SDT: Solicitor showed insight into what had gone wrong
A solicitor who allowed an unadmitted “friend” to run a law firm of which he was a nominee director and shareholder, with all the profits going to the friend and his mother, has been suspended for two years.
David Durkin-Finch admitted to the Solicitors Disciplinary Tribunal (SDT) that he had been recklessness, in that he was aware that Matthew Waterfield was unadmitted and his previous firm had gone into administration.
It was “perhaps more by luck than judgment” that no client had suffered harm, the SDT said.
It approved an agreed statement of facts and outcome between the Solicitors Regulation Authority (SRA) and Mr Durkin-Finch, who was the solicitor, sole director, COLP and COFA of EMEA Law, trading as Cleverson Solicitors.
The SRA said that, despite knowing that “there may be issues with Mr Waterfield’s ability to run a regulated firm”, the solicitor permitted him to run the firm unrestricted.
“No reasonable solicitor in Mr Durkin-Finch’s position and of his experience would have acted as he did,” it said.
It recounted how Mr Waterfield, an SRA-approved manager, had been the sole director and shareholder of Centenary Law, an alternative business structure (ABS) which went into administration in October 2019. It had active files with £1.5m of work in progress.
Mr Durkin-Finch and Mr Waterfield had met when the solicitor attended a job interview at Centenary Law. Although he did not get the job, they stayed in contact.
Jacqueline Tanner, a director of Tomini Legal Consultancy (TLC) and Mr Waterfield’s mother, appointed Mr Durkin-Finch to buy Cleverson for £7,500 and made him her nominee director and shareholder.
The firm opened in October 2019, with Mr Waterson and Ms Tanner operating as consultants provided by TLC.
The solicitor told the SRA that “the initial set-up of the business” was that he would be the regulated individual and undertake the compliance roles but Mr Waterson was responsible for the day-to-day running of the business. The plan was for the firm to become an ABS.
Mr Durkin-Finch was not paid but “stated that his recompense was assistance with website development and use of existing marketing platforms to develop the marketing of his own firm, Encore Legal”.
Mr Waterfield set up another company in August 2020, My Legal Consultancy, of which he was the sole director. All the profits from Cleverson went to either TLC or My Legal.
Cleverson employed a conveyancer for a few months before Mr Waterfield became a fee-earner responsible for conveyancing in July 2021.
The SRA said Mr Waterfield called Mr Durkin-Finch three months later to say the firm’s bank accounts had been suspended.
“Mr Waterfield stated that he had attended Metro Bank and was informed that three conveyancing transactions appeared to be suspicious and as a result the bank account had been suspended”.
Mr Durkin-Finch “requested access to the case management system, but Mr Waterfield refused to provide it”.
Mr Durkin-Finch terminated his agreement with TLC and asked for the return of the case files.
The solicitor reported his concerns about TLC to the SRA at the end of September and the SRA launched an investigation the following month.
Cleverson closed in January 2022 and entered voluntary liquidation in March that year, as did Encore Legal.
Mr Durkin-Finch admitted all the allegations against him, including that he did not adequately monitor how the firm was operating.
Most of the work was done by Mr Waterfield – between October 2019 and October 2021, TLC invoiced Cleverson nearly £250,000 and Mr Waterfield authorised their payment.
Mr Durkin-Finch failed to act with integrity also in allowing an unadmitted person to “effectively run the firm in an unsupervised capacity”, the SDT agreed.
He also admitted that, between July and October 2021, he caused or allowed conveyancing transactions to be completed unsupervised, which meant that undertakings were given by an unadmitted person, and for “significant delays to occur” in registering 13 properties at the Land Registry between March 2021 and January 2022.
He allowed a cash shortage of almost £13,000 to occur in Cleverson’s client account and failed to ensure client account reconciliations were carried out. He also failed to submit an accountant’s report for the year to October 2020.
Further, the solicitor failed to set aside “sufficient or any funds” to meet Cleverson’s VAT liabilities of over £83,800, causing the law firm to become insolvent.
In non-agreed mitigation, Mr Durkin-Finch said he thought of Mr Waterfield as a “mentor and trusted friend” and had made “serious errors of judgement” in trusting him.
Apart from HMRC, he said “no client suffered any losses” and he “never received any remuneration” from the firm.
The SDT commented: “It was perhaps more by luck than judgement that no client was said to have suffered harm. The respondent had been right to accept that his conduct had been reckless.
“The tribunal would have considered a much more substantial penalty were it not for the level of insight the respondent had demonstrated upon his poor conduct and the remedial steps he had taken in removing the unadmitted person and closing the firm in an orderly way.”
Mr Durkin-Finch was suspended for two years and ordered to pay costs of £6,000.
He was made subject indefinitely to conditions, following the end of his suspension, that prevent him from being a sole practitioner, partner, member of an LLP, COLP or COFA.
Isn’t this part of the closed shop that Maggi Thatcher promised to do something about nut never did.