Referral fees: Payments were more than expressions of gratitude
A solicitor struck off for multiple rule breaches, including that he actively concealed from his employer the fact that he had taken loans from clients, has failed in his appeal.
Mrs Justice Lang found nothing in the decision of the Solicitors Disciplinary Tribunal (SDT) to be wrong or unjust because of a serious procedural or other irregularity.
Jack Grunhut was struck off in January 2024. Having qualified in 2019, he was employed as a consultant solicitor for just over a year at Taylor Rose, and then for the next two years and two months was a consultant solicitor at Berlad Graham.
The SDT heard that, while at Berlad Graham, Mr Grunhut received four loans from clients totalling £630,000, most of which had been repaid.
However, in response to a request from the firm’s managing partner after learning about the first loan, he confirmed that he did not have any other personal or financial relationships with any other clients which he had not disclosed. In fact, he had recently entered into two of the loans.
In 2020, Mr Grunhut received four payments totalling around £3,400 into his personal bank account for referring clients to a short-term lender.
Berlad Graham regularly reminded fee-earners about the rules on referrals. They were asked to notify the firm about any arrangements they had currently or previously in place, and Mr Grunhut replied to say he had none.
He had argued that these were expressions of gratitude rather than referral fees, but the SDT concluded they were referral arrangements.
The SDT also found that he knowingly supplied a backdated deed of trust in support of an application for a stamp duty refund, and failed to conduct adequate due diligence on a party in a property transaction.
Before the High Court, Mr Grunhut submitted that the SDT failed to take into account that he had been “trained and mentored by [two solicitors at Berlad Graham] who were not suitable for those roles because of their conduct”.
Therefore, he said, he genuinely believed that his actions did not fall below the standard of an honest solicitor.
Mr Grunhut said one of his mentors had been suspended for two years in 2014 and then rebuked in 2021, when he undertook to remove his name from the roll, while the other had been investigated three times by the Solicitors Regulation Authority.
But Lang J found nothing to impugn the SDT decision and also rejected Mr Grunhut’s argument that, even if the tribunal’s findings were correct, the sanction was unduly severe.
He argued there were exceptional circumstances which meant striking off was not warranted and a fixed-term suspension would have sufficed.
Lang J said: “In my judgment, the tribunal correctly directed itself in law. It took into account all the relevant factors and evaluated them fairly.”
The tribunal found the misconduct had continued over a period of time, that Mr Grunhut had caused a high level of the reputational harm and had risked individual harm by his actions. This was not a single, isolated moment of poor judgment but a course of actions that included dishonesty in different fields of his working life.
Lang J said: “The tribunal was justified in concluding that this case did not fall within the small residual category of cases where striking off would be disproportionate in all the circumstances, and that there were no exceptional circumstances.”
She finally dismissed Mr Grunhut’s appeal against the costs order of £29,500, which the SDT had reduced from the £36,000 claimed.
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