The Solicitors Regulation Authority did not even interview a law firm partner before deciding he had a case to answer, it has emerged in a damning assessment of a high-profile prosecution.
The Solicitors Disciplinary Tribunal threw out all allegations of wrongdoing against London firm Teacher Stern and experienced partners Claire Rollo and Sacha Rifkin, following a four-day hearing in November.
The ruling was published this week and outlines a series of failures by the SRA that were deemed so serious that the regulator was ordered to pay some defence costs.
The tribunal’s judgment said the SRA’s presentation ‘could rightly be characterised as a shambles’ and that its case had changed multiple times even during the substantive hearing. The respondents were fortunate to have able counsel to protect their position,’ said the ruling, ‘The tribunal noted with concern what injustice may have resulted in a similar situation where respondents were not represented.’
The firm had self-reported, in 2020, a matter in relation to its advising a company between 2014 and 2016 on the issue of loan notes under a subscription agreement.
The SRA commissioned its own forensic investigation and produced a detailed report in December 2021 where it was suggested that payments made through the client account had not been connected to underlying legal transactions.
But giving evidence to the tribunal, the SRA’s officer admitted it had not been a ‘wide-ranging investigation’ and that she had not even interviewed Rifkin or asked him to give an account. Rollo was given documents on the morning of her interview and there was no investigation of documents provided by her.
Lawyers for the respondents said the SRA’s case was built upon an ‘inadequate investigation’ which failed to consider underlying documents.
The SRA relied ‘in very large measure’ on an email sent by Rollo to Rifkin and others in response to a request for a breakdown of fees, where she had said: ‘the amount of work we have to do like this is getting painful! it’s [sic] like being a bank for all our clients’.
The tribunal said the SRA had failed to appreciate the context of the email, which was clearly a complaint about the administrative burden of dealing with all clients. ‘The [SRA] had taken her words far too literally, magnified it out of proportion and had then placed an overly simplistic and sinister interpretation upon them,’ added the tribunal.
Put simply, the tribunal concluded, the facts presented by the SRA did not support the pleaded allegations. Instead, the regulator had sought to reverse the burden of proof and required the firm and its solicitors to prove their innocence.
‘It was notable that when [Rollo] had had the opportunity to thoroughly review documents relating to the transactions and she served her answer, [the SRA] had rightly withdrawn the majority of the impugned transactions from the allegations,’ said the tribunal. This decision was based predominantly on the investigative work and analysis carried out by [Rollo] and not upon its own investigation. This appeared to be the hallmark of the [SRA] case: accusation without evidence.’
The SRA did not attempt to claim back its costs, which came to almost £68,000.
The respondents sought their costs, saying there was an improper basis for proceedings, an ‘unreasonable persistence, ‘inordinate delay’ and other procedural failings. It had cost more than £300,000 in total to defend the allegations.
Costs were awarded covering the period during the hearing between an adjournment for the SRA to review its case, and the time when the tribunal retired to deliberate. These costs were subject to a further detailed assessment.
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