Bass & Anor v Solicitors Regulation Authority

Solicitors’ Accounts Rules impose a strict liability obligation on principals to ensure compliance. By contrast, professional supervision duties require a properly reasoned finding identifying what supervision or management was required during the relevant period. A disciplinary tribunal cannot establish liability by relying on obvious hindsight or by treating a non-strict supervision allegation as strict liability. On an appeal against sanction, the High Court must respect the expertise of the Solicitors Disciplinary Tribunal, but may intervene where the penalty is clearly inappropriate. Breaches of the Accounts Rules will usually require a financial penalty to maintain public confidence, although a reprimand may suffice in an appropriate case. Relevant considerations include honesty, reporting, supervision, independent checks and client reparation.

The appellants were the two equity partners of a solicitors’ firm. A fixed-share partner made 44 improper transfers of residual client balances to office account, creating a client-account shortage. The appellants admitted breaches of the Solicitors’ Accounts Rules 1998, but denied a separate allegation that they had failed to exercise adequate supervision under the Solicitors’ Code of Conduct 2007.

The Solicitors Disciplinary Tribunal found all allegations proved and fined each appellant £10,000. The appeal under section 49 of the Solicitors Act 1974 challenged both liability on the supervision allegation and sanction. The central issues were whether the supervision allegation was properly established for conduct after 1 July 2007 and what penalty was appropriate for the admitted Accounts Rules breaches.

1. Supervision allegation. The finding on the fourth allegation was quashed. Rule 5.01 of the Solicitors’ Code of Conduct 2007 required arrangements for effective management of the firm as a whole, including proper supervision and direction of clients’ matters. Whether the fixed-share partner was technically “staff” did not determine the issue, because that wording was only one aspect of the wider management obligation.
2. The Code came into force on 1 July 2007 and had no retrospective effect. The Tribunal therefore had to identify what the appellants failed to do between 1 July and 4 October 2007. Its finding that an appropriate system should have included supervision of file closure did not identify a failure during that period. Nor did the statement that earlier checks would have revealed the problem prove that checks should have been made. Rule 5.01 was not a strict liability provision.
3. Sanction. On an appeal from the Solicitors Disciplinary Tribunal, the High Court must respect the Tribunal’s expert sentencing judgment, but may intervene where, despite that respect, the decision is clearly inappropriate, applying the approach in Salsbury v Law Society [2009] 1 WLR 1286.
4. Financial penalties will ordinarily be required for Accounts Rules breaches to maintain public confidence, but this is not an invariable rule. Hazelhurst v Solicitors Regulation Authority [2011] EWHC 462 (Admin) did not establish a general exemption for honest partners who reported breaches. In the present case, the Tribunal was entitled to find inadequate early supervision, so a financial penalty remained justified.
5. The fine imposed on each appellant was reduced from £10,000 to £5,000. The finding on the first three allegations and the agreed costs orders remained.

• Solicitors Disciplinary Tribunal: found the admitted Accounts Rules allegations and the supervision allegation proved, fining each appellant £10,000 and making agreed costs orders.
• High Court (Administrative Court): quashed the finding on the supervision allegation and reduced each appellant’s fine to £5,000.