Clyde & Conduct: High-Profile lawyers suspended for financial misconduct
August 4, 2019
2 min read
What's going on here?
Two lawyers from major city law firm Clyde & Co have been suspended for alleged financial misconduct, whilst an internal investigation is underway.
What does this mean?
For Clyde & Co (historically a shipping and insurance focussed law firm) this is a very big deal. Not only does it attract negative media attention to the firm, but it is also a concern for clients who may lose trust in the firm. This is especially impactful for Clyde and Co because in 2017 the firm faced similar allegations. Then, three Clyde and Co partners were found to have breached accounting and money laundering rules, and used client bank accounts for alternative purposes. The fines were the largest ever awarded by the Solicitors Disciplinary Tribunal. The firm is known for its relentless growth in recent years, flying into the UK top 15, so it may be able to absorb the damage that comes from this, but for most smaller law firms, this wouldn’t be the case.
What's the big picture effect?
A breach of accounting rules and obligations laid out in the Solicitors Regulatory Authority handbook is a major offence. Often, it is one that results in serious consequences both for the firm, and the individuals involved. Other law firms will now likely be double-checking their important accounts after this incident, and be refreshing the knowledge of their staff on the repercussions of such actions.
In-depth investigations of this nature into employees can be expensive and time-consuming, with extensive legal fees often necessary on both sides. This is especially the case when there is high-level financial misconduct which attracts media attention. Those culpable may be handed penalties of several thousand pounds. In 2017, the guilty partners were fined £10,000 each. According to accounts at Companies House, Clyde & Co’s highest paid partner in 2015 took home £1.8 million. The fines awarded are thus not always deemed proportionate, but a fierce negotiation will have no doubt taken place to arrange such terms. Whether or not a second accusation against Clyde & Co’s top employees within 3 years will have an impact on the firm’s financial results though, is yet to be seen.
Report written by Eleanor Rickards
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