Southport solicitors accused in funding investigation

TWO senior partners at former Southport law firm Barnetts have been accused of misappropriating money from a litigation fund that was “improperly” obtained.

Richard Barnett, a Law Society council member, and Anthony Swift, who both led the Southport firm until it went into administration in January, are being investigated by the Solicitors Regulation Authority (SRA).

Mr Barnett is contesting the claims which he says are “deeply flawed”. Mr Swift could not be reached for comment.

The case will be heard at the Solicitors Disciplinary Tribunal but a hearing date has not yet been set.

The SRA has set out a string of 12 allegations against Mr Barnett and nine against Mr Swift. Both men are accused of accepting money from a litigation fund “in circumstances where it was improper to do so”.

In a long list of allegations, the SRA said the two men took the money knowing Barnetts had not complied with the terms of the funding agreement, and knew the agreement did not reflect the intended use.

It claims they had “no intention that the firm would repay within the time required by the agreement”, and had been warned that “the fund manager, in arranging for the fund to lend money to the firm, was acting fraudulently”. It added: “In all the circumstances, the transactions were dubious, and the money should not have been accepted or used.”

They are both accused of misappropriating the money and failing to keep proper records of how it was spent, but Mr Barnett faces further claims relating to the way the money was allegedly incorporated into Barnetts’ accounts. He is also accused of encouraging another solicitor to change records, providing false information to professional indemnity insurers, and of failing to cooperate with the SRA.

Litigation funding is used to finance legal cases, particularly ‘no win, no fee’ work, and is provided by a third party funder in return of share of the proceeds if a case is won.

But Mr Barnett told TheBusinessDesk.com the money, which came from the now-collapsed Cayman Islands-based fund called Axiom Legal Financing Fund, was not used for litigation but in care home fee recovery cases where the NHS should have been paying the bills.

He said: “It certainly was not a scam. We received all the money under the terms of a funding agreement. There was no scam and the allegations made by the SRA are deeply flawed, in many cases on their own facts.”

A spokesman for the SRA said: “If we think fraud or criminal activity has taken place we will refer it to the police.”

As a Law Society council member Mr Barnett is one of 100 or so lawyers responsible for the main policy decisions and overall direction of the society, which governs and supports the profession in England and Wales.

Barnetts was broken up and sold in a pre-packaged administration with four divisions acquired by different buyers, securing 130 jobs and the cases of 3,000 clients.

The conveyancing business was sold to South East-based DC Law, while personal injury and litigation went to SGI Legal in Liverpool. Manchester-based Simpson Millar picked up the care home work and interest rate swap cases went to Bolton-based Seneca Banking Consultants.