SDT’s judgment on Veneik shenanigans receives endorsement of the profession

It was a desire to uphold the probity of the legal profession that led the Solicitors Disciplinary Tribunal (SDT) to strike off former Berwin Leighton Paisner (BLP) partner Vinay Veneik.

Vinay Veneik
Vinay Veneik

Veneik was admitted to the roll in 1988 and joined BLP as a partner in 2000. He was regarded as one of the firm’s rising stars, gaining a name as an energetic dealmaker.

He worked with Legal & General (L&G) and managed the Great Portland Estates account, and in 2007 he was recognised as part of The Lawyer’s Hot 100. Over the previous year he had won Omega Land as a client and the major ­Morgan Stanley real estate fund that owned City fringes site Goodman’s Fields, which went into receivership this year. He also acted for Great Portland Estates, orchestrating a £86.9m land swap of ­properties with Prudential.

But while he was racking up the deals, contributing to his firm’s unprecedented average profit per equity partner (PEP) level, he overlooked the details. He neglected to pay stamp duty and Land Registry fees on eight separate transactions. At times the charge remained unpaid for up to four years.

When he began to incur penalties on those ­transactions he started withdrawing money from a client account and using that to pay off both the penalties and the fees, ­thereby incurring a bigger and bigger deficit. He did not tell his partners or his client (named in the SDT proceedings as “client L, an institutional purchaser of investment property”). The sums involved were large. The SDT judgment indicates that Veneik withdrew and misused client money totalling £558,234. He claimed he thought the loss would be covered by the firm’s PI insurance.

But there is still surprise in the profession over how a partner of Veneik’s seniority came to be responsible for paying these fees.

A former magic circle partner, who has dealt with property sales for a major institutional investor on a number of occasions, says: “Stamp duty returns [are] not partner work. I’ve never done one. Nor have I made a Land Registry application myself for many, many years. The fact that this went unnoticed seems to suggest that [Veneik] was doing all this himself.”

The partner also questions whether the firm’s PI insurance would have covered the deficit. “He must have known that an insurance claim wouldn’t be feasible, or would at least be queried, if made late, particularly for something as straightforward as failure to pay stamp duty every year,” he says.

Veneik’s actions only came to light once the ­buildings in questions were put up for sale. BLP responded promptly once it found out and Veneik resigned on 14 January 2008. The firm claimed subsequently that it had imposed “more stringent procedures […] than existed before”, although it declined to elaborate on the nature of these procedures (The Lawyer, 21 January 2008).

Winckworth Sherwood employment partner Susan Kelly says the case is a ­”cautionary tale for all hard-pressed and overstretched solicitors”, and one that should make “all practices consider their checks and balances. “Should payments over a certain amount be countersigned by a second partner, for example?” she ­continues. “Are partners regularly reminded of monies sitting on clients’ accounts so that these are used for their intended purpose?

“Such systems may seem bureaucratic at times, but if they save a pressurised ­individual from making mistakes and ruining his own career, they must be well worthwhile.

“Here the fault does seem to lie squarely with the individual, but firms can help their members by putting the right systems in place.”

In the hearing Veneik highlighted the enormity of the personal and professional pressures he was under at the time, indicating that 2007 had been a ­particularly difficult year for him and that he was not coping well with the work.

“He was aware that the firm’s liability to the client was getting larger, but he hadn’t thought out in ­precise details what he could do about it,” the judgment reads.

But Veneik’s submissions were not sufficient to sway the tribunal, which based its decision on the opinion of the then Master of the Rolls Thomas Bingham in Bolton v The Law Society (1994). Bolton found that “any ­solicitor who has shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal”. The ruling concluded that the most fundamental purpose of punitive measures is “to maintain the reputation of the solicitors’ profession as one in which every member, of whatever standing, may be trusted to the ends of the earth”.
The Veneik tribunal expressed its thoughts in the most severe language. Veneik was described as having “sullied” the profession as a whole and of acting dishonestly, although the tribunal ruled that “the level of dishonesty […] was at the lower end of the scale”.

Those with intimate knowledge of the process have indicated to The Lawyer that, given this kind of language, Veneik’s ­decision not to appeal is unsurprising.

BLP appears to have recovered from the incident, having managed to hold on to a place on the L&G panel following a full-scale review (The Lawyer, 19 January 2009).
The greatest impact must be for Veneik, who spent some time working with an unnamed former client ­following his departure from BLP. But solicitors still believe that the SDT acted proportionately.

“The standard is dauntingly, but rightly, high – and this isn’t just about partners controlling client money,” insists one. “Perhaps we all need reminding from time to time that, in the words of the Master of the Rolls in 1994, the solicitors’ ­profession is one in which ’every member, of whatever standing, may be trusted to the ends of the earth’.

“And perhaps those who would like to commoditise legal services should bear that in mind too.”

Veneik could not be ­contacted for comment.