Tribunal sanctions two solicitors in £30m client account misuse case
Two senior solicitors have been sanctioned by the Solicitors Disciplinary Tribunal (SDT) after a firm’s client account was misused as a banking facility for transactions totalling over £30 million, with no underlying legal work to justify the payments. William John Gregory Osmond, admitted as a solicitor in 1979 and owner of Osmond Solicitors Limited, was suspended from practice for 12 months and made subject to indefinite practice restrictions. His co-director, Paul Christopher Flaherty, admitted in 2007, was fined £5,001 and ordered to pay costs.
The case centred on the firm’s long‑standing relationship with “Person A”, a high‑value client accounting for around 10% of turnover, and companies linked to him. Between May 2014 and October 2017, the firm received £31.9 million into its client account and paid out £28.3 million to multiple third parties, without evidence of any legitimate underlying legal transactions. The SDT found that this conduct breached the Solicitors’ Accounts Rules 2011, the Money Laundering Regulations, and the SRA Principles 2011.
Embed from Getty ImagesFor Osmond, the tribunal accepted that the transactions did not result in loss to clients or third parties, and there was no evidence he personally profited. However, it found that over a period of more than three years, he knowingly permitted the client account to be used for the convenience of a client, ignoring repeated regulatory guidance that solicitors must never operate client accounts as banking facilities. The payments included complex international transfers and substantial sums to entities in high‑risk jurisdictions, carried out without the required due diligence, ongoing monitoring, or enhanced scrutiny. The tribunal concluded that his misconduct created a serious risk of facilitating money laundering and caused significant harm to the reputation of the profession.
The SDT noted that Osmond had previous disciplinary findings — including a two‑year suspension in 1995 for Accounts Rules breaches and a £10,000 fine in 2015 for being “less than wholly frank” in evidence. While striking off was considered, the tribunal determined that a suspension combined with strict indefinite restrictions on his ability to handle client money or act in senior compliance roles would adequately protect the public. He was also ordered to pay £50,000 in costs.
Flaherty, who became the firm’s Compliance Officer for Finance and Administration (COFA) and Compliance Officer for Legal Practice (COLP) in 2015, admitted allowing payments to be made from the client account in breach of Rule 14.5. He told the tribunal that, shortly after taking up the COFA role, he identified large transactions unrelated to legal work but relied on assurances from Osmond that they were proper. He made no further enquiries or file checks until the firm’s auditors indicated in 2017 that the SRA would be informed of a breach.
The tribunal accepted that Flaherty was not directly involved in authorising the transactions, that there were no warning signs of fraud or insolvency, and that his failings were confined to the matters handled by Osmond. Nevertheless, it found that, as COFA, he had a duty to ensure compliance and could not simply rely on a colleague’s assurances. His inaction allowed breaches to continue for nearly three years, risking harm to public trust and failing to meet proper governance and risk management standards.
In mitigation, Flaherty pointed to his otherwise unblemished regulatory record, his cooperation with the SRA, and the fact that the misconduct related to a small proportion of the firm’s work. The tribunal decided that a fine, rather than suspension, was appropriate given the lower culpability compared to Osmond, but emphasised that COFAs must exercise independent scrutiny over all client account activity. He was ordered to pay £15,000 in costs.
The case serves as a reminder that solicitors must never permit client accounts to be used for banking purposes, and that regulatory officers within firms are personally accountable for ensuring strict compliance with anti‑money laundering and accounts rules, regardless of trust in colleagues
