The law is a great profession to be in - until things go wrong!
- Sets standards for qualification as a solicitor and requirements for ongoing professional development;
- Provides and monitors legal training;
- With the client in mind, writes the rules of professional conduct;
- Provides guidance on ethical matters and legislation affecting the work of solicitors;
- Maintains a register of solicitors; and
- Provides information on the standards the public should expect from solicitors.
- Monitoring compliance, investigating standards and carrying out disciplinary action;
- Maintaining an open dialogue with other law enforcement agencies;
- Referring solicitors to the Independent Solicitors" Tribunal; and
- Compensating members of the public who have lost money through the malpractice of a solicitor.
The handbook offers further guidance on Professional Indemnity Insurance (PII) and the need to make sure clients are covered for negligence, dishonesty and fraud carried out by a solicitor, by having in place cover which:
- Enables negligence claims to be met;
- Offers compensation where monies have been misappropriated; and
- Ensures that when the SRA has to intervene money can be returned to the client.
The minimum level of cover for firms operating on the basis of limited liability is £3M; for other, smaller firms, £2M. The limits do not apply to defence costs which have no monetary limit (some insurers will provide this as additional cover).
Firms must properly assess whether this level of cover is sufficient and where necessary take out additional insurance.
- Customer profile;
- Amount of work done;
- Monetary value of work done;
- Size of potential loss from work undertaken;
- Historical claims record;
- Level of additional cover in excess of the minimum; and
- How a firm makes clients aware of its PII arrangements.
- Claims history;
- The type of work undertaken;
- Number of employees;
- Annual turn over; and
- Other risk the insurer believes the firm faces.
- Pro Bono work
- Commercial legal advice;
- Community based and third sector legal services; and
- Foreign law firms
Being a legal practitioner - what is the worst that could go wrong??
Great Legal Disasters
As solicitors are responsible for the safe conveyancing of the most expensive purchases people make in their lives, when things go wrong the potential for loss can be enormous. This is most certainly true of the first disaster we shall look at here, which involved the legal team from London based solicitors Hill Dickinson, specialists in the purchase and sale of marine vessels.
A Very Expensive Misunderstanding
In 2010, when Christian Candy agreed to the sale of his 200 foot yacht to telecoms tycoon Michael Hurtenstein, they settled on a price of £3.5 million. This deal seemed to be heavily in favour of the purchaser, until Mr. Hurtenstein was just one hour into his first voyage when the engines failed completely. Once the vessel had been towed back to the dock and expert opinion sought, the repair bill was estimated to be a staggering £1.5 million pounds.
Although obviously upset, Hurtenstein could at least console himself that the repairs would be covered by a warranty supplied with the vessel. His solicitors, Hill Dickinson, had advised him that Candy himself had agreed to personally back this. However, it was revealed that Hill Dickinson had not obtained this personal guarantee from him after all.
Mr Hurtenstein pursued a negligence claim against his solicitors, arguing that he would never have purchased the vessel without the personal guarantee of Candy himself. In the High Court, although the solicitors admitted negligence, it was decided that Hurtenstein had not suffered significant loss because of this. The court ruled that MrCandy would never have submitted to such a guarantee; that the low price agreed was subject to a sale "as seen"; that Mr Hurtenstein had decided to buy the yacht before there was mention of a warranty; that he would still therefore have purchased the yacht, even without a personal guarantee my Mr Candy; and that spending such a huge sum on new engines was not necessary and constituted betterment. He was awarded just nominal damages of £2, leaving him to face a substantial legal bill from Hill Dickinson.
Cybercriminals Target House Conveyance
The large sums of money that move between bank accounts after the sale of a house have begun to catch the attention of internet fraudsters, with potentially devastating results. When Paul and Ann Lupton's daughter, Tracey, moved out of the flat they had bought for her in Waterloo they were delighted when a buyer offered them £340,000 for the property. A couple of days before they were due to complete on the sale the Lupton's solicitor, Perry Hall and Company, contacted them by email requesting details of their bank account. The Luptons replied, supplying them with the relevant bank details.
What Perry Hall and the Luptons failed to realise however, is that email is not a secure enough form of communication for such sensitive information. Fraudsters managed to intercept their communications, almost certainly using software randomly scanning internet traffic for messages containing financial information. The scammers immediately sent the solicitor another message, using the Lupton's email account, requesting that they ignore the previous missive and instead use a new set of bank details which they enclosed.
On completion of the sale, Perry Hall deposited just over £330,000 into the bank account the criminals had specified. It was not until the Luptons enquired after the missing money a few days later that the fraud was revealed, and the police contacted. The vendor, the solicitors and the fraudsters all banked with Barclays who instantly froze the latter's account, recovering just over £270,000. Although an additional £13,500 pounds were later recovered neither Perry Hall, nor Barclays Bank, were prepared to accepted any liability for the loss. This left the Luptons over £48,000 out of pocket. It was not until eight months later, that the solicitor's insurers finally agreed to compensate the Luptons for the remaining sum.
Solicitor Faces Ruin After Vishing Phone Call
Karen Mackie, a sole practitioner was left facing ruin after fraudsters persuaded her to transfer £750,000 of clients" money to their account. The technique the criminals used is referred to as vishing, short for voice phishing, where the scammer speaks directly to the victim over the phone. In this case, the criminals pretended to be security experts from the victim's bank and were sufficiently plausible, and persistent, that they managed to pursued Mrs. Mackie to move a large sum of money into their accounts in tranches of up to almost £100,000.
The scam began with Mrs. Mackie receiving a phone call, purportedly from her bank, informing her that some of her clients" accounts were at risk of being compromised. The caller requested that she call them back on the number on her banking card, instructions which she immediately followed using the same phone.
Unfortunately the scammers used a quirk of the phone system which allowed them to dupe Mrs. Mackie that she was now talking to her bank, when in fact she was still on the line to them. When a phone call is received on a land-line, it does not end the moment the recipient disconnects. Instead, it requires the caller to also replace their handset to terminate the connection. Thus, by playing Mrs. Mackie the sounds she expected to hear, the criminals duped her into believing she was beginning a new phone call to her bank.
The criminals convinced her that the money in the clients" accounts was indeed at risk and that they would call the following day to move the money to a safe account. The next day, a distressed Mrs. Mackie took the call, and moved the money as instructed by the criminals. Later, reflecting on the earlier events, she began to feel suspicious of what had transpired and contacted her bank and the police. Natwest managed to recover just over £220,000; the thieves had already made off with the rest.
Mrs. Mackie was subsequently suspended by the Solicitor's Regulation Authority. This step did at least allow her clients to successfully receive compensation through the Solicitor's Compensation Scheme. Prior to this, Mrs. Mackie's insurers had refused to compensate her clients, stating that they were not under any obligation to do so as she had effectively condoned the dishonest activities of the criminals.
Although the clients were able to put the matter behind them, Mrs. Mackie has not been so fortunate. Suspended from work, she has since been declared bankrupt, is receiving counselling and treatment for anxiety and depression, and may yet lose her home.
In 2000, a woman was left with her wedding plans in ruins after her solicitor, Alan Craig, failed to complete the divorce proceedings from her previous marriage. When contacted by his client in February of that year, Mr. Craig assured her that the procedure would take no more than a few weeks. The woman began planning for her forthcoming nuptials, setting a date in August. She believed that by this would allow plenty of time to deal with the legal formalities. She paid a £500 deposit on a venue, money which she subsequently forfeited when Mr. Craig failed to progress her divorce in time.
Mr. Craig, who traded in Motherwell under the name Alan A Craig & Co, also told another woman in October of the same year that her divorce would take around 4 months. At the end of this period the woman contacted him to be told that the decree would be ready in 3 weeks time. In June of 2001, the woman discovered that no writ in connection with her divorce had ever been presented at her local court.
In 2001, Mr. Craig also assured a third client that he was working on his case, when he had in fact done nothing to institute proceedings. Mr. Craig had been instructed by the man, who was divorcing his wife, to sell the matrimonial home. He later admitted to his client that he had not made any progress in the matter, despite giving the impression that the sale of the property was underway.
Mr. Craig ceased practising as a solicitor in 2001. In June of 2003, Mr. Craig was found guilty of professional misconduct. The tribunal suspended him for a period of two years.