Your money is no longer safe with your lawyer. £50 million plus of money belonging to clients of Scottish legal firms is at considerable risk of loss, after revelations the Law Society's Guarantee Fund has less than £2 million left in its coffers to cover the millions held by Scottish solicitors on behalf of their clients in everything from house purchases & sales to the administration of wills, investments & settlement payments.
My advice : Clients should immediately withdraw their funds from any legal firm or solicitor who may be holding monies on their behalf. If you have funds being held by your solicitor, make it your priority this week or as soon as possible to ensure the safety of your wealth, or you may end up losing it.
There is simply no way the legal profession can guarantee the safety of your money in the wake of the financial downturn. You will have to be the best judge yourselves as to how to safeguard your own wealth, but trusting it to your solicitor who lacks any protection for its loss, is no longer an option.
While the news is filled with reports about banks & building societies having to be bailed out by the Government, little attention has been paid to the rate of legal firms heading for disaster, and not forgetting the huge rise in fraud cases involving solicitors falsifying banking records and financial transactions, usually for their own benefit. It is the Guarantee Fund which would cover such frauds on client’s funds, but the compensation scheme run by the Law Society which is supposed to repay defrauded clients, has been unmasked as little more than a theatre spectacle, offering nothing to victims of ‘crooked lawyers’.
I reported earlier on the Guarantee Fund’s problems and client’s attempts to claim from it here : Law Society's 'Guarantee Fund' for clients of crooked lawyers revealed as multi million pound masterpiece of claims dodging corruption
A legal insider at the Law Society said when asked about the Guarantee Fund problems said : “We are going to end up in a situation where there wont be enough money coming in from Solicitors to the Guarantee Fund to keep adequate levels of money available to cover failed legal business or lawyers taking their clients money for themselves.”
This claim is backed up by revelations 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.
As an example to emphasise the lack of safety of clients funds, a client who contacted me who entered into a house purchase transaction with a legal firm now faces a total loss of £185,000, which was handed over to his solicitor who was holding it in the legal firm’s client account on a short term basis while the client’s property transaction went through.
Eleven weeks later, the deal had still not been completed and it emerged the solicitor had taken £47,000 of the clients cash to prop up his legal firm’s huge debt. The solicitor then told the client the seller had made off with his money, and had refused to hand over the titles.
The client uncovered what had actually happened through his bank and an ex member of staff from the legal firm in question, but the Law Society did nothing. The client is still seeking legal representation to sue the Law Society and the solicitor concerned, who continues to represent unsuspecting clients in property transactions.
It is reported that discussions have taken place at the Law Society of Scotland on the idea of seeking external funding to the Guarantee Fund, or even asking for Government assistance of some kind, if the situation arises, as looks the case that the Law Society will not be able to meet its ‘official’ commitment to ‘safeguard’ clients funds – a commitment in reality it has never managed to achieve in the Society’s entire history.
However, fears were expressed by some lawyers that the public might not be too receptive to millions of pounds of taxpayers money being used to keep legal firms and lawyers afloat, given a general antipathy towards the legal profession for their poor regulatory conduct and overcharging of fees over the years for very poor legal services.
During discussions on how best to proceed with the flagging Guarantee Fund, officials warned that any external bailout of the compensation scheme would open up the actual workings of the Guarantee Fund & Master Policy to unwelcome public scrutiny, where questions would arise over the suspicious nature of how client claims for compensation are ‘managed’ and transferred back & forth between the two schemes to delay, deceive and generally thwart payouts to genuine victims of ‘crooked lawyers’.
A leading accountancy firm gave comment last week, claiming there may be up to £100 million of private & corporate clients money held by Scots legal firms which may well now be in unsafe hands.
An accountant with the firm who declined to be named said : “You would be correct in assuming there is a significant risk to funds held by your solicitor or legal firm in current market conditions. The advice we could only offer just now is to bank it and look after it yourself. After all, it’s your money, why let anyone else hold it or manage it in this financial climate.”
So, there you have it. If you currently have money with a lawyer, for any reason at all, take it out of their hands and ensure you put it in a safe place where you control it, not someone else who will only use it to further their own financial gain at your expense.