- Publication Date
- 2013-03-05
The Solicitors Regulatory Authority (SRA) conducted an audit of the law firm's operations, which revealed several issues. The law firm, established in 2012, had a marketing manager who invested equally with a solicitor and an unadmitted individual. Additionally, a partnership called RST Marketing was established in conjunction with the law firm, with the marketing manager being one of the partners. Another partnership, Chartwell Investigations, was established in 2003 and included the wife of the marketing manager as a proxy partner.
Prior to around June 2004, the law firm had an arrangement with an insurance intermediary, Assistance Consultancy & Placing Services (ACPS), allowing it to issue certificates for After the Event (ATE) insurance cover to its clients under a delegated authority from IGI Insurance Company Limited (IGI).
The arrangements worked as follows: 1) When a client required ATE cover, the law firm would generate a schedule for a policy underwritten by IGI. 2) The law firm paid a deposit of £10 plus IPT to RST or Chartwell, with the balance of the premium deferred and payable only if the claim was successful. 3) RST or Chartwell produced bordereaux of policy schedules issued by the law firm and passed them on to ACPS and IGI. 4) If the claim was successful, the balance of the premium was paid to IGI, with broker’s commission due to ACPS. 5) ACPS allowed RST or Chartwell to retain the broker’s commission in return for the law firm agreeing to bear the cost of any claims made under the policies.
IGI withdrew authority to operate the arrangement in June 2004. Despite this, the law firm and Chartwell continued to issue unauthorized ATE certificates. The commission payments retained by RST and Chartwell were distributed to the partners, including the marketing manager.
The law firm regularly instructed four doctors to provide medical expert reports for personal injury claims. The agreements made with these doctors required each to pay a commission to Chartwell for every report provided. The commission payments received by Chartwell were distributed to the partners, including the marketing manager.
The regulatory outcome indicated that the marketing manager received and retained commissions without the clients' fully informed consent. The law firm was operated as a partnership among three individuals, with the profits treated as part of the law firm's business profits.
The relevant lawyer admitted to the allegations, and an agreement was made that the SRA would control his future activities within the legal profession. An order was made that no solicitor, recognized body, or manager would employ, remunerate, or allow the relevant lawyer to hold any interest in a legal practice without the SRA's prior written approval.
The agreement also stipulated that the SRA would apply to withdraw the proceedings if the relevant conditions were met. If not, the application to the Solicitors Disciplinary Tribunal (SDT) would be pursued or renewed.