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Lawyer jailed for £90k embezzlement demonstrates need for independent regulation & greater protection of clients funds

20 May

Law Society of ScotlandLaw Society of Scotland ‘ineffective’ at protecting client funds from crooked lawyers. Despite the Law Society of Scotland’s claims to vigorously police their members, particularly when it comes to the question of protecting clients funds, headlines in the media this week report that yet another solicitor has plundered his client accounts to the tune of £90,000, and, it would seem only due to extensive media interest in the case, was found guilty and sentenced to 12 months for his crime.

The solicitor in question in this case, is William Rennie, an apparently respectable family solicitor and upstanding member of the Ayrshire community. He was as it turns out, anything but that, as the Scotsman reports :

The Scotsman : “In one case, Rennie banked £30,000 which was intended to pay off a mortgage following a divorce, writing on the cheque stub that it had been used to settle the mortgage. On another occasion, £15,000 was paid into his account but was disguised on the stub as a bequest to a friend of the deceased person.”

“One divorcing couple had asked Rennie to keep the money from their house sale, which was to be split between them, until they needed it. But instead Rennie paid himself £10,000, writing on cheque stubs that the husband and wife had each received £5,000.”

Rennie’s embezzlement of client funds was apparently discovered in July 2004, some five years ago, when he used clients’ money to pay a VAT bill in a bid to avoid legal action.

Five years to bring him to trial and eventual sentence so it would appear we don’t seem to have a very speedy justice system when it comes to jailing crooked lawyers … and curiously enough, while the Scotsman report ends with the point that clients have been compensated, the Law Society of Scotland have given no financial breakdown of who received how much in terms of compensation from the Guarantee Fund, and how long they had to wait for it.

Philip YellandPhilip Yelland, Director of Standards and in charge of complaints at Law Society for 20 years. The actions of William Rennie in plundering his client accounts is a fairly typical & regular occurrence, particularly in the current financial downturn it would seem, as complaints from clients rocket against solicitors who are looting their clients funds for their own benefit. The Law Society meanwhile, despite having the same person in charge of complaints & standards for nearly two decades, Mr Philip Yelland is engaged in the usual knot tying exercises in drawing out complaints investigations for months, even years to prevent any damaging headlines for the profession and to withhold any prospect of compensation for clients for as long as possible.

SLCC squareScottish Legal Complaints Commission still to decide on monitoring Guarantee Fund. Even with the new ‘independent’ Scottish Legal Complaints Commission in existence, little is currently being done to monitor the claims process by clients who have been ripped off by crooked lawyers, as the commission is still to decide on exactly how it will monitor the controversial Master Policy insurance scheme of Scottish lawyers and the Guarantee Fund compensation scheme run by the Law Society of Scotland, itself revealed to be little more than a badly run ploy which can delay paying out on frauds involving client money for years, even decades in some cases.

I wrote a recent article on the state of the Law Society of Scotland’s Guarantee Fund here : Law Society’s ‘Guarantee Fund’ for clients of crooked lawyers revealed as multi million pound masterpiece of claims dodging corruption

AdvisoryAdvisory on Client Funds over Guarantee Fund’s poor performance. In fact, from what I have heard in terms of the sheer numbers of complaints involving solicitors stealing clients funds and almost wholesale embezzlement carried out by lawyers even in some of the largest legal firms in Scotland, it appears to have become so dangerous to leave your money with a solicitor, I issued a Client Advisory some weeks ago relating to the safety of client funds, which you can read here : Advisory : Clients must protect their money from unsafe legal firms as Law Society’s Guarantee Fund fails

As I said in the earlier advisory, you are better off not handing any money over to your solicitor or their legal firm for safe keeping, because its simply not safe to so do, particularly in today’s financial climate, and of course taking into account there is nowhere near enough money in the Guarantee Fund to pay for the amount of client fund fraud & embezzlement by solicitors which is currently going on in Scotland.

The fact of the matter is that reserves in the Guarantee Fund only amount to a paltry £1.7 million at this time, and with significant outstanding claims standing at £4.3 million, together with incoming claims expected to reach double figures in the millions this year over buy-to-let & mortgage fraud schemes, there seems little prospect of clients recovering anything from solicitors who decide to take the money for themselves.

Even while I have written this piece, a solicitor somewhere in Scotland has probably dipped into their client accounts to do much the same as William Rennie and hundreds of his colleagues have done previously.

If you want to protect your own money rather than see it disappear into your solicitor’s back pocket – bank it yourself, because your solicitor cannot be trusted, and the Law Society’s Guarantee Fund can guarantee nothing.

The Scotsman reports :

Pillar of community to prison – downfall of a crooked lawyer

Published Date: 19 May 2009
By Campbell Thomas

A LAWYER who took nearly £90,000 from unsuspecting clients has been jailed for a year.

William Rennie, 56, traded on his image as a respectable family solicitor and upstanding member of the Ayrshire community.

But he secretly siphoned off cash from the proceeds of divorce cases and family wills after his business collapsed.

Jailing Rennie yesterday, Sheriff Alistair Watson told him: “A solicitor has a special place of trust in the lives of people and the abuse of that trust is always extremely serious.”

In one case, Rennie banked £30,000 which was intended to pay off a mortgage following a divorce, writing on the cheque stub that it had been used to settle the mortgage.

On another occasion, £15,000 was paid into his account but was disguised on the stub as a bequest to a friend of the deceased person.

One divorcing couple had asked Rennie to keep the money from their house sale, which was to be split between them, until they needed it.

But instead Rennie paid himself £10,000, writing on cheque stubs that the husband and wife had each received £5,000.

The crimes came to light in July 2004 when Rennie used clients’ money to pay a VAT bill in a bid to avoid legal action.

He ceased trading in November 2004 after the Law Society became involved. Rennie told police: “I must have been crazy.”

He admitted embezzlement from his firm, Rennie and Co, in High Street, Irvine, between June 2002 and September 2004.

He was originally charged with taking nearly £140,000, but the Crown reduced the amount when he agreed to plead guilty.

Rennie, of Kilmaurs, was cleared of failing to obey a court order relating to earlier bankruptcy proceedings after his guilty plea.

Sarah Livingstone, defence advocate, said Rennie got into financial difficulties after his partnership with another solicitor dissolved in the 1990s. He faced rising staff costs and diverted money from clients’ accounts to keep the business afloat.

Miss Livingstone told Kilmarnock Sheriff Court: “As serious as this is, and he knows it is, he has lost everything. Nothing was hidden and it was obvious he was going to be caught. He just buried his head in the sand.”

Rennie was suffering serious health problems because of the offence, Miss Livingstone said, adding: “He was not living the high life.”

In 2006, Rennie was found guilty of professional misconduct after allowing a house to fall into ruin. The Scottish Solicitors’ Discipline Tribunal (SSDT) heard he had been asked to handle the estate of a couple who left no wills after dying just weeks apart.

But he took no action for nearly three years, then refused to co-operate with a Law Society of Scotland probe.

After the ruling, Rennie was placed on restriction and banned from practising without supervision. He was struck off as a solicitor in December 2007.

Rennie’s victims had been repaid through a fund contributed to by all Scots solicitors, the court heard.

He refunded £70,000 of the money after selling his home and cashing in endowments.

Passing sentence, Sheriff Watson told Rennie he recognised he was a “broken man” who had shown contrition.

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