SDT questions why regulator's intervention was necessary

An experienced commercial partner who continued acting for several developers and buyer companies for months after admitting to a client there was a conflict of interests, was fined £10,000 and ordered to pay £40,000 in costs.  

David Roberts continued to act when there was a “clear and obvious” conflict and the Solicitors Disciplinary Tribunal (SDT) pointed out it was not the role of other solicitors to remind him of his obligations. 

However, the SDT said it was "difficult to understand" why the Solicitors Regulation Authority (SRA) considered that an intervention was necessary in the circumstances. 

Roberts had already retired from legal practice by the time of the intervention into his Wirral firm, David Roberts Solicitors (which has ceased trading).

Even though he had closed the practice and no longer had any clients, the SRA made the decision to refer the case to the SDT. 

Roberts had acted for property developers between 2014 and 2016 using a special purpose vehicle (SPV) in relation to developments which were reliant on the deposits of the purchasers to fund construction. He also acted for buyers companies. 

The SDT accepted Roberts’ evidence that the use of such a newly incorporated entity was a protection for both the purchasers and the sellers.

However, he was accused of acting in circumstances in which there was at the least a significant risk of a conflict of interests between developers and buyers companies. 

These included paying out substantial amounts of cash from a buyers company before obtaining security in the properties they intended buying.

These payments were favourable to the developers but potentially adverse to the buyers companies and this compromised his independence. 

Of particular concern was the fact that Roberts had continued to act for his clients for many months, even after he identified and communicated a conflict. 

The SDT accepted that this was because of his desire to resolve matters and successfully conclude the developments, however, it said given the clear and obvious conflict, his decision to continue to act was not one any reasonably competent solicitor could make. 

This was “a serious failure to act with integrity in breach of Principle 2”.

It also pointed out that Roberts was an experienced commercial solicitor who must have known he couldn’t properly carry on acting.

The SDT concluded he was unreasonable and reckless in continuing to act when he perceived there could be a conflict, though it made no findings of dishonesty against him. 

It commented: “Members of the public would not expect a solicitor to act where there was a conflict of interests between his clients. 

“Less still would members of the public expect a solicitor to prefer the interests of one client over the interests of the other when those interests conflicted, even though his aim was to put in place arrangements that would, he thought, lead to successful completion of the development which the buyers had funded.”

In it ruling, the SDT commented that just because other solicitors did not complain, this did not mean Roberts’ decision to continue acting was reasonable. 

Those solicitors were not conflicted and nor was it their responsibility to remind Roberts of his own duties and obligations.