The Solicitors Disciplinary Tribunal has found that a solicitor who used monies received for third parties to prop up his business was dishonest and has struck him off the roll.

David Johnson was admitted in 2002 and practised as the sole director of Bolton firm Johnson Law Ltd.  At the SDT hearing, Johnson admitted receiving payments for settled personal injury cases but failing to account to third parties for sums owed for work on the claims. This went on for almost seven years until the firm closed in January 2018 and went into administration.

During the administration of Johnson’s subsequent bankruptcy, administrators reported concerns to the SRA that there had been a failure to pay a significant amount in third party disbursements. 

Evidence was given to the SDT that the outstanding sums could be in excess of £790,000 with ATE insurers, barristers and medical reporting agencies amongst the unpaid creditors. There was no evidence of Johnson alerting the SRA to any difficulties in paying disbursements and an absence of accounting records for the immediate period prior to closure.  Johnson was unable to show the SD where the unpaid sums had been utilised.

Johnson made an agreed outcome with the SRA in which he admitted failing to pay disbursements and failing to repay a loan following an undertaking. He also admitted that his conduct had been dishonest.  In mitigation – which was not agreed – Johnson asserted that he had made attempts to address non-payments, which attempts failed.  He also submitted that he had no intention to permanently deprive his creditors of their monies.  He accepted that the mitigation did not meet the threshold for exceptional circumstances which would prevent him being struck off, but asked the SDT to take into account his previous unblemished record and co-operation with the SRA.

The SDT found that money intended for third parties was used to support the cash flow of the business and that Johnson ‘knew that failure to pay creditors and the use of money allocated to those creditors to otherwise support the running of the firm was dishonest’.

Johnson was struck off and ordered to pay £7,500 costs.

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