Former Cobbetts leadership fined by SDT after admitting failings over firm's 2013 collapse

Six ex-Cobbetts partners – including former managing partner Nick Carr and senior partner Stephen Benson – have been fined by the Solicitors Disciplinary Tribunal (SDT) after admitting to failings related to the firm’s collapse in 2013.

All six have been fined between £12,500 and £17,500 and ordered to pay costs of as much as £35,000 for their roles in the demise of the Manchester firm, which at its pre-recession height had annual revenues of almost £60m.

Cobbetts – which was particularly hard hit by the financial crisis due to its reliance on real estate and banking work – was rescued out of administration by DWF in February 2013 through a pre-pack acquisition.

The six partners fined by the SDT were all board members at Cobbetts. Benson is now client strategy partner at DWF, while Carr was a partner at the firm until February 2016 when he became a consultant.

Of the other four, two others are still partners at DWF – Birmingham corporate head Mark Gibson and Manchester banking partner Paul Brown – while the other two, Richard Webb and Jeremy Green, are now consultants at TLT at Gateley respectively.

They were referred to the SDT last year over allegations that they ”exhibited manifest incompetence and acted in breach” of Solicitors Regulation Authority (SRA) principles, that they allowed members drawings to exceed profits, and that they failed to have a proper contingency plan in place.

Carr and Brown admitted that they failed to deal with the SRA in an “open, timely and cooperative manner”, while Carr also admitted that he failed to “accurately represent the position on the status of proposed funding” from Wesleyan Building Society, a short-term funder that the SDT ruling states Cobbetts was “overreliant” on.

Carr, Benson, Brown, Gibson and Webb also admitted that they “failed to behave in a way that maintains the trust the public places in solicitors, and in the provision of legal services”, and all six admitted they “failed to run their business or carry out their roles in the business effectively and in accordance with proper governance and sound financial and risk management principles”.

In mitigation, it was noted that the financial pressures on Cobbetts had placed “enormous demands” on them, and that they had been attempting to navigate the fallout from the financial crisis “at great personal toll to themselves” and under “immense” stress.

Both Carr and Benson lost their mothers in 2012, while the “burden of the events” meant that Brown was absent from the firm for several weeks in October that year due to a stress-induced illness.

The ruling states that the firm’s administration has had a “devastating professional, financial and personal impact” on the group, who have “suffered severe personal and financial penalties”.

Carr has been fined £17,500, while Benson, Brown and Webb will pay £15,001, with Gibson and Green paying £12,500. Gibson has been ordered to pay costs of £15,000, while the other five will pay £35,000.

All the lawyers apart from Gibson were represented by Timothy Dutton QC and Marianne Butler of Fountain Court Chambers and Weightmans solicitor Michelle Garlick, while Gibson represented himself.

The SDT also held separate proceedings with former Cobbetts finance director James Boyd and partnership tax accountant Stephen Thornton, who were referred to the SDT in May last year  along with the other six lawyers. Boyd was fined £8,500 and ordered to pay costs of £10,000, while Thornton was fined £2,500 with £3,000 costs.

When the case was referred to the SDT last year, a spokesperson for the ex-Cobbetts partners said: “The SRA allegations, coming some four years after Cobbetts’ sale, are misconceived and are fully, and strenuously, denied. The evidence demonstrates that we acted appropriately and with propriety throughout.”

DWF was approached for comment.