Three solicitors have been suspended for 12 months and told to pay costs totaling £60,000, following the collapse of Ecohouse Developments Limited (Ecohouse), a multi-million pound overseas investment scheme which collapsed, owing £21 million to investors.
The respondents were found to have breached SRA principles after admitting acting for Ecohouse and for 849 investors, in a situation where there was a conflict of interest between Ecohouse, the investors and the interests of the firm.
The Tribunal determined the respondents failed to act in the best interests of the clients by involving themselves and the firm in a complex overseas investment scheme that was outside their area of expertise and experience. The respondents could not have acted in the best interests of their clients, as the firm ultimately had to prefer the interests of one client over another. The respondents were also found to have failed to act with integrity and to have failed to maintain public trust in the provision of legal services by permitting payments from the Firm’s client account which were not related to an underlying legal transaction or a service forming part of their normal regulated activities.
This case highlights that solicitors must have regard to the level of complexity of a case before accepting instructions, and a continuing review of capability as well as consideration of all current and future conflicts of interest on behalf of all parties involved. If a solicitor behaves in a way that is contradictory to the code of conduct, disciplinary action will be taken as necessary to act as a deterrent to the rest of the profession.