October 2 2014 Latest news:
Exclusive by Tom Bristow, Reporter
Friday, August 17, 2012
One of Norfolk’s most prominent solicitors was ordered to quit after selling unregulated insurance policies to clients and lying to a bank.
Godfrey Morgan, who founded the Norwich firm, GMS Law, set up an offshore insurance company to sell policies to cover clients’ legal costs in cases he was fighting for them.
They had gone to him seeking pay-outs for accidents but unknown to them he became both insurer and solicitor.
The professional watchdog, the Solicitors Regulation Authority (SRA), spent five years investigating Mr Morgan.
Allegations admitted by the 46-year-old solicitor include:
- Not acting in his clients’ best interests
- Removing documents from files demanded by investigators
- Lying in a letter to Morgan Stanley about a client’s finances
- Cutting a deal with a middleman who took commission for damages won by clients.
Documents released on August 9 show Mr Morgan admitted eight charges made by the SRA before a disciplinary tribunal in April.
Mr Morgan, who specialised in personal injury claims, was barred from the legal profession by being ordered to remove himself from the Roll of Solicitors and not reapply for at least six years.
He was also asked to pay £45,000 towards the investigation’s costs.
President of the Norfolk and Norwich Law Society, Roger Holden, said: “It is very important the legal profession is seen to be one of total probity and integrity. Those who don’t follow the rules have to pay the price.”
The tribunal gave Mr Morgan two months to hand over his business and remove himself from the roll of solicitors.
Documents filed at Companies House show Mr Morgan also removed himself as a director and secretary of GMS Law on June 20, but two days later, on June 22, he was re-appointed as a director of the firm.
A spokeswoman for the SRA said Mr Morgan had followed their order by removing himself from the roll.
There is no suggestion of any wrongdoing by GMS Law or anyone else working for the firm.
Richard Clegg, a director at GMS Law, said: “I would like to stress nothing in the judgement affects any current clients or would affect any potential new clients.
“I have recently set up a new relationship with an established insurer so I can offer my clients the best possible no win no fee cover.”
Mr Clegg said Mr Morgan had now retired.
Mr Morgan could not be reached for comment.
Timothy Dutton QC, representing the SRA at the tribunal, said the allegations were “very serious”.
The judgement papers said the breaches, including not acting in his clients’ best interests and having a potential conflict of interest, arose from Mr Morgan’s dealings with his insurance firm which was not regulated by the Financial Services Authority (FSA).
Registered in Panama, the insurance company operated from an office in Bulgaria and was run by a Bulgarian woman referred to as Vanya in the Black Sea resort of Varna. It also had an address in Nassau in the Bahamas.
The firm went by various names including GIRY and NIC, leading investigators to the conclusion it was not a company with “the hallmarks of being a reputable insurer”.
It was set up by Mr Morgan in 2004 with a fund of £467,000; some £240,000 was loaned back to his law firm with a £30,000 administration fee.
Investigators concluded the cash was used to refurbish the offices of GMS Law at Roxley House in Yarmouth Road, Norwich.
They found 237 policies which were not “proper insurance” and some clients appeared to be charged additional premiums.
Mr Morgan put cash from the insurance premiums into a UK bank account holding £457,632, but only £167,000 stayed in it, leading to fears he would not be able to cover clients if a series of claims were made.
The inquiry also looked at Mr Morgan’s dealings with a client and her daughter, referred to as Mrs FS and TG.
He admitted sending misleading letters to Mrs FS’s creditors and allowing the firm’s client bank account to be used by her. Mrs FS went to him in February 2007 with debts of £100,000.
The solicitor wrote a letter to one of her creditors, Morgan Stanley, stating: “Unfortunately she has reached a situation where she is unable to make payment of even the minimum sums due on a monthly basis. Our client has no capital and no surplus income. The only way out of the situation that our client can see is some form of insolvency.”
But the client had £230,000 in her bank account and was claiming income support and carers’ allowance.
A deal was struck with Morgan Stanley where the bank accepted just 10pc of the debt would be paid - £905.
A second deal was made with another creditor - MBNA bank, where 30pc of the debt would be paid - £4,201.
He then allowed Mrs FS to use the firm’s client bank account to transfer money to her daughter.
Mr Morgan, who was too ill to attend the tribunal, admitted breaching another part of the code of conduct by cutting a deal with a man referred to as Mr K who got 15pc of damages paid out to clients as a commission.
The SRA refused to say whether or not the middleman was being investigated.
When ordered to hand over his paperwork by the SRA, Mr Morgan removed documents, claiming he had panicked.
Marc Beaumont, for Mr Morgan at the tribunal, said his client wanted to bring his legal career to an end.
He said complaints were not coming from clients, which showed he had been a successful and popular solicitor for years. He had also helped many people get access to justice.
Mr Beaumont admitted the insurance deal was misconceived but said it had been set up with good intentions - to increase access to justice. Mr Beaumont said Mr Morgan, who began his legal career in 1990, had become too close to Mrs FS and lost a sense of proportion and propriety.
He had been “crushed” and traumatised by the case.