The Solicitors Regulation Authority has suffered another setback to its mission to pursue firms for historical breaches of accounts regulations.
Allegations against London firm Teacher Stern LLP and two partners were thrown out by the Solicitors Disciplinary Tribunal last week. The full reasons for the dismissal will be set out in a judgment in around seven weeks.
The SRA had alleged that the firm allowed its client account to be used to make payments to different beneficiaries which did not relate to any piece of legal work. The alleged breaches dated back to a period between 2013 and 2016. Real estate partner Sacha Rifkin and corporate partner Claire Rollo were also alleged to have caused or allowed the payments.
In a statement, the firm said: ‘We welcome the decision of the SDT last week dismissing all allegations made against the firm and our two partners and look forward to reading the tribunal’s reasoning in due course.’
It is understood that a costs hearing will be held in the new year, but it is possible that the firm will apply for a costs order and potentially leave the SRA with another large bill.
This is the third time this year that the regulator has failed to prove a case against a firm relating to historical alleged breaches of accounts rules or money laundering regulations.
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In March, the SDT dismissed all allegations against global firm Dentons relating to a period from 2013 to 2017 and directed that the SRA shoulder its own costs of £189,000.
There was a further defeat in September when London firm Candey was cleared of failing to do the required due diligence of a client’s source of funds. A former partner had admitted failing to carry out adequate checks on a client, but he was cleared of authorising any payments or of using the client account as a banking facility. The partner was fined £6,000 and ordered to pay £10,000 costs. The tribunal made no costs order in relation to Candey, leaving both sides to pay their own.
The SRA said in the summer that it would challenge the SDT’s decision in relation to Dentons. A High Court hearing on that case will be in the new year, and could prove pivotal to the regulator’s policy of pursuing firms for alleged breaches from the past when different rules applied.
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