Bevan Brittan LLP has acted for the Solicitors Regulation Authority (SRA) – the regulatory arm of the Law Society, on the recovery of £1.3 million arising from thefts from Midlands law firm Payne & Co.

The payment to the SRA’s Compensation Fund, which protects clients from losses caused by the dishonesty of solicitors, follows High Court proceedings after a massive shortfall was uncovered in Payne & Co’s client account in 1995. The firm was subsequently closed down and Mr Payne was struck off and later sentenced to five years in prison.

Sephton & Co, the firm’s accountant had failed to qualify their reports on the firm’s client account, preventing earlier regulatory action. Sephton took a limitation point which was dismissed by the House of Lords (Law Society v Sephton [2006] 2 WLR 1091). Negotiations led to a settlement of £1.3 million which includes the SRA’s costs. The money recovered will be used to help minimise future contributions by the profession to the Compensation Fund.

Commenting on the settlement Iain Miller, Regulatory Partner at Bevan Brittan said: “I am delighted that we have made a recovery on behalf of the SRA.  These types of claims form an important way of recovering losses that would otherwise fall on the profession as a whole.  The precedents we have set in this and The Law Society v KPMG [2000] 1 WLR 1921 will also hopefully assist the SRA in making recoveries in the future.”

Timothy Dutton QC and Rosalind Phelps of Fountain Court Chambers represented the SRA. .