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Kennedys could be forced to defend in court a decision not to reimburse a client who alleges he was the victim of client money theft by a rogue partner.
Former partner Peter Lloyd-Cooper was struck off by the Solicitors Disciplinary Tribunal (SDT) last September after the firm called in the SRA over missing client funds (1 August 2011).
According to the tribunal ruling one client alleged to have lost more than £2m as a result of the partner deception.
Now the firm is facing legal action from another client who alleges that his funds totalling £500,000 were misappropriated by Lloyd-Cooper, further claiming that firm is refusing to reimburse him.
Last week the client, who The Lawyer has agreed not to name, instructed Wragge & Co to issue proceedings against the firm and a statement of claim was sent to the firm.
The letter, seen by The Lawyer, states that Lloyd-Cooper was retained for advice on buy-to-let mortgages following a 2009 meeting at Park Lane’s Lanesborough Hotel. Following the deal three tranches of payments were made to the firm to be held in a client account, the letter states.
The payments were in fact made by another company, which had been set up by the client but was not held in his name. According to the letter: “It is not clear why Mr Lloyd-Cooper arranged for the monies to be allocated to that client account rather than – as ought to have occurred – to one in [the claimant’s] name.”
It is alleged that the payments were later transferred to a third party and another firm “without our client’s prior knowledge or consent”.
The letter continues that in December 2011 the claimant, concerned by his dealings with Lloyd-Cooper, became aware that there were “serious irregularities” in how his money was being handled. When the client learned that the partner was under investigation and had been subsequently struck off he contacted the firm in a bid to recover his funds from the firm, it adds.
Wragges states that should the firm refuse to reimburse its client to the tune of £620,147 it will issue High Court proceedings by the end of the week.
A statement from Kennedys read: “The money in question was paid to us in three different tranches by three parties, none of whom was the claimant. We’ve been engaged in lengthy dialogue with the claimant, who we have repeatedly asked to make good his claim to have an interest in the money in question.
“The last time was in December 2012 and we have heard nothing from him since. As Wragges are now involved we look forward to having a dialogue with them in this regard.”