“Bogus” law firms are those who are not regulated by the Solicitors Regulation Authority (SRA) and claim they have the authority to perform reserved legal services. They are behaving unlawfully and are often at the centre of attempts to defraud your clients.
The Autumn Risk Outlook from the SRA and a new paper entitled “In the Shadows” have revealed that the volume of reports received regarding bogus firms has increased by nearly 60% in 2013 compared to the previous year.
In 2014, the number of these reports for the first 8 months of the year stood at 454. Considering there were 548 reports for the whole of 2013, this suggests the annual figure is set to rise even further. This should be a concern for all conveyancers.
Reserved activities within the conveyancing, probate, civil litigation, and immigration sectors are all said to be common targets. Bogus activity across the entire legal industry can also be segregated into 3 main groups:
- identity theft of a legitimate firm or solicitor
- identifiable firm or individual posing as a solicitor
- fictitious firm or individual posing as a solicitor
According to the SRA, online strategies are becoming increasingly popular amongst false firms. 46% of the bogus activity reports were involving identity theft, whereby the accused masqueraded as another firm or solicitor using cloned email addresses and websites. In some instances even false office branches are created as part of the set-up.
The main risks this type of activity can have on your business is both loss of money and sensitive information. Bogus firms are created by criminals to defraud clients and other conveyancers. Therefore, not only could this harm the reputation of affected firms and cause harm to clients, confidence in the legal sector may diminish if these issues continue.
The SRA states, “Firms are responsible for assessing their own risk of becoming a victim of bogus activity. They must take steps that are appropriate to their individual characteristics and the type of work they engage in to protect against this risk. If firms fail to do this, they may be held liable for harm caused to consumers of legal services or members of the public.”
Therefore failure to carry out the appropriate level of safeguarding can put your firm at great risk of being targeted, or in some cases deemed liable for the effects of the offence. Law firms and individual solicitors can protect themselves by performing regular checks on their firm’s name, partners, and staff, which will help ensure your name is only being used by those authorised to do so.
The SRA website will also alert to any bogus activity taking place, so keeping up to date with this is a great way to remain aware of what is happening within the industry.
In order to identify whether a firm is genuine, you’ll need to perform in-depth checks on their identity and bank details, along with filtering any letter, email, or telephone correspondence you receive from them.
Jenny Owen of Lawyer Checker, a verification service that helps conveyancers avoid this type of bogus fraud, says, “We have seen a corresponding rise in criminals trying to defraud conveyancers. One of the latest methods is when a second set of requisitions on a title is sent late in a conveyancing transaction, where the account number for the firm has changed. With the SRA shining a clear light on this issue conveyancers can no longer turn a blind eye to this issue and claim they weren’t aware of the risk.
“Any conveyancer wanting in house training for their staff on this issue or seeking a demonstration of Lawyer Checker should contact us on 0800 133 7127”
If you suspect any illegitimate legal activity, the SRA report says that you must contact them immediately. Providing as much evidence as possible will help the investigation teams look into the matter more efficiently.
For more information on bogus firms and guidance on how to safeguard your law firm, visit the SRA website.