Insurance: Cover is an overhead and should not have been charged
Three partners have been fined for charging conveyancing clients for the firm’s indemnity insurance, as well as “variable sums” for filling out a simple standard form.
The Solicitors Disciplinary Tribunal (SDT) recounted too how Davinderjit Singh, sole equity partner at Crown Gate Law Solicitors, went on holiday to India, leaving nobody qualified to supervise staff when officers from the Solicitors Regulation Authority (SRA) paid a surprise visit.
The ruling also revealed that the SRA planned to close down the firm in December 2018, but held off “following representations” and eventually decided not to take that action after problems with the accounts were sorted out.
Crown Gate Law, based in Birmingham, began trading in December 2013. Mr Singh was admitted in 2008.
Kunal Ahir, qualified in 2012, became a partner in December 2014, although he had his own law firm in Leicester which “provided him with his living”, the tribunal said.
Mukhtiar Singh Ubhi, admitted in 2005, became a partner in 2016. He ran a company through which he provided a consultancy service.
Mr Ahir and Mr Ubhi told the SRA that they did not carry out fee-earning work, receive an income from the firm, supervise staff or attend the offices regularly.
The three solicitors admitted all the allegations made against them by the SRA.
The firm charged conveyancing clients variable indemnity insurance contributions and fees for land transaction returns, a standard form that set out the stamp duty land tax payable and details of the transaction.
The SDT said: “The firm’s insurance was an overhead of the firm. It was something the firm should pay as an overhead, rather than something clients should have to pay themselves.
“As [Mr Singh] conceded, all clients got the same level of indemnity cover and same protection.”
The only differences in the completed land transaction form were the address and value. They all took a similar amount of time to prepare “and did not, of themselves, protect the client,” the SDT noted.
But when asked why the firm was charging different amounts for different properties, Mr Singh said: “If [the clients] don’t have any objections, what’s the problem with that?”
However, clients were told that this was a fixed disbursement.
Both of these charges were examples of clients not being treated properly, the SRA said.
Mr Singh admitted going on holiday in February 2018, without leaving anyone qualified to supervise staff, as the other two partners were not there.
The only solicitor in place – who in any case was not an employee – was one with conditions on his practising certificate stating that he could not be a manager.
The three solicitors admitted a range of accounts rules breaches as well, including failing to have a proper record of the accounts, having two “separate and inconsistent sets of client ledgers”, failing to keep office and client money separate, and failing to carry out reconciliations.
They failed to run their firm with “proper governance principles”, they did not have “proper employment arrangements with their staff” or a partnership agreement or VAT registration.
In mitigation, Mr Singh said the firm had since merged and had new accountants, all of the staff had contracts of employment, and there was also a partnership agreement in place. He apologised for what had happened, which he put down to issues of competence that had been addressed.
The SDT found that Mr Singh’s misconduct arose of his failure to pay proper regard to his obligations as a partner to manage the firm and its accounts in accordance with the rules over a period of time.
The tribunal accepted there was “no malign motivation” on his part and there was no loss of client monies. He displayed “genuine insight” into what he had done.
It concluded that the misconduct was not such that it should interfere with Mr Singh’s ability to practise and considered an £8,000 fine appropriate.
The tribunal said Mr Ahir and Mr Ubhi had “abrogated all responsibility for the running and management of the firm to the first respondent” and their lack of engagement was “culpable”. They were each fined £1,500.
The SRA applied for costs of £53,800, which the tribunal reduced to £35,000 after finding the investigation costs excessive. Mr Singh was to pay £25,500 of them and Mr Ahir and Mr Ubhi £4,725 each.
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