The High Court last week criticised the Solicitors Disciplinary Tribunal (SDT) for the lack of published guidance on the sanctions it can impose, as it overturned fines levied on four partners at a Merseyside firm.

Brian Hazelhurst, Christopher Murphy, Stephen David Garrett and Martyn Robert Brown, partners at Fanshaw Porter & Hazelhurst in Birkenhead, had each been fined £4,000 after a member of staff stole more than £100,000 from the firm’s client and office accounts.

The thefts, which occurred between February 2003 and May 2006, had gone undetected by anyone, including the firm’s auditors.

When the firm discovered the thefts, it dismissed the employee and reported the matter to the Solicitors Regulation Authority.

The partners ensured that the firm’s accounts were put in order and paid £80-£90,000 in uninsured losses so that clients were compensated in full.

The SRA charged the four partners with breaches of the Solicitors’ Accounts Rules, and failure to supervise the employee.

They pleaded guilty on the basis that they accepted, with hindsight, that they had been at fault in placing too high a degree of trust in the employee.

There were no allegations of dishonesty against the partners.

Mrs Justice Davies ruled that the fines should be overturned and a reprimand given instead.

She found that the SDT had failed to take account of the mitigating factors put forward in respect of why the thefts were not discovered sooner.

The judge said that the SDT had made a finding of fact that the firm had an inadequate system of file review, without any proper basis for doing so.

The judge said the tribunal had also failed to give reasons for the financial penalty imposed, the amount of the fines, or an explanation of how the sum was apportioned between the breaches.

Davies said: ‘It is of note that the SDT has not published Indicative Sanctions Guidance.

'Such guidance identifies the purpose, parameters and range of sanctions. It permits those who appear before it to better understand the proceedings and the thinking of the SDT. It assists the transparency of the proceedings.

‘Such guidance has been used by other regulatory bodies for some years and is a valuable reference point both for the tribunal and for those who appear in front of it, as practitioners or advocates,’ she said.

An SRA spokesman confirmed that the decision would not be appealed and 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, bearing in mind that 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,’ she added.

The SDT declined to comment on whether it now plans to publish sanctions guidance.