News release

High Court upholds tribunal fine

The High Court has upheld the largest fine ever imposed on solicitors by the Solicitors Disciplinary Tribunal (SDT).

The tribunal imposed the fines—totalling £75,000—on Fuglers LLP and its two equity partners, David Berens and Bryan Fugler, following a prosecution brought by the Solicitors Regulation Authority (SRA). Mr Berens, as senior partner, had authorised the use of the firm's client account for the benefit of Portsmouth FC at a time when the club was facing winding-up by the Inland Revenue and when the club's bank had frozen its accounts.

Any payments made after the winding-up petition would be void if a winding-up order was made. Fuglers however decided to use their client account as a banking facility for Portsmouth FC and payments out were made which favoured certain creditors over others.

The Code of Conduct gives solicitors special privileges for holding client money for various reasons; acting as a bank is not one of them. The use of Fuglers' client account as Portsmouth FC's bank account was discovered during a routine inspection in November 2010.

Over £10 million of Portsmouth FC's money passed through the firm's client account in four months, misconduct which the tribunal described as very serious. The tribunal fined Mr Berens, as the most culpable partner, £20,000 and the firm £50,000. Mr Fugler was fined £5,000.

The firm and partners appealed on the basis that the fines were manifestly excessive. However Mr Justice Popplewell held that "a very substantial fine was called for to mark the seriousness of the misconduct" and to send a message that client accounts are central to regulation of solicitors' conduct.

The court also upheld the principle that a firm and its partners can all face sanction for misconduct in appropriate cases. The tribunal had been right to apportion the overall fine in the way it did so - to the firm as the regulated entity and the individuals because of their personal involvement in and responsibility for the misconduct.

Gordon Ramsay, SRA Director of Legal and Enforcement, said: "The client account is sacrosanct and the accounts rules banning it from use as a bank account for others are there for that reason. This decision from the High Court ratifying the decision of the SDT reinforces that message."  

 
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