A manager of a law firm heading for insolvency failed to tell the regulator it was subject to a winding up order, it has emerged.
Victoria Powell, head of finance and administration at Liverpool firm High Street Solicitors, also substantially underplayed the extent of the business’ debts in meetings with the regulator.
The Solicitors Regulation Authority revealed this week that it had disqualified Powell from being a manager or head of legal practice at any firm after she admitted failing to uphold her duties.
Claims practice High Street Solicitors has been one of the biggest law firm failures in the past five years, with creditors collectively owed more than £35m and at least 70 jobs lost. Administrators said in January that no money had been received from any of the work in progress handed over when the firm folded in June 2023.
In the first disciplinary case stemming from the firm’s collapse, the SRA prosecuted former legal cashier Powell, who had taken up the role as head of finance in November 2021.
The regulator had started a forensic investigation into High Street Solicitors at the start of 2023 after receiving reports that it was failing to meet financial payments or demands. The SRA met Powell and one of the firm’s managers on 7 February, where it was told that debts came to around £4m. A schedule of liabilities and loan agreements disclosed later that month showed these balances actually came to more than £26m.
Powell attended a further meeting in April 2023 – again with another of the firm’s directors – where they told an SRA forensic investigator that no decision had been taken about the future. But just a day later, the investigator discovered that the firm had in fact been subject to a winding up order resulting from an outstanding debt of £340,000.
Powell had arranged a repayment plan as far back as September 2021 which saw off a first winding up petition. But when High Street Solicitors defaulted on payments, a second petition was listed to be heard on 2 May 2023. None of this information was communicated to the SRA during its first meetings with Powell. The regulator later expressed concern that Powell ‘didn’t have any idea about what was going on’.
Powell told investigators that at no point did she consider that a report to the SRA was required as she ‘felt that we would get that back on board and sorted going forwards’. She accepted that with hindsight she should have reported matters but stated that she tried her best within her role as head of finance.
The SRA said Powell had shown she was unsuitable to hold responsibility for compliance roles in a law firm. She agreed to be disqualified and to pay £600 costs.
