Hilary Meredith Solicitors Limited - Licensed Body
(Hilary Meredith Solicitors)
Meredith House, 25-27 Water Ln, Wilmslow
, SK9 5AR
Decision - Agreement
Outcome: Regulatory settlement agreement
Outcome date: 15 December 2020
Published date: 31 December 2020
Firm or organisation at date of publication and at time of matters giving rise to outcome
Name: Hilary Meredith Solicitors Limited - Licensed Body
Address(es): Meredith House, 25-27 Water Ln, Wilmslow
Firm ID: 561149
This outcome was reached by SRA decision.
1. Agreed outcome
1.1 Hilary Meredith Solicitors Ltd (the Firm), a licensed body, agrees to the following outcome to the investigation of its conduct by the Solicitors Regulation Authority (SRA):
- (a) it is fined £8,000
- (b) to the publication of this agreement
- (c) it will pay the costs of the investigation of £2,750.
2. Summary of Facts
2.1 On 15 September 2017 the Firm told the SRA it had failed to comply with the SRA Accounts Rules 2011 (Accounts Rules).
2.2 The SRA carried out an inspection of the Firm’s books of account and identified a minimum client account shortage of £702,517.59 as at 31 October 2017.
2.3 The shortage was caused when the Firm incorrectly retained unpaid professional disbursements in its office account. The Firm should have either paid the professional disbursement or transferred the sum to its client account by the end of the second working day in accordance with the Accounts Rules.
2.4 The Firm’s accounting systems and internal controls failed to ensure compliance with the Accounts Rules for approximately three years, before the matter was discovered and reported to the SRA.
2.5 The minimum client account cash shortage was fully replaced by 16 January 2018. The Firm has reviewed and updated its accounting systems and internal controls to reduce the risk of similar breaches happening again.
3.1 The Firm makes the following admissions which the SRA accepts:
- (a) By retaining unpaid professional disbursements in its office account, thereby causing a minimum client account shortage, the Firm breached Rule 17.1(b) of the Accounts Rules and failed to protect client money and assets in breach of Principle 10 of the SRA Principles 2011 (the Principles).
- (b) By failing to establish and maintain proper accounting systems, and proper internal controls over those systems, to ensure compliance with the rules the Firm has breached Rule 1.2(e) of the Accounts Rules 2011.
4. Why a fine is an appropriate outcome
4.1 The SRA’s Enforcement Strategy sets out its approach to the use of its enforcement powers where there has been a failure to meet its standards or requirements.
4.2 When considering the appropriate sanctions and controls in this matter, the SRA has taken into account the admissions made by the Firm and the following mitigation which it has put forward:
- (a) that it accepted the allegations at the earliest opportunity
- (b) that it replaced the client account shortage in full and the breaches have now been remedied
- (c) no actual loss was suffered by any clients
- (d) it has co-operated with the SRA’s investigation
- (e) it has taken steps to update its procedures, systems and controls to ensure future compliance with the Accounts Rules
4.3 The SRA considers that a fine is the appropriate outcome because:
- (a) the misconduct continued over a long period of time
- (b) the issue resulted in a client account shortage that was not remedied until January 2018
- (c) the Firm had control over and an obligation to ensure compliance with the Accounts Rules and so was directly and solely culpable for the misconduct.
4.4 A fine is appropriate to maintain professional standards and uphold public confidence in the solicitors' profession and in legal services provided by authorised persons, because it reflects the seriousness of the misconduct and provides a credible deterrent to the Firm and others. A financial penalty therefore meets the requirements of rule 4.1 of the Regulatory and Disciplinary Procedure Rules.
5. Amount of the fine
5.1 The amount of the fine has been calculated in line with the SRA’s published guidance on its approach to setting an appropriate financial penalty (the Guidance).
5.2 Having regard to the Guidance, the SRA and the Firm agree that the nature of the misconduct was low. The Firm remedied the breach promptly upon discovery and it has cooperated with the investigation and has no similar regulatory history. The Guidance gives this type of misconduct a score of one.
5.3 The SRA considers that the impact of the misconduct was medium because the funds were incorrectly held in office bank account, which caused a shortage on the client account, although accept there is no evidence to show that any client suffered any actual loss. The Guidance gives this level of impact a score of four.
5.4 The Firm has an average annual domestic turnover, during the period of misconduct, of circa £3,333,333. This means that, for the purposes of the Guidance, it is a firm of greater means and a fine should be determined as a percentage of the Firm’s turnover. The nature and impact scores add up to five indicating a basic penalty of up to 0.5% of annual domestic turnover.
5.5 The SRA and the firm agree the basic penalty scale should be towards the top end of that bracket and therefore the appropriate percentage is to be 0.4% of turnover, equating to a basic penalty of £13,333.
5.6 In deciding the level of fine, the SRA has considered the aggravating factors as well as the mitigation which the Firm has put forward at paragraph 4.2 above.
5.7 The conduct caused a significant shortage on client account over a prolonged period of time for which the Firm was directly and solely culpable for the misconduct. The SRA is mindful of the need to create a credible deterrent to the Firm and others. The SRA considers, therefore, the basic penalty of £13,333 to be appropriate.
5.8 The SRA considers that the basic penalty should be reduced to £8,000, representing the maximum allowable discount of 40%. This reduction takes account of the early admissions of the misconduct made by the Firm, its cooperation with the SRA’s investigation and that it remedied the breach promptly.
5.9 The Firm does not appear to have made any financial gain or received any other benefit as a result of its conduct. Therefore, no further adjustment is necessary to address this and the amount of the fine is £8,000.
6.1 The SRA considers it appropriate that this agreement is published in the interests of transparency in the regulatory and disciplinary process. The Firm agrees to the publication of this agreement.
7. Acting in a way which is inconsistent with this agreement
7.1 The Firm agrees that it will not deny the admissions made in this agreement or act in any way which is inconsistent with it.
7.2 If the Firm denies the admissions or acts in a way which is inconsistent with this agreement, the conduct which is subject to the agreement may be considered further by the SRA. That may result in a disciplinary outcome or a referral to the Solicitors Disciplinary Tribunal on the original facts and allegations.
7.3 Acting in a way which is inconsistent with this agreement may also constitute a separate breach of Principles 2 and 5 of the Principles and paragraph 3.2 of the Code of Conduct for Firms.
8.1 The Firm agrees to pay the costs of the SRA's investigation in the sum of £2,750. Such costs are due within 28 days of a statement of costs due being issued by the SRA.