Law Society’s ‘Guarantee Fund’ for clients of crooked lawyers revealed as multi million pound masterpiece of claims dodging corruption

19 Mar

Law Society of ScotlandRevelations from the Law Society’s briefing to the Scottish Legal Complaints Commission on claims against crooked lawyers, show that the”Guarantee Fund” – a compensation fund which the legal profession’s regulator maintains to ‘compensate clients’ who are ripped off by their lawyers, is actually little more than a masterpiece of claims dodging corruption, where money paid in annually from each solicitor is held by the profession’s regulator and used for anything other than actually compensating the victims of crooked lawyers who swindle their clients.

0004 Documents show money pouring into Law Society which never returns to clients. Staggering figures from documents obtained from the SLCC show that claims against the Guarantee Fund have leapt by millions of pounds in the past year to £4.3 million and are expected to go much higher as the rising tide of fraud committed by lawyers against their clients hits spectacular proportions. “Claims received or earlier claims assigned a value in the current year totalled £4,286,000 (2005/6 £35,000). As a result of this dramatic increase and stock market volatility, the Fund’s investments were realised and the decision taken to increase the 2007/8 subscriptions. Depending on the eventual level of settlements, additional subscriptions may be required in the future.”

A senior legal figure I spoke to this morning wasn’t surprised by the figures.

He said “The current poor financial climate does not bode well for honesty in any profession, and sadly we will see a lot more claims to the Guarantee Fund and probably the Master Policy from clients who suffer at the hands of the fraudulent element of the profession”

He went on : “I feel the situation on client fraud has spun out of control and the Law Society simply do not know how to control it, other than continue to plug holes in the wall to keep the situation quiet, otherwise clients may begin to panic over the security of their funds held by solicitors offices across Scotland.”

The Guarantee Fund and Master Policy are both reportedly going to be subject to huge increases in compensation claims due to incidents such as the rising levels of mortgage fraud claims, where an ever increasing number of solicitors in Scotland are facing criminal charges or already have appeared quietly in court.

Recently, Richard Keen QC, the Dean of the Faculty of Advocates, broke ranks with the Law Society and admitted there would be soaring claims against crooked lawyers this year and in years to come. I reported the story in an earlier article here : Dean of faculty hints at rising fraud claims against solicitors as ‘Penman Levy’ bites hard into Scots law firms

The Law Society now admits that (for the last recorded year figures available : “The total of claims intimated but not admitted at 30 October 2007 is £3,777,000, representing 42 separate claims made against 13 firms. This sum can be reduced by £771,000 on the basis of “stop loss” insurance cover in place (compared to £850,000, 42 claims, 13 firms in 2005/6). There is accordingly a need to build reserves to meet claims.

While the staggering rises in claims against solicitors indicate a huge level of ever increasing fraud by solicitors against their clients, the Law Society controlled “Guarantee Fund” has been busy trying to kill off as many claims to the fund, to preserve the amounts of money remaining in the fund,

One client who has lodged a claim to the Guarantee Fund spoke to me this morning, calling the Law Society run compensation scheme as “something like a giant slush fund of dirty money that drug barons might keep to launder their ill gotten gains”.

Various tactics have been employed by the Law Society and legal firms in attempts to square off against client who make financial claims to the Guarantee fund.

In one seedy case, where a solicitor had stolen money from clients accounts to pay for an extension to his own home and a new car for his wife, the Law Society were reported to have engaged a firm of Private Detectives based in Edinburgh to spy on the crooked lawyer’s client, in an attempt to find out compromising information on the client and his family which could be used to barter for the claim to the Guarantee Fund to be dismissed.

A retired accountant, who looked at the Guarantee Fund papers said “There appears to be a lot of money going into it, but not much coming out. I would have to suspect there is a great deal of money simply sloshing around which could be used for anything. It doesn’t seem to be much of a protection scheme for solicitors clients.”.

He went on : “If I had handed money over to my solicitor recently for some kind of transaction like a house purchase or sale, an investment, or even dealing with a deceased’s estate, I think its fair to say I may have significant cause to worry about the security of the funds.”

“In the present financial climate, I would advise clients who have concerns about their solicitor holding onto their money or having control of it, to immediately take steps to transfer their funds to a more secure location, because there are little or no guarantees in this “Guarantee Fund” the Law Society claims will protect clients.”

The Guarantee Fund as it currently stands is not monitored by any external organisation, although the Scottish Legal Complaints Commission has said it will fulfil its monitoring role within the commission’s first year of operation.

MacAskill must clean up SLCCSLCC members jibes against consumers. However, recent verbal spats between the SLCC’s board members over the way in which the commission will monitor the Guarantee Fund, along with bitter rants by officials against claimants to the fund, where one commission member, lawyer Margaret Scanlan dubbed claimants as “chancers”, indicate the SLCC has a long way to go in developing any reliable method of monitoring the claims made against crooked lawyers by financially ruined clients.

Jane IrvineLegal Complaints Chief Jane Irvine. Staggeringly, it also turns out the SLCC has not even began its role of monitoring the Master Policy, let alone keeping an eye on the Guarantee Fund. Jane Irvine, the SLCC’s Chairman was asked about the commission’s role in monitoring the Master Policy and asked whether the SLCC had actually asked for a copy of the Master Policy which they are supposed to be monitoring. Irvine however said the SLCC had still not requested sight of the actual Master Policy but “were doing the research”.

Researching an insurance scheme they haven’t even asked for sight of the actual insurance policy …now that’s a new one ! Who is pulling the wool over whose eyes there ?


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