On 20th August the Law Society released a new Practice Note to aid solicitors in their understanding of actions to be taken if their firm falls victim to a scam. Yet more proof, if we needed it, that law firms need to ensure that they are aware of and understand this very real risk. We know from the latest Risk Outlook that the scammers are still rife and bogus law firms are the blight of the industry. In 2014 there were 183 alerts issued by the industry regulator and over 700 reports received.
Falling victim to a scam is damaging not only for the client whose money is lost, but also to the firms’ reputation; either if a firm is cloned or mistakenly deals with a fraudster.
In its introduction the Note identifies whom it is most pertinent to; Managing partners, practice managers and staff of firms which hold a client account and who are responsible for:
- The secure management of the client account
- The firm’s information security
- The management and day-to-day operation of the practice
- The firm’s professional indemnity insurance (PII)
- Business continuity management and handling their clients’ business when something goes wrong
In addition this Note is also relevant for COLP and COFAs.
Most significantly the note reiterates the importance of the adherence to the SRA principles and mandatory outcomes which include Principle 5 ‘acting in the best interests of each client’, Principle 10 ‘protecting client money and assets’, Outcome (1.1) You treat your clients fairly and Outcome (1.2) You provide services to your clients in a manner which protects their interests in their matter, subject to the proper administration of justice.
The Note goes on to provide information on recovering the client account, recovering your business, reviewing your incident response policy and lessons learnt. Further help can be found on the website for the Action Fraud National Fraud and Cyber Crime Reporting Centre. It is also appropriate for practitioners to note that the SRA issued further guidance in June 2015 with their warning notice which gives guidance on money missing from client account.
Clearly taking preventative steps and implementing measures which help mitigate this ever increasing risk is best – prevention is always better than cure.
By being more aware of the pitfalls that can occur you and your firm will be more able to help thwart the criminals.
Lawyer Checker always strives to keep industry peers aware of current news and seeks to assist conveyancers in the fight against the bogus law firm. To find out more about our service visit www.lawyerchecker.co.uk or call 0800 133 7127.
This article was submitted to be published by Lawyer Checker as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.