CLIENT ACCOUNTS : INTERVENTION IN SOLICITORS’ PRACTICE : SOLE PRACTITIONERS : SOLICITORS’ ACCOUNTS : SOLICITOR’S FAILURE TO MAINTAIN PROPER ACCOUNTING PROCEDURES : MORE THAN TRIVIAL BREACHES : s.32 SOLICITORS ACT 1974 : Sch.1 SOLICITORS ACT 1974 : SOLICITORS ACT 1974
It was not appropriate to order the withdrawal of a notice of intervention in respect of a solicitor’s sole practice where there had been serious failures to maintain proper accounting procedures required under the Solicitors’ Accounts Rules and the Solicitors Act 1974.
The claimant solicitor (D) sought an order that the defendant Law Society withdraw a notice of intervention in respect of her sole practice. Her firm was the subject of a forensic accounting investigation. The resulting report concluded that there had been a number of breaches of the Solicitors’ Accounts Rules and the Solicitors Act 1974 s.32 including (i) transfers of money from client accounts to D’s personal accounts which were not rectified for a number of months; (ii) allowing client accounts to become overdrawn; (iii) balance sheet deficiencies. In the event, D’s practice certificate was suspended and disciplinary proceedings were commenced against her. The issue for determination was whether, in principle, the grounds for intervening in D’s practice pursuant to the Law Society’s Council’s powers under Sch.1 were still made out. D submitted that the breaches and deficiencies in her accounting procedures were no more than trivial and routine accounting errors.
HELD: Firstly, no deficit in solicitors’ client accounts should occur: as a result of the deficiencies, D’s accounts could not be safely relied on. As a solicitor, D should have known and understood what was required of her in the context of relevant accounting requirements under the Rules and the Act. Secondly, it was inherently unlikely that the accountant conducting the forensic examination of D’s accounts would have included in his report details of deficiencies that were simply trivial. Thirdly, the length of time it took for D to rectify the deficiencies in the client accounts highlighted the more than trivial inadequacies of her accounting procedures. If the procedures had been properly complied with, various of the errors would not have occurred and would, in any event, have been rectified timeously. The breaches of the Rules and requirements under the Act were serious and there was no reason to suspect that they would not continue if the practising certificate was reinstated. Accordingly, it was not appropriate to order the withdrawal of the intervention.
Judgment for defendant
DUA v LAW SOCIETY (2010)