Scots law firms feel the financial squeeze while clients feel the effects of rising fees, rip offs & legal aid swindles. TIMES ARE TOUGH as we all know, but many clients will feel it hard to shed a tear over recent news from the Law Society of Scotland announcing that Scottish solicitors are apparently earning less cash for their greedy partners as profits take another dive at Scots law firms. Should ordinary Scots feel sorry for a profession which writes its own rules, charges what it likes, has talked up and abused the housing market to the point of making homes unaffordable for many, has ruined families for their own financial benefit and even stolen from the dead ? Hardly.
The Law Society of Scotland reported in a recent Press Release : Drop in profits shows market still tough for Scots law firms that trading conditions remain tough for solicitors’ firms, despite an increase shown in profits for sole practitioners and larger firms, according to a survey commissioned by the Law Society of Scotland. The Law Society’s Cost of Time survey for 2012, based on the results of 244 participating firms, showed an overall drop in profits per partner levels which are now on a par with those of 2010, with cash flow issues proving to be a particular problem for solicitors.
However, while lawyers profits may be down, complaints made by clients, legal aid swindles, theft, dishonesty, embezzlement. negligence and client rip-offs are unsurprisingly all on the rise as Scottish solicitors follow tried & tested methods of extorting every penny from already impoverished clients and even taxpayers & the public purse, as increasing amounts of cash greedy law firms who previously refused to offer legal aid to clients now scramble to sponge off the Scottish Government’s £160 MILLION legal aid budget.
In December 2012, Diary of Injustice reported on the latest annual report from the hapless, anti-client Scottish Legal Complaints Commission (SLCC), who were themselves forced to admit that complaints against Scottish solicitors had risen significantly on the previous year at a figure of 16% here : From Bad to Worse : Complaints against lawyers up 16%, few cases upheld, Board members on £20K expenses, reports anti-client Scottish Legal Complaints Commission in 2012 annual report
The Law Society of Scotland’s survey claimed : Median profits for equity partners in Scotland have dropped to £64,000, the same level as two years ago, following an increase in 2011. Partners in medium sized firms have seen the biggest drop, with 2-4 partner firms dropping from £75,000 to £67,000 in 2012 and 5-9 partner firms seeing a £4,000 fall to £76,000 in 2012. However the survey showed an increase of £7,000 to £53,000 on average for sole practitioners and those in 10+ partner firms have seen a rise in their per partner profits from £144,000 to £163,000.
The results illustrate the extent of the difference between the profitability of larger firms with 10 or more equity sharing partners and smaller firms, with larger firms’ average profit per equity partner exceeding those at smaller firms by £79,000. Equity partners in a law firm are not paid a salary, and the profits they earn are often used to fund working capital, so the figures have to be interpreted with care. The apparent paper profit is not the same as actual earnings.
The research has also shown a drop in law firms’ bank balances in the past year from over £200,000 last year to just over £50,000 this year for 10+ partner firms. 2-4 partner firms have seen their median bank balance fall from £27,000 to £6,000, and 5-9 partner firms have also seen a major fall.
Clearly however, the reduction in law firms’ bank balances and lack of cash for partners have made dishonesty, negligence and almost bare faced theft of client funds an even more tantalising way out of many law firms’ financial black holes as clients experience large fee demands for legal services which seem to have no effect on clients legal troubles.
In some cases brought to the attention of Diary of Injustice, some of Edinburgh’s ‘top’ law firms are regularly charging clients well over £150 plus VAT for letters & emails which comprise only a few lines of text and many of which appear to be repeated communications, or in other words, lawyers using both email & written correspondence to inflate fees demanded from clients.
In other cases, clients have been contacted by a solicitor years later, the solicitor claiming fees had not been accurately charged (in once recent case up to £30,000) and were now being demanded within seven days, otherwise the solicitor would apply to have clients sequestrated.
In several such cases currently being monitored by Diary of Injustice, not one of the solicitors or law firms have been able to substantiate work now being claimed for which in certain cases is claimed to date back to 2001. However, as Scotland’s Sheriff courts, the Court of Session and regulators such as the Law Society of Scotland & Scottish Legal Complaints Commission appear unwilling to the point of prejudice to hear out the clients side of the story, there appears to be little help for those who are now being trapped by greedy solicitors effectively demanding money with menaces which clearly are not due.
However, it is not just clients who are feeling ripped off, as figures reveal many law firms are going back to the legal aid register, apparently with intentions to plunder public coffers to make up for shortfalls in business …
The Scottish Legal Aid Board (SLAB) confirmed in a statement published along with in their latest annual report that the number of solicitors and firms registered to provide civil and criminal legal assistance has increased again and is at the highest level for five years. At the end of March 2012 there were 662 firms registered to provide civil legal assistance (36 more than 2009) and 591 firms and 1,431 solicitors registered to provide criminal legal assistance (25 more firms and 75 more solicitors than in 2009)
Sources within the Scottish Government have now told Diary of Injustice the Scottish Legal Aid Board have reason & increasing evidence to suspect that law firms re-entering the Legal Aid register and many currently on its books are submitting increased numbers of false claims for legal aid work on cases which are clearly going nowhere.
Lorna Jack, chief executive of the Law Society of Scotland, who is more used to issuing lavish claims about the size of Scotland’s legal industry, regularly putting out statements claiming a Scotland wide worth of over £1 billion pounds, told the media: “The cost of time survey is a good indicator of the general health of the profession on an annual basis and it’s clear that the effects of the recession are not over.We’re all well aware of tightening budgets right across the private and public sectors and we are encouraging our members to think very seriously about how they shape their business and look hard at their strengths and weaknesses to make the most of available opportunities.
Ms Jack continued : “The legal services sector is, and will remain, highly competitive. We anticipate the arrival of the first licensed legal services providers in Scotland in the first half of this year and we will undoubtedly see further consolidation. As the legal market continues to change it’s vital that our members make sure that they are running a tight ship and take steps to ensure that they are effective business managers as well as excellent solicitors. Our professional practice team at the Society, headed by Coral Riddell, are more than happy to provide information and advice to solicitors who want to discuss best business practice.”
While the Law Society of Scotland has plenty of advice for law firms on how to increase their profits, there is precious little advice or help available for clients who are caught in complicated swindles masterminded by their solicitors who operate safe in the knowledge that weak self-regulation will see them escape any punishment or need to pay compensation for their wrongdoing.
However, consumers can help themselves and avoid the rip offs by taking this simple advice : Let’s be honest folks, this recession is a tough one. Save your money. Don’t feed the legal profession, feed yourself and your own family, and, if you do have problems with a solicitor, or have been forced to make a complaint about your solicitor, tell someone in the media about it.