A law firm boss who transferred around £140,000 in residual client funds to cover business expenses has agreed to a fine of £20,000 and costs a further £25,000.

Philip Browell, owner and manager of north east firm Browell Smith & Co, made three different transfers in 2018 as a short-term measure to cover outstanding debts.

Browell told Solicitors Regulation Authority investigators that the first transfer had been for a VAT bill when there was insufficient time to raise monies from his own mortgage. The client account held a cash shortage for 32 days before it was replenished.

The second and third transfers paid staff salaries and then a further VAT liability, with a shortage in the client account for less than a month in each case.

The SRA was not informed of the transfers until the firm was prompted to report the matter in December 2018 by its own accountants.

In a settlement agreement with the SRA, Browell admitted causing the firm to retain residual client balances in breach of accounts rules, and accepted that he had failed to act in his clients’ best interests. He further accepted that he failed to act with integrity.

In mitigation not agreed by the SRA, the solicitor of more than 40 years said he had been approached by his colleague, the firm’s compliance officer at the time, who was ‘in a state of panic’ that a VAT payment was due and there was insufficient cashflow to cover it. This colleague, it was claimed, had suggested that the only way to make the payment was to use monies from the residual client account balances, and Browell had then authorised the transfer.

Browell said he had passed many financial controls over to his colleague because he was so busy with litigation arising from miners’ claims. He had since taken back much of the financial control.

The shortages were all paid back from Browell’s personal funds as soon as possible, and he admitted misconduct at an early stage.

The Solicitors Disciplinary Tribunal, asked to rubber-stamp the agree outcome, said Browell was ‘wholly culpable’ for his misconduct, noting he was ‘an experienced solicitor who understood the sacrosanct nature of client monies’.

The tribunal said there was no need to take away Browell’s practising rights through a suspension or strike-off, and agreed that a fine of £20,000 adequately reflected the seriousness of what had happened. He may no longer practise as a sole practitioner or be a compliance officer for any firm, and he cannot act as a sole signatory to any client or office account.

Browell agreed to pay the SRA’s £25,000 costs.

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