A LONG-RUNNING Stourbridge law firm is due to close its doors today (Thursday) after 41 years in business amid accusations the company became embroiled in an overseas housing scheme that collapsed owing an estimated £21 million to investors.

Sanders & Co blames its demise on its inability to get professional indemnity insurance following the affair - and its partners say they are "bitterly disappointed" at the turn of events.

Senior partner Michael Davies and managing partner Clare Taman together with fellow lawyers Charles Fraser-Macnamara - a former Dudley councillor - and his daughter, Katherine, are facing an appearance before the Solicitors Disciplinary Tribunal.

All four are accused of acting or permitting Sanders & Co, based in Hagley Road, Stourbridge, to represent a client in relation to a complex overseas investment scheme at the same time as acting for individuals who had put their money into the project, causing a significant risk of a conflict of interest.

Mr Davies and Ms Taman are also alleged to have involved themselves and the firm in a scheme that was outside their area of expertise and permitting payments into and withdrawals or transfers from Sanders & Co's client account which were not related to an underlying legal transaction.

The allegations follow the collapse of EcoHouse Developments, which was behind a proposed Brazilian social housing scheme which crashed last year and is said to owe investors at least £21 million.

The Eco House Action Group, set up for investors affected by the collapse of that company, says Mr Fraser-Macnamara left Sanders & Co and became a director of EcoHouse in May 2012.

An article in satirical magazine Private Eye reported last year that Sanders & Co had acted in the role of "escrow agent" - a kind of contractual arrangement to accept investors' funds and pass them on as invoices are presented - for the scheme.

Mr Davies and Ms Taman - and Mr Fraser-Macnamara and Miss Fraser-Macnamara both of whom who left Sanders & Co in 2013 and 2014 respectively - are now due to answer charges brought by the Solicitors Regulation Authority at a five-day hearing in London from October 31.

If allegations before the panel are proven, the tribunal can strike a solicitor off, suspend them from practice indefinitely or for a specified period, fine them and order that costs should be paid.

Mr Davies, who started out at Sanders & Co as an articled clerk 31 years ago before working his way up to senior partner, however, insists the firm has “done nothing dishonest”.

He said: “There’s no suggestion of dishonesty whatsoever, we can account for every penny. The only issue is whether or not there was a breach of a regulation in the solicitor’s account rules. There’s no reason why solicitors can’t run escrow services providing they are providing a legal service.”

Mr Davies, aged 57, previously a duty defence solicitor across Dudley for many years, said Sanders & Co became involved with the EcoHouse scheme after acquiring the assets of another local firm and he said following the collapse of EcoHouse "we couldn't find professional indemnity insurers that are prepared to cover us so under SRA regulations we have to close".

He stressed Sanders & Co has co-operated fully with the SRA and he added: “There’s never been any criticism of the traditional practise of Sanders and Co – it’s only this element that’s brought these difficulties upon us.

“We have not run away from our obligations and continue to meet them as best we can.

“Although we won’t be trading we’ll be properly disposing of all the files, deeds, wills etc and therefore all clients should be reassured that they are not going to disappear. Our main objective is to properly deal with all the money we hold on client accounts."

He said he and Ms Taman had invested more than £100,000 of legal costs in trying to overturn the decision by the professional indemnity insurers and he added: "One could be very emotional about it – it’s 30 years of serving the local community – we’ve always had an unblemished reputation as far as I can tell and were well-respected by the judiciary, local magistrates and our clients and for it all to end in this way - it’s really a tragedy, quite frankly."

Sanders & Co, which was set up in Church Street 41 years ago by solicitor John Sanders who died in 2012, aged 77, intends to transfer wills and files lodged with it to George Green Solicitors in Cradley Heath High Street for safekeeping.

Clients wishing to collect their will and make alternative arrangements, and those wishing to have deeds returned, are urged to email sandersllp@gmail.com.