UK: Solicitor hid 743 cheques worth £233,000 in filing cabinet

Great story via Legal Futures (UK) we’d almost forgotten about cheques

A veteran solicitor who signed but then kept 743 cheques worth £233,000 in a filing cabinet in his office, rather than using them to pay disbursements and other liabilities, has been struck off.

The Solicitors Disciplinary Tribunal (SDT) said Ian Caunt Wilson’s misconduct was “self-serving, financially motivated and intended to keep the firm operating”.

The SDT heard that Mr Wilson, admitted in 1969, co-founded Lyons Wilson in Manchester in 1979, running it himself from 1982. He was the sole owner and equity partner and held the compliance roles. Most of the firm’s work (70%) was personal injury.

From 2013, he was joined by a salaried partner, who been an assistant solicitor and trained at the firm.

She later made two reports to the Solicitors Regulation Authority (SRA) about the financial position of the firm, one in July 2021, after the SRA’s investigation had started, and one in February last year, a few days after her resignation. The SRA closed the firm on 31 March 2020.

The SRA was prompted to investigate Lyons Wilson by an anonymous report in 2019, however. “The report stated that following the settlement of personal injury claims, the firm received monies from the defendants’ insurers to settle costs and disbursements,” the SDT recounted.

“Cheques were then written to the disbursement providers, along with covering letters, and entered onto the relevant client ledgers as having been paid.

“However, the letters and attached cheques were placed in a locked cabinet and not sent out to the providers. The amounts on the cheques appeared on a list of unpresented cheques, to make it look as though they had been sent out but not drawn down.”

The SRA began its investigation in February 2020, finding 743 cheques with cover letters in a filing cabinet in Mr Wilson’s office – 479 cheques totalling £153,000 related to unpaid professional disbursements (largely medical providers and counsels’ fees), and 264 cheques totalling £80,000 related to unpaid business liabilities.

Much of the money – accumulated over more than three years – was instead transferred into office account, leading to a shortfall of nearly £150,000 on client account.

The firm’s accounts showed that its financial position “had deteriorated from 2018 and the office bank account revealed that had the cheques been sent out and drawn down, the firm would not have been in a position to meet the payments”.

Among the creditors were medical reporting organisations Doctors Chambers, owed £85,200, and Speed Medical (£60,000), and Irwin Mitchell, which was owed £55,000 under a fee-sharing agreement for clients where Irwin Mitchell was conflicted out.

The SRA was unable to ascertain the final financial position of the firm. “The only firm conclusion reached was that circa £73,000 was repaid in respect of the outstanding payments owed to third parties.”

The SDT rejected Mr Wilson’s claim that his accounts staff were responsible for what had happened.

It said: “The tribunal found Mr Wilson’s assertions to be disingenuous and lacking in credibility in circumstances where he was the sole equity partner, he was the COLP and COFA, the filing cabinet where the unpresented cheques were stored was in his office, he would have seen the firm’s bank statements for the office and client account, he was shown and signed the monthly lists of unpresented items and he was corresponding with the third-party provider chasing outstanding payments, he dealt with the firm’s accountants.”