This blog post will consider a number of recent cases in England where solicitors have been convicted of offences or struck off the register for misappropriating client funds from deceased estates. These shed light on the surprising levels of abuse uncovered by the Courts and the English Solicitors Regulation Authority (the “SRA”), and the zero tolerance approach taken to solicitors who seek to personally benefit from the trust placed in them by their clients.
A number of common themes run through the cases, namely that offenders have often sought to explain and justify their actions through desperation, ill health and financial hardship. Further, the solicitors in question generally practised in local firms or as sole practitioners, where clients place a high degree of trust in them due to their geographical proximity and personal familiarity. Finally, the offences appear to have taken place over a number of years, with initial abuse turning into a pattern of offending.
During its investigations the SRA asserted that it is only in exceptional circumstances that a solicitor found to have acted dishonestly will avoid being struck off the register. Explanations and mitigating circumstances advanced in the cases below were not sufficient to overcome the serious breaches committed and the need to uphold public confidence in the legal profession.
Simon Kenny, Emma Coates and Stephen Hiseman
Kenny (60), a former deputy district judge, his assistant Coates (47) and Hiseman (60), a "fee earner" in their firm CK Solicitors who had no legal qualifications, were convicted of fraud and jailed in January 2017.
The trio were involved in the transfer of monies from CK Solicitors' client accounts over a period of four years, telling staff that monies were being moved to offshore accounts due to the Northern Rock banking crisis. At one point, approximately £60,000 of client money was transferred to Hiseman's own foreign bank account. Hiseman had also misappropriated approximately £5,000 from a client through misrepresenting the outcome of a debt settlement.
When CK Solicitors was shut down by the SRA in 2011, Coates established another firm, Coates and Co., and continued to misappropriate £85,000 from the estate of an elderly client. Kenny was removed as a judge in 2014 following an investigation into his conduct as a solicitor, but failed to inform the Lord Chief Justice of these proceedings.
According to press reports of the trial, Kenny and Coates spent the proceeds of their fraud on expensive holidays and paying off mortgages on four properties.
When the company accountant, Robert Foskett, learned of the fraud in 2011 he committed suicide and stated in his suicide note (which was read to the jury) "I am so sorry but the pressure mounts on me. I was lured into signing an audit certificate by Simon Kenny which I should not have… He assured me funds would be [available] the following week from his family trust".
As above, the accused did not deny the offences but rather emphasised their apparent suffering and hardship. For example, counsel for Kenny stated "He is in the protection wing given his role as a judge. Simon Kenny is ruined in nearly every way".
Despite this, the Judge sentencing the trio said that it was "difficult to imagine a more spectacular breach of trust by someone running a legal practice" and that Coates in particular had "an instinct for excess and extravagance".
Kenny and Coates both received 6 years imprisonment, while Hiseman received a 2 and a half year sentence.
Linda Mary Box
Box (67) was a senior partner at Dixon Coles & Gill when she misappropriated £4 million of client money, around £2 million of which was taken from deceased estates.
In its investigation in 2016, the Solicitors Disciplinary Tribunal (the "Tribunal") cited the scale of the misappropriation as one of the highest it had come across. Particular consideration was given to improper payments made out of the estates of two deceased clients.
"Dishonesty at its highest level and gravity"
In the first instance, Box made 12 payments out of a client account over the course of two months, totalling £537,650.53. These payments included £5,523.60 to a PR firm employed by her husband's company, £60,000 to settle personal credit card liabilities and over £72,000 to settle negligence proceedings brought against her firm by a different client.
In the second instance, Box made 29 payments out of a client account over the course of four months, totalling £625,721.35. These included £170,000 to a bank for "investment" purposes, which was in fact used to settle personal credit card debts, and payments to various individuals who were not named in the deceased's will but whom Box believed should benefit. The beneficiaries who were named in that will had not received their entitlement by the date of the SRA investigation.
Box's trial was widely reported in the press, not least because details of her excessive spending were given in court. Examples of such spending included a collection of vintage wines worth £800,000 and a family trip to Edinburgh costing £11,000.
Defence / Mitigation
Box admitted the charges levied against her in Court, but attempted to demonstrate mitigating circumstances to explain her actions.
Box argued that "The perception of her success had pressurised her to feel that she had to provide for her family and friends. Her generosity in later years had extended far beyond her means and she had lacked the courage to say that she could not afford to provide the lifestyle they had become accustomed to."
Box also submitted that she had sought to repay some of the misappropriated money, she had shown sincere remorse for her actions and she was beyond retirement age and did not plan to practise as a solicitor again.
Box was convicted of nine counts of fraud, two counts of forgery and one count of theft and jailed for seven years in March 2017. Dixon Coles & Gill has been shut down by the SRA.
Further, the Tribunal found that Box had acted dishonestly and she was struck off the roll. The mitigating factors advanced were not considered sufficient exceptional circumstances to allow for a finding of dishonesty to result in anything less than a strike off (see SRA v Sharma  EQHC 2022).
Scott (64) was a partner at Langleys Solicitors LLP when he abused his power of attorney over the accounts of four clients to make improper transfers totalling £468,712.
Scott was reported to the SRA by his firm after transfers from four client accounts to his personal account, which he held jointly with his wife, were noticed. Unlike Dixon Coles & Gill, Langleys is still a practising firm.
Plundering of client accounts
Between October 2009 and August 2015, Scott made 143 transfers from the accounts of four elderly clients over which he had an Enduring Power of Attorney. These transactions ranged from £20 to £26,000 and the client files did not indicate any reason for the transactions. It was a common theme that, at the time of the larger transfers, Scott's personal account was significantly overdrawn. The victims included a retired vicar for whom Scott's wife acted as a carer.
Like Box, Scott admitted the charges levied against him in Court. He sought to explain his actions by saying that they resulted from financial strain and ill health, stating that he was "paying out on credit cards three times what he was receiving in his salary".
In front of the Tribunal, Scott admitted to having "betrayed the keystone of solicitor/client relationship, creating a breach of trust of huge magnitude" and stated that his actions had left him "with nothing but fear in my eyes and soul".
The court found that such "shame and abject sorrow" was not sufficient to overcome Scott's calculated and repeated pattern of behaviour. Furthermore, references to his ill health were not deemed an adequate defence or excuse for his actions, even if they did provide an explanation. Scott was sentenced to 4 years imprisonment for theft, fraud and transferring criminal property.
In addition to a custodial sentence, Scott was found to have acted dishonestly by the Tribunal. As in Box's case, Scott's explanation of his behaviour and subsequent remorse were not deemed sufficient exceptional circumstances to prevent him from being struck off the roll. The Tribunal particularly emphasised the importance of protecting the public and maintaining confidence in the profession.
David Christopher James Barr
Barr (66) was a partner at Brighouses Solicitors in Southport when he misused hundreds of thousands of pounds worth of client money to expand his property portfolio and to settle personal debts.
Barr was reported to the SRA by his brother when he improperly administered their father's estate. The Tribunal consequently reviewed a number of his previous matters and made nine allegations of dishonesty against him. Barr was struck off the roll in April 2017.
"I thought it was my money… I just got it wrong"
In one instance, Barr used £40,000 from a deceased estate to compensate a different client for a mistake made when handling the sale of their property. The partners of the firm questioned Barr about this and he produced a note falsely stating that the payment was a legitimate legacy from the deceased's secret trust. Barr repeated this assertion in a false letter addressed to the recipients of the payment, and inserted this into the client file. The Tribunal held that the letter was backdated as it was written on Brighouse headed paper, which only came into existence six months after the apparent date of the letter. Barr later admitted that he knew it was wrong to make the payment.
In another instance, Barr used £120,000 from a deceased estate to purchase a property in his own name, allegedly as an investment to protect the trust property. Barr sold the property a year later for £280,000, repaying only £120,000 into the estate. He repeated this pattern with two further properties. Barr responded to questions on this course of action by stating "I thought it was my money…and I'm sorry, I just got it wrong".
Barr continued to use client monies from various deceased estates, taking £60,000 to settle personal debts with his brother, loaning £70,000 to another client to help with their property purchase and using the firm's client account to deal with his late father's estate despite having no instructions to do so.
Barr admitted to the allegations made by the Tribunal but argued that there were mitigating circumstances, namely that the prescription drugs he was taking to help with his chronic arthritis had brought about behavioural changes in him. Further, he struggled to cope with stress and workload and found it difficult to make decisions. Barr recognised that he had made "catastrophic errors of judgment" and had lost sight of what a solicitor can and cannot do.
As with the cases discussed above, Barr's illnesses were not sufficient 'exceptional circumstances' to prevent a strike off. Barr was considered wholly culpable for using his position as a solicitor for personal gain and for falsifying documents to conceal his dishonesty. Unlike the three cases above, Barr received no custodial sentence.
The Courts and the Tribunal have emphasised the sanctity of the trust placed in solicitors by their clients and the risks posed to public confidence in the profession if solicitors abuse that trust for personal gain.
It is clear that pleas of financial hardship, ill health and stress are insufficient evidence to justify a sanction other than a strike off for solicitors' dishonesty. Such circumstances are also unlikely to be taken as mitigating factors in Court.
For more information, please contact Richard Norridge, Joanna Caen or your usual Herbert Smith Freehills contact.