The Solicitors Disciplinary Tribunal (SDT) has fined two partners from a Preston-based law firm for serious rule breaches, including the misuse of client accounts.
Ayub Bhailok and Robert Michael Fielding, partners at the firm Bhailok Fielding, have been penalised for violations of legal regulations primarily aimed at serving non-legal business interests. The misconduct involved utilising client accounts as banking facilities, a breach of the 2017 Money Laundering Regulations (MLR), which the SDT found particularly troubling.
Mr. Bhailok and Mr. Fielding have distinct profit-sharing arrangements, with Mr. Bhailok receiving 80% of the profits due to his more significant business involvement. Their firm, with no qualified employees, still holds authorisation from the Solicitors Regulation Authority (SRA) despite its focus on providing services exclusively to property companies owned by Mr. Bhailok and his family.
The SRA’s investigation revealed that significant amounts of money from various Special Purpose Vehicles (SPVs) linked to Mr. Bhailok’s business activities were improperly held and transferred within the client account. The tribunal highlighted that these transactions, involving £17m in sample cases, lacked the necessary provision of regulated legal services to justify such practices.
The analysis of Greyfriars Assets Ltd, which consolidated the profits of Mr. Bhailok’s ventures, showed payments unrelated to legitimate legal services. Notably, a substantial payment for a personalised number plate attracted scrutiny for failing to meet legal service criteria.
Funds were often retained in client accounts long after they should have been repaid, with one instance seeing £5m held for 267 days. The tribunal noted the firm’s failure to maintain essential MLR compliance measures, such as risk assessments and procedural controls.
Despite Mr. Bhailok’s argument that his familiarity with the funds’ sources ensured legitimacy, the SRA pointed out his sole ownership was not verified across all involved entities, with Mr. Fielding owning none.
The tribunal imposed a joint and several fine of £12,000 against the partners and the firm, reflecting systemic issues beyond individual failings. It identified the misconduct as severe, underscoring the misuse of solicitor privileges for personal business advantages.
The case’s circumstances were deemed unusual by the tribunal, which acknowledged that while the client accounts were wrongly used, they did not facilitate money laundering or bolster deceitful schemes. Further penalties included an order to cover costs of £22,000 and mandatory training on anti-money laundering and account rules.
This case highlights significant lapses in regulatory compliance and misuse of legal privileges, underscoring the importance of adhering to professional standards in legal practice.
