Solicitor used client's PI award 'to prop up firm'
Sole practitioner paid staff out of client account until the money ran out
A solicitor who had used a client’s personal injury award to ‘prop up his firm’ has been struck off for dishonesty.
The SRA opened an investigation into Nicholas Goddard’s firm after receiving a complaint from a Ms AK that she hadn’t received a £88,500 compensation award the firm had secured for her following a road traffic accident.
The firm’s account showed that money had regularly been transferred from client account to office account so that Goddard could pay staff salaries. The solicitor said he continued to do this until there was no money left in the client account.
‘This was a case in which the respondent had been motivated by his desire to keep his firm going. His actions were planned and continued as a course of conduct,’ the Solicitors Disciplinary Tribunal found. By doing so, he had caused ‘extensive harm to Ms AK and to the reputation of the profession.’
Striking off Goddard for dishonesty, the tribunal said his misconduct was ‘deliberate, calculated, and had continued over a period of time. He had taken advantage of his client, and had concealed the receipt of her damages award from her.’
AK instructed a former employee of the firm to represent her in respect of a personal injury claim in January 2013. She accepted a Part 36 offer in early December 2015 on the understanding that this would be paid within a fortnight.
Shortly afterwards, the firm received £108,500 in respect of the damages awarded to AK. After deduction of costs, this would leave her with £88,500.
AK discovered that the funds had been transferred to the firm when she called the defendants’ insurers in February 2016.
She exchanged a number of text messages with Goddard asking about payment. In May, he assured her that he would be in a position to transfer between £5,000 and £10,000 within a week – a promise he failed to keep.
AK wrote to the SRA on 15 June 2016, complaining she had not yet received the award. She said Goddard had avoided her for months and gave her his mobile number so that she wouldn’t ‘contact the office and discover his lies’.
A few days later, on 19 June, the SRA suspended Goddard, and his firm, Total Law, was closed down on 4 July.
Goddard had been declared bankrupt on 18 May. In addition of owing £73,500 to AK, the firm owed two other clients £1,000 and £2,887 respectively.
The tribunal found that Goddard’s dishonesty was ‘extensive’. ‘It had continued over eight months and involved 35 separate transactions; his misconduct was not merely a one-off or a “moment of madness”, but was a sustained and continuous course of conduct.’
The judges took account of Goddard’s circumstances – he had been under considerable stress and had been diagnosed with chronic adjustment disorder, anxiety, and depression – but concluded that strike off was the only appropriate sanction.
Jean-Yves Gilg is editor in chief at Solicitors Journal