UK law firm owners suspended for accounts breaches dating back to 1980s

A husband and wife owners of a law firm in central England have been suspended for manifest incompetence after allowing dormant client balances to build up over decades.

However, a Solicitors Disciplinary Tribunal (SDT) ruled that the costs against Andrew and Janet Stevenson should be reduced from almost £24,000 to zero, on the grounds that once their firm had been wound up, “there would be no money left over”.

The tribunal heard that Mr Stevenson, suspended for 18 months, was admitted as a solicitor in 1979, while his wife, suspended for six months, was admitted in 1976. 

A Solicitors Regulation Authority (SRA) launched an investigation in August 2021, which found the firm was holding £121,270 in client funds that had been dormant for more than 12 months – in one matter, the last transaction dated back to 1984.

Mrs Stevenson, who took over the law firm’s bookkeeping in 2020, said she was “surprised by the old balances, having become aware of them since taking over the books”.

Mr Stevenson said he was “aware that there were dormant client ledgers”, but he was also “surprised that the last movement dates on some of them went back to the 1980s”.

He told the SRA that the issue had not been addressed “due to ‘overwork, lack of time, endless hours fighting CustoMrs and Excise or HMRC…’.”

The firm’s last accountant’s report was signed off in June 2014. Mr Stevenson told the SRA that because of the “financial problems created by HMRC, made worse by the economic recession”, it was “necessary to pare overheads to the minimum”.

The solicitors admitted causing or permitting the improper retention of money in client account, and Mr Stevenson admitted acting with a lack of integrity in doing this.

They also admitted to failing to notify clients that their money had been retained. In doing both of these things, they accepted their conduct was manifestly incompetent.

They admitted failing to obtain an accountant’s report for the firm between 2014 and 2020, failing to remedy breaches of the accounts rules and failing to report those breaches to the SRA. They also admitted failing to tell the SRA, for a period starting in 2014, that the firm was in financial difficulty.

The tribunal said it had not heard any evidence of loss to individual clients but Mr Stevenson’s misconduct was “aggravated by the fact that it continued over a period of time and was, to an extent, deliberate, calculated and repeated”.

Mrs Stevenson had been manifestly incompetent, like her husband, but had not acted without integrity, so the period of her suspension was reduced.