The owner of a legal aid firm has denied knowingly holding onto disbursement payments to prop up his struggling practice.
Mladen Kesar admitted using monies from the Legal Aid Agency for counsel and interpreters to settle other debts and pay staff salaries and office overheads. But he denied this was deliberate and today told the Solicitors Disciplinary Tribunal that he did not understand the accounts rules at the time and believed he was allowed to act as he did.
Kesar, owner of Bromley firm Kesar & Co, said the business had suffered financial difficulties after legal aid cuts but he believed there was no need to report any issue to the Solicitors Regulation Authority.
But the regulator was alerted to the firm when two suppliers, a document checker and an interpreting business, both complained about disbursements not being paid. County court judgment over these debts was obtained in May 2019.
It emerged that the firm had failed to pay professional disbursements for more than six years, and by 2019 it owed £283,000 to third parties, with the oldest debt going back to 2012.
Michael Collis, for the SRA, told the tribunal that it was ‘inconceivable’ that Kesar would not have known that withholding payments and using them for other purposes was against the rules. He added: ‘There is no smoking gun which confirms they knew of the requirements of the accounts rules. But given their position of the firm, and the length of time the account rules had been in force, they must surely have known what the requirements were.’
In his evidence, Kesar said he had started the firm in 2010 with a handful of staff and he was having to act as both owner and fee earner. ‘Setting up on your own is very time-consuming… I was juggling many things at the time,’ he said. ‘It was not as obvious as you seem to think. You receive a block payment from the Legal Aid Agency for criminal and civil work – that amount does not specify what has been paid.’
Asked by Collis whether he chose to start using legal aid payments for the firm’s most urgent debts, Kesar said: ‘I was simply unaware that was a violation of the rules – I would not have continued for so many years acting in breach. When we finally realised we had breached the rules we made an effort to rectify it.’
Kesar accepted he should have reported to the SRA that the firm was in financial difficulty, but said he had believed it was managing better than most other businesses.
He denies misconduct along with former practice manager and compliance officer Elizabeth Hill, a non-solicitor. The hearing, expected to last for two days, continues.
