Solicitor misled hundreds into investing £19m in failed claims scheme

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SDT: Solicitor lacked integrity and was dishonest

A solicitor who misled hundreds of investors and attracted £19m to bring claims for miscalculated mortgage payments – none of which succeeded – has been struck off.

Roger Brian Allanson dishonestly told investors that there was no chance of losing their money, the Solicitors Disciplinary Tribunal (SDT) found.

“In the 18 months that this the scheme was running, [Mr Allanson] did not recover a penny from any lender,” it said.

“He had not issued any claims, nor had he made sent any part 36 offer letters. He had collected from litigation funders, and paid out, over £19m.

“In not one case had any lender indicated any intention to do other than reject the claims. In not one case had [Mr Allanson] provided a detailed exposition to a lender of why there was a good claim and how it was particularised. The letters before action had not been in the proper form, leading to their rejection.”

Mr Allanson qualified in 1986 and set up Allansons in Bolton in 1993. It was shut down by the Solicitors Regulation Authority in May 2019. A year later, the firm went into voluntary liquidation owing £2.9m to trade creditors and £20m to litigation funders.

The firm started taking on claims for breach of contract by mortgage providers in December 2016, although only really got moving a year later. By 31 January 2019, the firm had taken on at least 7,773 cases under conditional fee agreements.

After entering a contract with a company, PSP, to act as administration agent for the claims, Mr Allanson needed funding to pay for the claims to be processed and for audit reports to show that the calculations provided by mortgage lenders had been incorrect and resulted in customers paying too much.

Together with a director of PSP, he produced a brochure to attract litigation funders; individuals had to fund a minimum of three claims at £4,000 per claim. Some people put in over £100,000 – one, ‘Mr AL’, invested £248,000.

Most of the money went to PSP but Allansons retained £152.50 from each case funded.

The brochure said investors could expect a return of 40% within 18 months, as there were only two possible outcomes of each claim: settlement, which was estimated to take up to a year; or a court hearing, which was expected to be a year to 18 months.

It said the money would pay for the audit report, with Allansons covering all the other costs. If the claim failed, after-the-event insurance would cover “all non-refundable disbursements”, the brochure said.

It also cited opinions from two barristers that the chances of success in any one case was 75%.

Some 813 investors came on board and funded 4,773 cases between them, investing £19.1m in total.

Interviewed by the regulator in March 2019, Mr Allanson admitted that no claims had settled, no part 36 offers made or received and no court proceedings been issued. He was in the process of seeking further funding to pay for the court fees.

The SDT found that the assertions made in the brochure were misleading: the investments were at risk, no case had produced a return within 18 months, some of the £4,000 actually went to pay introducers as well as Allansons’ own office expenses, and the views of counsel had been mischaracterised.

A claim that the firm had a track record in these types of cases was also misleading – at the time, it had conducted a single case and that had not been successful.

Mr Allansons’ actions lacked integrity and were dishonest, the tribunal concluded, as was using some of the money for purposes other than what was said in the brochure and the funding agreement with PSP.

The tribunal also found that Mr Allanson failed to adequately manage the progression of the claims.

“This was not a failure on one or two files but a systemic failure on thousands of files, funded to the tune of over £19m. The failures were basic and repeated, and the tribunal was satisfied on the balance of probabilities that it clearly amounted to manifest incompetence.”

In addition, the SDT found Mr Allanson guilty of a host of accounts rule breaches – such as failing to maintain client ledgers for over 4,000 clients – of sending Mr AL, who was becoming concerned about his investment, two “clearly inappropriate” emails.

In them, he threatened Mr Al with defamation – even though that was not possible given there was no publication to a third party – and accused him of being stupid.

The SDT went on: “The tribunal rejected [Mr Allanson’s] case that the emails were jocular. The tribunal also rejected the suggestion that because one of them was sent at 6.34am that it was not sent in the course of business. The timing of the email was completely irrelevant; it was the content that mattered.”

Concluding that Mr Allanson should be struck off, the SDT said that, while he said he was motivated by a wish to help others, “he had primarily been motivated by financial gain”.

It continued: “He had been motivated to mislead in order to attract ‘investment’. This was a misnomer. The money was in fact to be used (to his knowledge and contrary to his representations to the litigation funders) to fund the progress of the work though people to whom he outsourced the work, and over whom he had little if any control.

“His conduct was entirely planned. The litigation funders had placed their trust in [him] when they had given him the funds and he had failed to honour that trust.”

He was also ordered to pay costs of £104,000.