Cobbetts’ board members to face allegations of “manifest incompetence”

Eight former lawyers at failed law firm Cobbetts have been referred to the Solicitors Disciplinary Tribunal for “manifest incompetence” and financial mismanagement over their conduct in the months leading up to its collapse.

The action against the former board members was revealed today by the Solicitors Regulation Authority and comes more than four years after the Manchester-headquartered firm was bought in a pre-pack deal by DWF.

In a statement, the group said: “The SRA allegations, coming some four years after Cobbetts’ sale, are misconceived and are fully, and strenuously, denied.

“The evidence demonstrates that we acted appropriately and with propriety throughout.”

TheBusinessDesk.com broke the news when Cobbetts went into administration in February 2013, after a severe downturn in trading in late 2012.

DWF, with whom it had previously held merger talks, picked up its work in progress and some 400 staff in a £3.9m pre-pack deal.

It had total liabilities of more than £90m, of which £74m related to property leases. A number of professional service firms, including Deloitte, property advisers DTZ and Jones Lang Lasalle are among the worst hit creditors. All were owed more than £100,000.

Four of the eight partners still work at DWF – former Cobbetts managing partner Nicholas Carr is based in Leeds, Stephen John Benson and Paul Andrew Brown are at DWF’s Manchester office, and Mark Gibson is based in Birmingham.

Richard Webb, who joined DWF in the 2013 deal, is now at TLT in Manchester and Mark Green, the Honorary Consul for Germany in the North of England, is a consultant for Gateley in Leeds. Stephen Alan Thornton and James Boyd are not currently attached to a firm.

There are two allegations against Carr and his former colleagues – that between June 2012 and February 2013 they were responsible individually or collectively “for providing misleading information and/or for failing to provide material information” and “for failing to run the business or carry out his respective role in the business effectively and in accordance with proper governance and sound financial and risk management principles”.

The full allegations are reproduced below.

For Benson and Green the SRA alleges:

1. In his role at Cobbetts LLP from June 2012 to February 2013 he was responsible individually and/or collectively for providing misleading information and/or for failing to provide material information to one or more of

i) a third party lender;

ii) an insurance company; and

iii) a former member; and thereby exhibited manifest incompetence and acted in breach of Principle 6 of the SRA Principles 2011.

2. From June 2012, by reason of the conduct giving rise to Allegation 1 above, and by one or more of the following:

i) causing or permitting the Firm being able to meet its debts;

ii) causing or permitting members’ drawings to exceed profits;

iii) failing to have an appropriate contingency plan in place; he was responsible individually and/or collectively for failing to run the business or carry out his respective role in the business effectively and in accordance with proper governance and sound financial and risk management principles and thereby acted in breach of Principle 8 of the SRA Principles 2011 and exhibited manifest incompetence.

For Thornton the SRA alleges that:

In his role at Cobbetts LLP from June 2012 to February 2013 he was responsible individually and/or collectively for providing misleading information and/or for failing to provide material information to one or more of

i) a third party lender;

ii) an insurance company; and

iii) a former member; and thereby exhibited manifest incompetence and acted in breach of Principle 6 of the SRA Principles 2011.

2. In the opinion of the Law Society (“the Society”), he has occasioned or been a party to, with or without the connivance of a solicitor, an act or default in relation to a legal practice which involved conduct on their part of such a nature that in the opinion of the Society it would be undesirable for them to be involved in a legal practice in one or more of the ways mentioned in S43 subsection 1(a) of the Solicitors Act 1974.

For Brown, Carr, Webb and Gibson the SRA alleges that:

1. In his role at Cobbetts LLP from June 2012 to February 2013 he was responsible individually and/or collectively for providing misleading information and/or for failing to provide material information to one or more of

i) the SRA;

ii) a third party lender;

iii) an insurance company; and

iv) a former member; and thereby exhibited manifest incompetence and acted in breach of Principle 7 (insofar as it related to the SRA) and/or Principle 6 (insofar as regards to third parties) of the SRA Principles 2011.

2. From June 2012, by reason of the conduct giving rise to Allegation 1 above, and by one or more of the following:

i) causing or permitting the Firm being able to meet its debts;

ii) causing or permitting members’ drawings to exceed profits;

iii) failing to have an appropriate contingency plan in place; he was responsible individually and/or collectively for failing to run the business or carry out his respective role in the business effectively and in accordance with proper governance and sound financial and risk management principles and thereby acted in breach of Principle 8 of the SRA Principles 2011 and exhibited manifest incompetence.

For Boyd the SRA alleges that:

In his role at Cobbetts LLP from June 2012 to February 2013 he was responsible individually and/or collectively for providing misleading information and/or for failing to provide material information to one or more of

i) the SRA;

ii) a third party lender;

iii) an insurance company; and

iv) a former member; and thereby exhibited manifest incompetence and acted in breach of Principle 7 (insofar as it related to the SRA) and/or Principle 6 (insofar as regards to third parties) of the SRA Principles 2011.

2. From June 2012, by reason of the conduct giving rise to Allegation 1 above, and by one or more of the following:

i) causing or permitting the Firm being able to meet its debts;

ii) causing or permitting members’ drawings to exceed profits;

iii) failing to have an appropriate contingency plan in place; he was responsible individually and/or collectively for failing to run the business or carry out his respective role in the business effectively and in accordance with proper governance and sound financial and risk management principles and thereby acted in breach of Principle 8 of the SRA Principles 2011 and exhibited manifest incompetence.

3. In the opinion of the Law Society (‘the Society’), he has occasioned or been a party to, with or without the connivance of a solicitor, an act or default in relation to a legal practice which involved conduct on their part of such a nature that in the opinion of the Society it would be undesirable for them to be involved in a legal practice in one or more of the ways mentioned in S43 subsection 1(a) of the Solicitors Act 1974.

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