Bromley Solicitor Fined By SDT For Using Disbursement Money to Pay Wages

A recent SDT case saw solicitor Mladen Kesar issued with a fine and an indefinite Restriction Order after it was found that he used disbursement money received from the Legal Aid Agency to pay office bills and wages. Kesar & Co, based in Bromley, employs 30 staff and represents around 1,000 clients. Despite receiving the fine, Kesar and the firm’s practice manager, Elizabeth Hill, were cleared of lacking integrity. In this article, we will review why the SRA referred Kesar & Hill to the SDT, the case presented, and the decision reached by the SDT.

Referral To The SDT

Kesar & Co, which was established by Solicitor Mladen Kesar in 2010, was the subject of complaints by two companies that were owed money for legal aid-funded work. One was a document-checking company, and the other was an interpreting business. CCJs for these debts were obtained in May 2019. On further investigation, it was found that the practice had not paid professional disbursements owed between 2012 and 2019, amounting to £283,000. The SRA stated that it was “inconceivable” that Kesar would have been unaware that he was in breach of the accounting rules relating to the withholding of payments. Kesar & Co’s practice manager, Elizabeth Hill, was also referred to the SDT.

SDT Hearing

During the SDT hearing, which was heard between 12th and 13th September 2022, Kesar denied acting without integrity. He explained that he was not aware of the SRA’s Accounts Rules at the time and was overwhelmed by the work required as the owner of his own legal practice. In response to the SRA’s statement that it was “inconceivable” that Kesar would have been unaware that he was in breach of the rules, Ben Hubble KC stated that both Kesar and Hill were “caring professional people who want to serve their clients and community”. He went on to state, “It is plainly regrettable that the situation has arisen. But in the circumstances it is entirely believable that [they] took this approach in good faith”, and that “It is striking that under the solicitors accounts rules [amended in] 2019 the firm would now be entitled to treat block payments in the way they had done previously”.

It was argued that placing a practice restriction on Kesar would adversely affect the existing staff and clients of the firm. Hubble also explained that Kesar & Co had set up a legal charity in 2013 (the Intervene Project) to assist those in custody who have been denied access to legal advice and assistance, and this would be placed at risk with a severe sanction.

Kesar, for his own part, admitted that he should have reported his firm’s financial difficulties to the SRA; he stated, “Setting up on your own is very time-consuming… I was juggling many things at the time….It was not as obvious as you seem to think. You receive a block payment from the Legal Aid Agency for criminal and civil work – that amount does not specify what has been paid”. When asked by the Tribunal whether was using legal aid monies to cover the most urgent debts of the firm, Kesar stated, “I was simply unaware that was a violation of the rules – I would not have continued for so many years acting in breach. When we finally realised we had breached the rules, we made an effort to rectify it”.

SDT Decision

SDT ruled that neither Mladen Kesar nor Elizabeth Hill had deliberately misused the disbursement funds received from the Legal Aid Agency. The decision of the SDT was to fine Elizabeth Hill £6,000 and order her to pay ~£18,000 in costs. Mladen Kesar was fined £6,000 and ordered to pay ~£40,000 in costs.

Final Words

The decision by the SDT in the case of Mladen Kesar and Elizabeth Hill demonstrates their willingness to take into account other important factors behind a breach of the SRA’s accounting rules . In this case, the background of the historical cuts in legal aid funding was a contributing factor to the practice experiencing financial difficulties. This resulted in a breach of the accounting rules as funds were moved where needed (i.e. to pay bills and wages) to keep the firm going. This highlights the importance of training on the SRA’s rules, implementing processes and procedures to keep within the rules, and being transparent with the SRA as soon as possible when problems occur.

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