Money which your solicitors have been looking after may no longer be safe as it was revealed today lawyers have failed to keep a check on clients funds under their administration, being too busy trying to save their own personal financial deals and sweeteners they received from the big banks for steering clients funds into certain institutions which are now financially unstable or have been nationalised.
The Law Society of Scotland’s "Guarantee Fund" which is touted by lawyers as being the ultimate in consumer protection, may now not be able to handle the expected increase in client claims for financial losses suffered through their solicitors poor management of client funds .. and solicitors occasional use of slightly dodgy banking deals purely to shore up their own personal finance dealings.
One solicitor today expressed fears the Guarantee Fund was “hopelessly inadequate to compensate clients for an expected run of claims after the banking crisis”.
He went onto say “I have heard of two legal firms today who were struggling to recover funds for clients which have been lost in the financial fiasco in Iceland”. The sums in question are rumoured to be in the millions of pounds, which had been held on clients behalf, now possibly lost.
Jane Irvine, Chairman of the Scottish Legal Complaints Commission, whose functions include oversight of both the Guarantee Fund and the Indemnity Insurance scheme to protect clients against negligent solicitors would not comment on questions put to her relating to the instability of the Law Society’s Guarantee fund, probably because as I reported earlier, the SLCC has staggeringly decided to delay their implementation of monitoring the Guarantee Fund and the Master Insurance Policy.
Read my earlier report on the Scottish Legal Complaints Commission’s decision to delay oversight of the Guarantee Fund and Professional Indemnity Insurance here : Legal Complaints Commission to delay monitoring of discredited lawyers insurance as worries increase over poor regulation of crooked lawyers
The Law Society of Scotland describe their “Guarantee Fund” as the following : “The Guarantee Fund is for the protection of those who have lost money as a result of their solicitor acting dishonestly. It is operated by the Law Society of Scotland and those who have suffered loss in this way can apply to the Society for a grant of compensation. All solicitors in Scotland who handle clients’ money contribute to the Fund each year.”
In truth however, conditions are attached to this compensation fund, which has seen some claims last almost 15 years before being resolved … with the following conditions attached :
• The solicitor must have acted dishonestly in the course of their legal practice.
• The claimant must have suffered monetary loss.
• There must be no other means of recovering the money; for example, by suing the solicitor directly or making a negligence claim.
The last condition “no other means of recovery by suing the solicitor or making a negligence claim” , involves as you may expect .. trying to obtain the services of another lawyer to sue the lawyer you are attempting to claim against and as many people who have tried to claim against the Guarantee Fund in the past, have found to be a policy which the Law Society cooked up to ensure most claims fail.
As expected, it seems the “Guarantee Fund” may be of little use to thousands of Scots who may find out their money has been totally mismanaged to the point of being lost by their solicitor, with no compensation cover available simply because the Law Society is too busy protecting the backs of lawyers to care about clients.
To make matters worse, lawyers who are seeing their income from litigation and legal business dwindle to a trickle, are now inflating accounts for existing work up to extortionate levels.
One client who contacted me after he had received a revised bill which has been more than tripled from nearly £1000 to £3630, for work done on a boundary dispute which has so far got nowhere after two years.
The solicitor had already sent the client an account for £958.32 earlier last week, detailing work which had allegedly been done, but in the wake of the financial crisis it seems the legal firm felt they had inflate their demands, claiming 'court work' and 'court appearances' which apparently never took place must be added, along with a junior counsel's opinion which the client has never been asked to authorise or has seen - this all despite the fact the client had been promised access to court and the resolution of the fairly clear cut boundary problem within a year.
As the problem of solicitors inflating their costs and demands for more money all across Scotland, another client last night revealed he had received a bill demanding £600 for three telephone calls made by his solicitor to an unidentified individual for exactly 35 minutes each, work which has been of no apparent use to the client’s case whatsoever. The solicitor when asked by the client who the telephone calls were made to, staggeringly refused to identify the person he had called !
The Law Society of Scotland, rather doing their duty of protecting clients funds held by solicitors, have been too busy lobbying the high street banks to protect legal firms and solicitors personal financial deals and the standing of the legal profession's 'financial power' such as it remains.
As insiders to the profession put it simply last night “if the Guarantee Fund collapses, there will be a riot among clients who will lose a lot of money and it could get nasty”, while another solicitor joked “we might have to go begging to the Bank of England too !”
As a reminder of the Scottish Legal Complaints Commission’s powers, here are the relevant parts of legislation from the Legal Profession & Legal Aid (Scotland) Act 2007, which in the light of the international banking crisis, should now be implemented immediately to guard against severe losses of clients funds held by solicitors :
(1) The Commission may monitor the effectiveness of—
(a) the Scottish Solicitors Guarantee Fund vested in the Society and controlled and managed by the Council under section 43(1) of the 1980 Act (“the Guarantee Fund”);
(b) arrangements carried into effect by the Society under section 44(2) of that Act (“the professional indemnity arrangements”);
(c) any funds or arrangements maintained by any relevant professional organisation which are for purposes analogous to those of the Guarantee Fund or the professional indemnity arrangements as respects its members.
(2) The Commission may make recommendations to the relevant professional organisation concerned about the effectiveness (including improvement) of the Guarantee Fund, the professional indemnity arrangements or any such funds or arrangements as are referred to in subsection (1)(c).
(3) The Commission may request from the relevant professional organisation such information as the Commission considers relevant to its functions under subsections (1) and (2).
(4) Where a relevant professional organisation fails to provide information requested under subsection (3), it must give reasons to the Commission in respect of that failure.
28 comments:
I heard one of the Edinburgh firms has already approached 'a bank' for huge loans to cover client losses and it looks like they wont get it
Yes I remember your other story on this.
What point is there of having a regulator if it wont do the job it is supposed to.
I liked the part about the phone bills to Mr/Mrs Anonymous.Probably the lawyer was calling the rent boy line for extra marital services?
Shouldn't it be the FSA who regulate funds held on behalf of clients rather than this Law Society cloned commission ?
Good point Peter.After what happened with the banks there should be better oversight and regulation of client funds for sure
Hi Peter Cherbi.
My dad asked me to get in touch with you about a bill he got from his greedy bastard lawyer which was supposed to be about £2000 and is now £12000
Can I email it to you for a comment or help?
Now that would be just sick if the taxpayers have to bail out fucking lawyers too
LET THE LEECHES TWIST IN THE WIND OF THIER OWN MAKING
This is troubling to me Mr Cherbi as my late father's lawyer has about 50k in his accounts which should have been returned to us last year.I'm guessing now its gone and if so I will call in the Police the newspapers and you
• The solicitor must have acted dishonestly in the course of their legal practice.
• The claimant must have suffered monetary loss.
• There must be no other means of recovering the money; for example, by suing the solicitor directly or making a negligence claim.
so in conclusion this guarantee fund guarantees nothing
The guarantee fund is managed with the help of banks so I am not surprised it has got into difficulties but as you point out there are so many conditions for someone to be able to claim from the fund there is little prospect of anyone actually getting anything if their solicitor loses their money in one way or another
I know a sole practitioner in Aberdeen who has lost clients close to £500,000 and the guarantee fund paid them nothing.
If it is in a state of collapse now it must be down to maladministration because the damn thing never pays out despite claims to the contrary.
I feel sorry for the people you mentioned being ripped off by their lawyers.
Maybe instead of saving this fund if thats what they are asking we should just throw these lawyers to the sharks and take all their ill gotten gains and spread it around back to their clients!
The wise choice would be for everyone to go to their lawyers office and take charge of their own money rather than let some jumped up shit of a lawyer use it for whatever.
More dynamite from P. Cherbi Esq. Of course those who might lose hundreds of thousands will doubtless be offered 'an accomdation' from the powers that be, while smaller fry will no doubt be given the Law Society/SLCC runaround.
What on earth is the SLCC doing postponing what needs to be done today until who knows how many years hence?
A result perhaps of more 'advice'from long established sources?
I didn't realise lawyers looked after money for clients but I suppose you are correct and with some firms going under probably their clients wont get their money.
That "Guarantee Fund" sounds like a con too.
Don't worry Peter.I'm sure John Swinney will bail out the lawyers on MacAskill's request.After all its pretty clear they are sponsoring the SNP by getting all their pals onto this complaints quango !
Oh no wait though Swinney will have to go begging to London for the money !
I foresee clients coming in to ring our necks which will make you happy ?
I have about 12 letters from bastards at the Law Society of Scotland telling me I can't claim a penny from this guarantee fund but my lawyer emptied a bank account of 24 thousand he was 'looking after' when we sold a piece of land
Law Society are full of lying bastards as are all their lawyers
To all those who are passing comment about the Guarantee Fund you are not alone in your suspicion.
Most of the profession have regarded it as a joke for many years and Mr Cherbi is probably spot on about its impending collapse.
To Peter.You should make inquiries just how much it takes to 'manage' the fund and who gets the lions share of that.
Maybe this and the bank failures will help bring better regulation to the legal sector too because anyone who argues against it now looks like a crook and that includes macaskill.
slcc looks stupid not starting its full role already and as you say now the banks have failed us this fund probably will too
anyway why is it with the lawyers and controlled by the law society - shouldn't it be independent if it was to be any good at all ?
Its been known for awhile as some suggest there are problems with the fund.
If these lawyers lose you money do something about it.Don't get sucked into the complaints system just (you know the rest)
Thanks for the advice Mr Cherbi.I went into my lawyers office this morning to make sure he followed my instructions to transfer all money he was holding into my own bank account today.I had called him several times yesterday and he wouldn't reply but I caught him today.Everyone do the same if you are sensible!
Law Society are refusing to take complaints against the Guarantee Fund Peter
I have been writing to Yelland Clancy Mill and others for months trying to complain against my solicitor who transferred 35000 from my account to his own personal account and the Law Society wont do a thing about it not even the Police because the lawyer is on Law Society Committees
I am another one with a bill that's went from an estimate of 1,000 to a 3,200 demand from my bastard lawyer and he hasn't done a thing to get the case into court
same as the comment at 6.31pm I have a demand from my lawyer for £2,420.40 and he had estimated the work at £900 and the case also has not reached court yet I complained to the Law Society before the 1st October with this slcc coming along but I will complain to them too
I think your story caused the following !
http://www.journalonline.co.uk/News/1005933.aspx
Society's advice on banking of client funds
18 Nov 08
Terms of business should be revised in light of counsel's opinion
Solicitors are not under an absolute duty to account to clients for funds deposited in accordance with the Law Society of Scotland's Accounts Rules, according to counsel's advice obtained by the Society.
In the light of the recent uncertainty about the future of banks, the Society sought the opinion of the Dean of Faculty on a range of matters.
In summary, as respects the duty of accounting, in the Dean’s view the basic duty is that of the solicitor of ordinary skill acting with ordinary care as set out in Hunter v Hanley 1955 SC 200. The contract of agency between solicitor and client is fiduciary (i.e. like that of a trustee), but in the Dean’s view that does not equate to an absolute duty to account to clients for client funds which have been deposited in accordance with the Accounts Rules. If the solicitor has actual or constructive knowledge of a material risk of failure of a particular bank, a question of negligence might arise.
In the Society’s view, actual or constructive knowledge of a material risk of failure means such knowledge of a specific and material risk for a bank. Mere knowledge of speculation in the media or on the internet would be unlikely to amount to actual or constructive knowledge.
In response to the suggestion that the Society’s Accounts Rules, and in particular rule 4(3)(b), create an obligation to guarantee clients’ funds, the Dean confirmed that the rules do not create such an obligation. The wording in rule 4(3)(b) “nothing herein contained shall relieve a solicitor of his responsibilities” must refer to responsibilities to be found elsewhere and not within the Accounts Rules.
Terms of business
Having regard to the Dean's advice, the Society's Professional Practice Committee has agreed that further guidance on terms of business is appropriate. Solicitors should advise clients in their standard terms of business of the identity of the bank or banks in which any funds held for the client will be deposited. The terms of business should further say that if clients wish their funds to be deposited in a different bank or banks they will need to give the solicitors specific instructions to that effect.
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