Facebook: Clients warned that insurers were looking
The managing director of a Liverpool law firm has been cleared a tribunal of telling holiday sickness clients to delete social media posts which could undermine their claims.
However, the Solicitors Disciplinary Tribunal (SDT) fined Michael James Paul Wilson and director Sean James Rogers from High Street Solicitors £10,000 each for breaking the accounts rules, while head of finance Victoria Kinsella was banned from working for law firms.
A Solicitors Regulation Authority (SRA) review of 26 holiday sickness claims found that a social media warning had been sent to most of the clients in January 2017.
This said that “defendant solicitors are going on Facebook, Twitter and Instagram to look for comments and photos relating to your holiday to try to prevent travel sickness claims”.
They were told to change settings to private on Facebook, ‘unfriend’ any holiday companies and “delete any comments or photos from your holiday ASAP”.
The SRA told the tribunal: “It may be inferred that the social media warning was a reference to the possibility that non-genuine claims could be exposed by defendant tour companies or solicitors finding material showing claimants enjoying food, drink and other activities at times when they claimed to be sick.”
Mr Wilson told the tribunal that Mr Rogers had actually been responsible for the letters – saying he was only the titular head of the department at the time – and, once he became aware of them, Mr Rogers admitted making a mistake.
But he said they presented a united front throughout the SRA investigation because he did not want to “throw [Mr Rogers] under a bus”. The SRA did not charge Mr Rogers.
The SDT said there was “no evidence” Mr Wilson had been involved in creating the social media warning.
The SRA’s investigating officer had confirmed in evidence that she had found no evidence of who had created the warning, and had not asked the solicitors.
The tribunal did not take issue with the solicitors referring to “we” during the investigation; it only became necessary for Mr Wilson to state that he played no role in setting up the department or preparing the letters once the formal allegation was made against him.
Mr Wilson, admitted in 2000, has been a director of High Street Solicitors since 2009. Mr Rogers, admitted in 2008, was a director from 2011 until he resigned in October last year.
Ms Kinsella was the non-lawyer head of finance and the firm’s COFA from 2014 until February 2017. She had no accountancy qualifications.
Figures produced by the SRA showed that, by April 2017, the firm’s office account held unpaid professional disbursements of £101,000 and after-the-event insurance premiums of £89,000, made up of unpresented cheques and unprocessed electronic transfers.
The SRA said a figure of £90,000 for aged creditors should be added to arrive at a total for unpresented items; without them all, the regulator claimed, the firm would have gone over its overdraft limit. The payments were made by September 2017 and the solicitors self-reported to the SRA.
Mr Wilson and Mr Rogers admitted breaking some of the accounts rules and some SRA principles in the process, but not others.
The SDT said unpresented cheques were not, in and of themselves, an issue or that the transfer of monies from client to office account to settle payment was improper. “However, the respondents had no proper systems in place to ensure that the payments were actually made.”
The solicitors failed to make “any enquiries at all” about the unpresented cheques issue and were not “absolved from responsibility or culpability” just because Ms Kinsella was under a duty as COFA to report the issue.
“Whilst it was entirely reasonable for the [solicitors] to rely on the firm’s COFA and its accountants to undertake the financial work, that did not negate their responsibility for ensuring compliance.
“It was no defence to say that they relied entirely on those they had paid to undertake that work. At a minimum, it was expected that the [pair], as the directors (and later the only qualified managers) would have applied some scrutiny to the monthly reconciliations to satisfy themselves that they were complying with their obligations.
“The unpresented cheques issues was clear from the face of the monthly reconciliation reports that were prepared by the firm. Had they requested/seen those documents, the position would have been obvious.”
The SDT said Ms Kinsella had allowed her “loyalty to the firm” to override her obligations as COFA and she took no steps to ensure compliance.
She failed to protect client money by allowing funds which “were, in fact, client monies” to be credited to the office account and was found to have failed to report the failure to comply to the SRA as soon as reasonably practical.
In deciding fines of £10,000 each for the solicitors were appropriate, the SDT said their misconduct was “a single episode” in otherwise unblemished careers.
Ms Kinsella “was aware of the issues and did nothing to rectify or prevent them”. She was banned from working for law firms subject to SRA permission.
Reducing the SRA’s application for costs from £82,500 to £60,000, the tribunal ordered Mr Wilson, Mr Rogers and Ms Kinsella to pay £20,000 each.
In April, High Street Solicitors won a ruling from the High Court dismissing the claim of a finance broker who sought a £100,000 fee for introducing it to a new loan provider.
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