separate ruling, the firm’s COFA Yasar Malik admitted “manifest incompetence”.

The tribunal heard that Ms Kaur, aged 65, was sole principal of Quick Solicitors in East London. Admitted in 1999, Ms Kaur was rebuked by a senior adjudicator at the Solicitors Regulation Authority (SRA) in 2015, fined £1,000 and ordered to pay costs.

Conditions were imposed on her practising certificate requiring her to deliver an accountant’s report to the SRA every year within six months of the end of each accounting period.

The SRA launched an investigation in August 2017, by which time Ms Kaur had a minimum cash shortage on client account of over £57,600, “due to the number of rectifying entries on client ledgers and the unpaid professional disbursements held in office account”.

But the SRA’s investigation officer was “unable to rely on the firm’s books of account”. A further investigation was launched in February 2020.

Approving an agreed outcome between Ms Kaur and the SRA, the tribunal heard that Ms Kaur admitted a long list of offences related to financial mismanagement as well as recklessness. She denied dishonesty and this allegation was withdrawn.

Among her offences were causing or allowing debit balances on client ledgers of over £53,200 between April 2016 and July 2017 and causing or allowing unpaid professional disbursements to be held on office account of at least £4,400 from February 2016 onwards.

Ms Kaur admitted failing to carry out reconciliations of her firm’s client account and failing to keep accounting records properly written up.

Mr Malik, COFA of Quick Solicitors, resigned in June 2019. Ms Kaur admitted allowing her firm to operate after his resignation without a COFA, and later telling a professional indemnity insurer, her reporting accountants and the SRA that he was still the firm’s COFA.

She failed to produce an accountant’s report by the deadline of the end of November 2019. She told the SRA that this was because the reporting accountant had not prepared it on time, but the accountant told the SRA he was not asked to prepare it until 3 December.

In non-agreed mitigation, the sole practitioner said she admitted all the allegations, apart from dishonesty, at a “very early stage” and no client had lost financially. She was struck off and ordered to pay costs of £11,000.

In a separate agreement approved by the SDT, Mr Malik admitted that as the COFA of Quick Solicitors he had been “manifestly incompetent” in failing to ensure compliance with the Accounts Rules.

Mr Malik, a non-lawyer who had worked at the law firm since 2011, said in non-agreed mitigation that he had “no experience” of the role before taking it on.

“He was not fully aware of previous unresolved accounting issues and this combined with his lack of experience to make his role difficult and stressful.

“He had underestimated the role and did not fully comprehend the difficulties and challenges associated with accounting procedures.”

The SRA said that, by the time he became COFA in October 2017, Mr Malik was “aware of the firm’s financial position” and that the SRA was investigating, but he did not know how to do the three-way reconciliations of client account required by the rules.

As a result of Mr Malik’s failure to take action, Quick Solicitors continued to operate in “serious breach” of the accounts rules, putting client money at risk.

He was made subject to an order banning him from working for law firms without the SRA’s permission and ordered to pay £2,500 in costs.

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