SRA: prosecutions for failing to meet wind-down undertakings
Solicitors running two firms caught out by changes to indemnity insurance rules and the closure of the assigned risks pool in 2012-13 have been fined by the Solicitors Disciplinary Tribunal (SDT) for failing to wind-down their practices in an orderly manner.
Both cases, the rulings in which have been published recently, involved elderly solicitors with spotless regulatory records, at the point of retirement. Both involved failures by the solicitors to meet compliance plan undertakings made to the Solicitors Regulation Authority (SRA) about winding down their practices.
In the first case, heard in April, sole practitioner Ian Robert Gannicott, who was admitted as a solicitor in 1966 and practised as IR Gannicott in Gloucestershire, admitted a range of allegations before the SDT. They included a number of breaches of the code of conduct, the practice rules, and the accounts rules, including failing to comply with undertakings in an ‘orderly wind-down compliance plan’ and breaches of his duties as the firm’s compliance officer, such as that he failed to notify the SRA that the firm had entered the extended indemnity period.
In mitigation, Mr Gannicott, aged almost 75, explained that he had been expecting to merge with another firm until the last moment, and that as soon as he realised this would not happen in time, quickly acted to protect as many clients as possible.
He also pointed out that no fraud or misappropriation of client money had been found.
The tribunal took particular exception to some of the findings of a forensic investigation into Mr Gannicott’s firm, which found that in several of his cases there had been delays in distributing money that was part of the administration of an estate – in one case of 14 years.
It accepted there had been “no dishonesty or criminality”, but observed “the firm had clearly been run in a somewhat old-fashioned manner”. It felt the reputation of the profession would be harmed, “particularly in respect of the delay in dealing with the administration of estates and returning money to clients [which] could feed into a public perception that solicitors delay matters”.
The SDT concluded that a fine of £5,000 was “appropriate to mark the seriousness of the overall breaches”. In a summary assessment, Mr Gannicott was ordered to pay costs of £12,770, a reduction of some £2,000 on the sum applied for by the SRA.
The second case, also heard in April, involved a married couple, John Bryon Sampson and Angela Susan Marshall, both solicitors who had practised in partnership as Sampson & Co in Redditch, Worcestershire for 30 years. Mr Sampson was admitted in 1959 and Ms Marshall in 1980.
When SRA rule changes meant that firms unable to secure insurance on the open market after 1 October 2013 would have to close by the end of the year, Sampson & Co was given notice it had entered the 60-day cessation period and it agreed the closure timetable with the regulator, again providing undertakings in an ‘orderly wind-down compliance plan’. But it did not close in time and an SRA inspection, and then a forensic investigation, followed.
Like Mr Gannicott, the pair admitted breaching a number of SRA rules and principles. In their case, they admitted failing to account to clients for money due to them promptly, to register title of properties with the Land Registry in a timely manner, and other failures, including Mr Sampson breaching his duties as the firm’s compliance officer for legal practice.
In mitigation, Mr Sampson, a conveyancing specialist, said it had been his intention to retire and he realised in 2013 that he would not have been able to obtain indemnity insurance. But a delay in confirming that another firm would not become a successor practice had caused a knock-on delay on registrations. He had also suffered a stroke.
He described the wind-down as “a bit ragged” but done “with good intentions” and he “was sorry he had not made a better fist of it”. Ms Marshall, a family lawyer who was now working in another practice as an employed solicitor, with conditions on her practising certificate, said neither of them had held themselves out as practising after 29 December 2013, and they had tried to follow the compliance plan.
The SDT concluded that “a breach of an undertaking to the regulator was a serious matter and harmed the reputation of the profession” but that neither solicitor “posed any risk to the public in future”.
It imposed a fine of £2,500 on Mr Sampson and £1,000 on Ms Marshall, with joint costs of £11,000.
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