Evans: Just £50 can make a difference
Two law firms that between them retained £425,000 of client money for many years have been rebuked as charity Support Through Court called on solicitors to donate small residual balances.
According to a notice published last week by the Solicitors Regulation Authority (SRA), East London law firm Christofi Law’s problems with residual balances only came to its attention in 2023, when the firm submitted an accountant’s report for the year ending March 2021.
This showed 369 client balances totalling nearly £290,000, of which 329 had seen no movement for over 100 weeks. The last movement on the oldest client balance was February 2011, while the largest was £112,666, which had been held since January 2019.
The firm has since sought to reduce the number and, as at 31 March 2024, there were 92 balances totalling £54,840.
In a regulatory settlement agreement with the SRA, Christofi Law admitted that it has had a problem resolving client balances since 2017, that it was late in submitting two qualified accountant’s reports and that it did not inform clients of the outstanding balances
In mitigation, the firm said the pandemic, stamp duty holidays and personal issues of the partners had “severely affected” its ability as a small firm to submit the accountant’s reports: the partner who most client matters with residual balances relate too, and whom would have led compliance with the accounts rules, “has not been available to work due to personal issues”.
The firm added that part of the issue around the residual balances arose due to a Land Registry expense that was not allocated to a client ledger. “This delay in allocation meant funds appeared to be static. This is a historic issue which has now been resolved with new systems being implemented.”
The SRA acknowledged that remedial action had been taken, while there was no lasting significant harm to clients and a low risk of repetition.
“Some public sanction is required to uphold public confidence in the delivery of legal services” and a rebuke was appropriate.
Meanwhile, Leicester sole practitioner Rajinder Singh, practising as Rajinder Singh & Co, has been rebuked for allowing residual balances in excess of £135,000 to accumulate in client account for 20 years to 2022.
The SRA said Mr Singh “failed to take adequate steps to promptly return these balances to clients”.
In deciding to rebuke him, the regulator said most of the balances were small – the largest were slightly in excess of £1,000 – and Mr Singh has put in place measures to manage residual balances in future. There were also no allegations of dishonesty or a lack of integrity.
Support Through Court has today launched a campaign called ‘Residual Impact’, encouraging law firms to release unclaimed client balances to help people facing court without a lawyer.
SRA rules allow firms to donate unclaimed funds of up to £500 to charity without its permission. Support Through Court said it provided indemnity insurance on donated funds, in case the money is subsequently claimed.
“A donation of just £50 can fund a trained volunteer to support up to two people through the court system, providing critical assistance during one of the most challenging times in their lives,” said Ali Evans, deputy senior corporate partnerships manager at Support Through Court.
Support Through Court, formerly the Personal Support Unit, assisted over 50,000 people without legal representation last year, guiding them through the court system and process.
“Demand for this free service has surged as more people find themselves with no option but to represent themselves in legal proceedings,” it said.
It has over 600 trained volunteers across England and Wales.
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