Cooper: Baseless allegations
The Solicitors Regulation Authority (SRA) relied on complaints by anonymous people and “a significant amount of prejudicial hearsay evidence” to support a failed prosecution against two high-profile solicitors, the Solicitors Disciplinary Tribunal (SDT) has ruled.
It criticised the regulator for failing to keep the case under review and advancing it at the tribunal without “sufficient objective, primary evidence” – rather, it relied on evidence provided by “self-motivated pay day lenders” who had been sued by the solicitors.
We reported last November that the SDT had dismissed the allegations made against Craig Cooper, managing director of Manchester firm Barings Law, which is very active in high-volume consumer and commercial claims, and his one-time fellow director Erich Kurtz, who is now a senior associate at Hugh James and heavily involved in acting for former clients of SSB Law.
Mr Cooper described the allegations as “baseless” and “an egregious waste of time and resources”.
The SDT’s reasons have now been published.
The pair were alleged to have made misleading statement to clients/potential clients over making claims relating to mis-sold personal loans by payday lenders for six months in 2018.
In that period, Barings accepted 4,191 of the 6,206 clients who had signed up on via an automated on-boarding process through its ‘Your Claims’ website. A third-party credit referencing agency, Call Credit, provided an automated process for client identification and verification.
The SRA said the website was misleading by saying that claims were instantly validated, no paperwork was required, and clients typically received over £1,800 in compensation.
The SDT found these were all true. Barings’ processes made validation “as close to instantly as was possible”, onboarding was paperless, and the £1,800 figure was based on Financial Ombudsman information.
The SRA made similar allegations over another website, ‘Pure Claims’, which also claimed that clients would find out in seconds if they were due a refund. However, this was a testing site and the SDT found the statement had not been made to clients.
The solicitors were also accused of failing to obtain clients’ consent to making a claim.
There were no complaints from clients, however, and in 2020 the SRA contacted 101 of them; only six responded, of whom two denied having instructed Barings to make a claim on their behalf.
However, after giving a witness statement, one of them declined to attend as a witness, while evidence from the other came from a customer support officer at a lender, who said the client had told her she had never heard of Barings.
Other evidence came from Stewarts Law, which acted for several lenders who received the claims and said it had identified 31 claims made by clients who it stated had not authorised the firm to make them.
The SDT said it attached “very little weight” to this – there was “no primary evidence in support of this allegation and that the [SRA] essentially relied on the complaints of anonymous people and a significant amount of prejudicial hearsay evidence that was submitted by those acting on behalf of aggrieved pay day loan companies”.
This was particularly significant given the efforts the SRA had made to contact former clients.
“Every case that the [solicitors] brought against the lenders in question had been successful and this further emphasised the importance of primary evidence from clients.”
The SDT rejected further accusations that the solicitors did not properly assess merits and again noted the lack of evidence of client complaints.
The final, unrelated allegation was that Mr Cooper alone failed to conduct adequate client due diligence, in breach of the Money Laundering Regulations 2017, by accepting five payments totalling £230,500 into client account via credit card.
They related to property purchases on behalf of clients based outside the UK and the circumstances raised various red flags, not least because the firm had not handled commercial conveyancing before.
The SDT said Mr Cooper was “ill advised to proceed in the manner that he did” and he was fortunate that Barclaycard identified irregularities before any substantive work was done.
However, the SDT accepted that this was money on account of costs and that Mr Cooper had acted reasonably in following Law Society guidance that said due diligence need only be completed before substantive work was done.
The payments were therefore outside the scope of the regulations.
The starting point on costs where prosecutions fail is no order due to the SRA’s public interest role.
But here there were good reasons to depart from this, the SDT said. The solicitors conceded that the SRA was entitled to conduct its investigation – they had self-reported and it also received complaints from lenders – and limited their claim to £30,000, a quarter of the amount they had spent.
The SDT ordered the SRA to pay this. The regulator “was obliged to keep under review and maintain an ongoing assessment as to whether the evidence indicated that the case should be pursued” but it failed to do this “and proceeded to the substantive hearing without sufficient objective, primary evidence that was required to sustain its case”.
