A sole practitioner whose firm did not have an accounting system has accepted a rebuke after the Solicitors Regulation Authority found there was no lasting harm to clients.
John Michael Gibson, 56, was sole director and shareholder of Leeds firm Aventus Law Ltd until the regulator intervened to close the firm in June last year. A forensic inspection had found that Aventus failed to carry out timely reconciliations and that a suspense ledger had been maintained since 2012 with a credit balance on the office side of £39,480.
Aventus was found not to have an accounts system. The SRA was told that the money in the suspense ledger related to cheques paid by insurance companies for costs paid on personal injury matters on which the firm had been instructed.
In February 2022, an invoice was raised for the full amount held in the suspense ledger to clear the office credit balance in full. The bill was reversed in March 2023 and the firm closed without the credit balance being fully dealt with.
As the firm did not have an accounting system, it was unable to reconcile the amounts held in the suspense ledger to client matters so bills could be raised.
Gibson, who was also the firm’s sole compliance officer, admitted breaching the accounts rules and rule 2.1 of the Code of Conduct for firms.
Before imposing sanction, the SRA considered mitigation put forward by Gibson. He had attempted to deal with the suspense ledger by contacting the bank to obtain details of the client matters where payments were received. Before the firm closed, reconcilitations were taking place regularly and issues relating to money being left in the ledger and reconciliations not being carried out had arisen due to lack of staff.
Issuing a written rebuke, the SRA considered that there was no lasting harm to clients. The money in the ledger was owed to the firm. Gibson had attempted to rectify the breach, but it persisted longer than was reasonable. Although he took some remedial action, this happened only after the forensic inspection began.
Gibson was also ordered to pay the SRA’s costs of £300.
