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Daily Mirror article by Fenton Bresler, barrister and author, dated 1/6/1994.

Cheats in the dock


It is shocking news that nearly 800 solicitors firms in England and Wales will have their books inspected by the profession's investigators because of record levels of fraud uncovered within solicitors offices.
the Law Society, representing the country's nearly 70,000 practicing solicitors, is the profession's governing body.
It established in 1986 an independent unit, the Solicitors Complaints Bureau, to handle complaints about solicitors.
Under the codename "Operation Crackdown", the bureau is now investigating these firms - which amount to more than one in seven nationwide.
They are suspected of extensive fraud and serious breaches of the Law Society's own accounts rules - which the Society drew up to help protect clients' money.
It is very easy to cheat - if you want to. Solicitors are free to compete on price - and they do.
They lost their highly-profitable monopoly on conveyancing charges nine years ago. Many firms relied on that revenue for a substantial part of their income.
In August, the Solicitors Journal warned: "the pressure of tightened profit margins, the reluctance to turn down cases in a recession when a practitioner is over-burdened....(all) mean that the pressure of work, and the consequent danger of slip ups is increasing."

But t he dividing line between "slip ups" and downright dishonesty can be dangerously paper-thin for a man or woman, used for years to an agreeable lifestyle and now faced with mounting overheads and diminished returns.
The general public has for years criticised solicitors for being slow, expensive (very much so), sometimes pernickety and often seemingly not of the real world.
But crooks, actual villains? Few people would have said that.
Yet four years ago the Complaints Bureau was already investigating 200 firms. Mr Stephen James, a senior Bureau investigator, admits:
"There has been an enormous increase in dishonesty and disregard for the accounts rules in recent years.
"Part of it is the recession. Firms have been in financial difficulties. But much of it is the latent dishonesty we are beginning to unearth."
We must keep this in perspective. The vastly overwhelming majority of solicitors are honest, decent men and women of the greatest integrity.
But the Ancient Greek philosophers taught us that nothing exists in a vacuum.
We're all affected by the spirit of the age and prevailing standards of behaviour.
Why should solicitors be any different from policemen, barristers such as myself, politicians, businessmen or workers?
We all have lower standards that 20 or ten years ago. We all need a "Back to Basics" attitude - if only that term had not been grievously devalued by John Major's glib and cynical use.
But every profession or group of people has always had its bad apples. What is at last coming out to public gaze (although known within the profession for quite some time) is that not only are there nowadays more bad apples among solicitors than ever before, but they are more greedy and individually cause more damage.

The law Society knows this. It is a professional rule that all solicitors be insured against negligence and dishonesty.
The profession contributes 167m annually to the Solicitors Indemnity Fund, which pays out millions of pounds a year to dissatisfied or cheated clients.
You cannot insure against your own dishonesty, so the Law Society also has a Compensation Fund, to which solicitors must also contribute.
This pays out only in claims of dishonesty.
In 1992, the last year with figures available, it received 2,257 claims - a rise of 68 per cent on the previous year.
What is more significant than the number of claims is the immense damage which a comparatively few firms manage to cause.

Consider these three examples in the past year.

1. A west London "one man band" solicitor was struck off after a massive mortgage fraud which the Solicitors Journal estimated could cost the compensation fund more than 80 million from 58 separate claims.
How did he go about it? In one fraud there were five simultaneous mortgages with five different men.
Other fictitious borrowers had different names but all seemed to live in the same house.
Another address was supposed to be the home of nine different people taking out mortgages. A crook is a crook.

2. A senior partner in a Hastings firm was struck off for activities which cost the compensation fund 3.6.million, with 6m in claims still pending.

3. A partner in a Lancashire firm was struck off for negligence and dishonesty which cost the Indemnity fund 1,759,346.

There is no special mystique - the fraudulent solicitor does not have to be a criminal mastermind.
His greatest asset is that his own clients and other solicitors trust him and hand over large sums which he is supposed to hold on behalf of his client or pay out on instructions to third parties. Instead he transfers it into his own bank account or takes it out in cash.

As in the case of the Surrey solicitor to whom a propety developer client handed over 250,000 to buy a property on his behalf.
The solicitor duly paid the cheque into his client account (a special account into which all solicitors are supposed to put their clients' money and keep it separate from their own) and paid out 25,000 for the normal 10 per cent deposit.
But he did not keep the 225,000 balance in the client account to await completion of the deal when it should have been paid over to the seller.
He transferred it into his own private account and committed suicide when the fraud was discovered.
Another case was a 44-year-old London solicitor who drew out sums totalling 135,000 from his client account and was jailed for 12 months for theft.
One Hastings solicitor was struck off after being accused of cheating clients out of 8 million.
His catalogue of alleged offences include transferring customers' funds without proper authority and providing misleading or false final bills.
The now bankrupt former lawman is awaiting Crown Court trial. On the whole, these have been "middle income" cases.
Now it has been revealed that the Complaints Bureau and other enforcement bodies are also investigating an estimated 8m legal aid fraud where the poorest people, who alone qualify for legal aid nowadays, are at risk.
The Law Society is doing its best. But is its best good enough?