SDT: Technical breach of accounts rules
A solicitor who used his firm’s client account as a personal banking facility did not need to admit that he had damaged public trust, the Solicitors Disciplinary Tribunal (SDT) has held.
But Richard Harbord did act without integrity by failing to co-operate with the Solicitors Regulation Authority (SRA) for some years over missing accountant’s reports.
The Surrey-based solicitor, who qualified in 2002, was the owner of Harbord & Co, a recognised sole practice from 2007, and a partner at McGlinchey & Co from 2016, holding the compliance roles at both.
He was made bankrupt last year and his practising certificate made subject to various restrictions as a result. The bankruptcy order is due to expire this month.
McGlinchey & Co acted for Mr Harbord on the sale in 2017 of his former matrimonial home and in 2019 of the former office premises that both firms shared.
The proceeds were held in the client account until 2020, during which time there were multiple payments totalling £386,641 to Mr Harbord personally or for personal payments at his direction, and £315,970 as loans to the two firms.
The SDT describing this as “a technical breach” as it did not pose any risk of money laundering – “the principal evil which the rules are designed to avoid”.
Further, Mr Harbord had been “careless (but not more)” in failing to appreciate that his conduct breached the accounts rules. He said he would not have done this had it been a client’s money.
Mr Harbord “now accepts that he should have researched the matter further (beyond speaking to the firm’s accountant and a fellow partner) and ascertained that he was not allowed to retain his own money in the client account”.
He admitted breaching various principles and rules, most of which the SDT accepted, but it said his admission that the conduct diminished public confidence in the profession was “not properly made” given that other client’s funds had not been put at risk.
There were accountant’s reports outstanding for both firms dating back to 2020, which was a breach of the accounts rules, but the SDT did not accept that Mr Harbord had failed to deliver them to the SRA, as it could not be said for sure they would have been qualified. Again, his admission in this regard was not properly made.
But it found he acted “without integrity by persistently, and over a long period of time, failing to cooperate and communicate frankly” with the SRA in relation to obtaining the reports and failing to take the remedial action requested by the SRA “despite being given many opportunities to do so”.
Mr Harbord was also found to have failed in his duties as the compliance officer for finance and administration.
The SDT heard that Mr Harbord had a regulatory history dating back to 2003, when he was severely reprimanded after being convicted of possessing 0.41g of cocaine, while in 2012 the SRA issued him with a warning over accounts rules breaches.
In 2017, he was fined by the SDT after failing to disclose to the court that he was in a personal relationship with a client in family law proceedings.
In mitigation, Mr Harbord referred to “enduring health issues”, which had started around 2017 and prevented him from working for prolonged periods. The fall in his earnings that resulted meant he had been unable to pay his accountants to produce the overdue reports, and ultimately his bankruptcy.
However, he said his health has improved over the past year, since when he fully co-operated with the SRA. The two firms were being closed down, but he had been offered employment by a new entity, Harbord & Co, which would be managed by his partner. He also said he would not seek to have the conditions on his practising certificate removed.
The SDT concluded that Mr Harbord had shown “genuine insight into his misconduct by making full and open admissions”.
His misconduct “may have at least to some extent resulted from his ill health, and consequent lack of funds”, although these “did not entirely excuse” his misconduct”.
It fined Mr Harbord £8,500 and ordered him to pay costs of £40,000, but the order should not be enforced without leave of the SDT, given the uncertainty of his financial position.
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