A RULING by the High Court, which overturned fines levied on a Merseyside law firm, has led to calls for a change of procedure.
Partners Brian Hazlehurst, Christopher Murphy, David Garrett and Martyn Robert Brown, of Fanshaw, Porter & Hazlehurst Solicitors in Birkenhead, were each fined £4,000 after a member of staff stole a substantial sum – believed to be around £250,000 – from the firm’s accounts.
Although there were no allegations of dishonesty against the partners, they were charged by the Solicitors Regulation Authority (SRA) over failure to supervise the employee.
The matter was passed on to the Solicitors Disciplinary Tribunal (SDT), who deal with the most serious breaches of conduct.
The partners pleaded guilty on the grounds that they had been at fault in placing too high a degree of trust in the employee.
In overturning the fines, the High Court criticised the SDT for failing to provide guidance on the sanctions it can impose.
The firm, based in Hamilton Square, is now known as FPH Law.
Practice manager Graham Rowe said: “As soon as the thefts were identified, we made sure all the funds stolen were replaced into clients’ accounts and reported the matter to the regulation authority.
“They brought charges on the grounds that the supervision of this employee was inadequate. Our defence was that we were the ones who spotted the thefts, which two independent audits had failed to do.
“It seemed unfair to impose any kind of fine, given the circumstances. We had identified and corrected the theft, but the partners pleaded guilty on a strict liability issue that they hadn’t supervised adequately and were fined. The High Court agreed this was draconian and that the sanctions imposed by the SDT were never explained. I am hoping they will change their procedures in the light of the judgment.”
A SRA spokeswoman said: “We welcome the Judge’s decision as emphasising the need for openness and transparency within the regulatory and disciplinary process, values to which we are firmly committed. We take issues concerning the supervision by solicitors of their employees seriously.
“The Judge’s conclusion, that a reprimand in this case was appropriate, even bearing in mind the partners had self-reported the incident, repaid the stolen monies, and made admissions to the SDT, shows that the judiciary also support this view.”
