Can Scots lawyers be trusted with £160m of legal aid public funds when client frauds continue to occur ? LAW FIRMS identified in client frauds should not expect to automatically receive public funds from the ONE HUNDRED & SIXTY MILLION POUND taxpayer funded legal aid budget managed by the Scottish Legal Aid Board (SLAB), until solicitors and their regulators publicly prove they are preventing further fraud by beefing up strict supervision over their internal accounting procedures, according to a senior legal insider who branded Scottish lawyers accounts generally as “a dogs breakfast” and in some cases “lacking any credibility in the business world”.
Last weekend, the Sunday Mail newspaper reported a significant fraud involving up to £150,000 of client funds from Kilmarnock law firm BELL & COMPANY SOLICITORS. It was further reported the law firm called in the Police after the fraud, which had apparently been going on for some months, had been discovered. A paralegal was identified in connection with the fraud and is reported to have been dismissed from her post. There are as yet no reports of any criminal charges being made in the case.
It was later revealed Bell & Co Solicitors regularly conduct legal aid work, receiving, £119,100 of taxpayer funded legal aid for 2009-2010, £82,600 in 2008-2009, £81,800 in 2007-2008, £83,700 in 2006-2007, £81,800 in 2005-2006, £79,700 in 2004-2005, & £91,100 in 2003-2004. All figures are sourced from SLAB’s own legal aid payments figures, available HERE
There is no suggestion whatsoever the fraud at Bell & Co Solicitors extends to legal aid payments, and, according to news reports, the law firm did call in the Police as soon as the fraud was discovered, however as the firm is registered with the Scottish Legal Aid Board and regularly receive payments, SLAB was asked if they were concerned about reports in the press of a law firm which receives legal aid public funds had been identified in a substantial client fraud.
A spokesperson for the Board said : “Any allegation of fraud against a firm’s client account does not mean that legal aid fraud was being committed. The Board has not been notified by the Law Society or the Police of any concerns in respect of legal aid payments to this firm. However, it is our normal practice where there have been any allegations of fraud that we make enquiries to satisfy ourselves that public funds are not at risk.”
The spokesperson continued : “The Board's auditing processes ensure the on-going monitoring of all firms registered to provide legal assistance. We only grant applications that meet statutory tests and on receipt of accounts submitted by solicitors; pay only for work that actually, necessarily and reasonably has been undertaken.”
SLAB was further asked to confirm if any enquiries regarding Bell & Co had been made. Their spokesperson said : “Unfortunately, it would not be appropriate for us to comment further, the statement is the fullest response we can make.”
A senior legal insider, who prefers not to be named, said SLAB should be more pro-active in taking away legal aid payments from law firms who are identified in frauds of any kind until such time as they prove themselves fit to receive public funds.
He said : “If as happens in some cases already part of the media record, a law firm’s internal structure is such that large scale frauds can go on for a lengthy period of time before being identified, there are obviously problems within the audit procedures of that particular law firm and its supervision of its partners and employees. Clearly this raises questions as to whether it is safe to pay vast amounts of public money to such firms. In my opinion, thought should be given to automatically deregister law firms identified in fraud cases until they publicly prove to the Scottish Legal Aid Board their audit procedures & supervision will prevent such incidents occurring in the future.”
He continued : “Additionally, if a case arises where there is a report of fraud at a law firm, if the firm is registered to provide legal aid there should be a requirement on the Law Society of Scotland and the Police to notify the Scottish Legal Aid Board immediately so the board can make enquiries of the firm itself and conduct its own audit if required rather than having to read about it in the newspapers first.”
He also backed up claims from others within the profession that solicitors internal audit procedures are a mess.
He said : “Many sets of firm’s accounts I have seen resemble a dogs breakfast and would lack any credibility in the business world. One might say in certain instances, accounts were simply fabricated to get past an audit.“
A former employee of an Edinburgh law firm alleged a general culture of dishonesty in audit procedures, particularly on how accounts for services to clients are prepared.
She said : “In some cases it is clear there are charges put on clients bills for services which the client neither authorised, requested or required. In one case I am aware of, a client’s bill was three times the amount it should have been. The Law Society took over two years to agree the fee note should be reduced. The law firm pursued the client through the courts for money it claimed was owed to it, yet there was never any doubt the work it alleges it was due payment for, never took place.”
It should be noted in the particular case referred to above, the Sheriff ruled in favour of the law firm’s since-discovered-to-be-fabricated evidence which did not help matters and resulted in a protracted time of threats of repossession & bankruptcy against the client concerned.
The matter was only resolved when the case was given to a journalist to investigate who discovered one of the two counsels opinions had been faked as the Advocate who it was claimed had given the opinion was ill at the time and not working. Upon being shown the evidence, along with an email from the Advocate who denied giving any opinion in the case, the law firm subsequently ceased its demands for any fees, however there are no reports of any action being taken against the law firm and its legal representatives who clearly lied in court to obtain recovery of fees it was not due.
SOLICITORS ‘WERE USELESS AND UNABLE TO COUNT’ :
The general perception of Scots law firms failing to keep accurate accounts was coincidentally reflected in sentiments reportedly expressed by the Chief Executive of the Scottish Legal Aid Board (SLAB), Lindsay Montgomery, who was alleged to have said in an allegedly recorded conversation with the Govan Law Centre’s Mike Dailly that solicitors “were useless and unable to count”.
The controversial, unverified remarks were made public by Mr Dailly who claimed the SLAB Chief Executive had leaned on the Law Society of Scotland to silence its Access to Justice Committee, which was chaired by Mr Dailly until he & its members resigned in protest after arguments broke out over the Committee’s published proposals to scrap the Scottish Legal Aid Board and merge it with the scandal ridden, anti-client Scottish Legal Complaints Commission.
The Daily Record newspaper reported on the proposals to merge SLAB with the SLCC and take legal aid under the wing of solicitors directly : “The access to justice committee's plan would transfer the responsibility for administering legal aid to a new body created out of the Scottish Legal Complaints Commission (SLCC), who are currently paid for the solicitors they oversee. Committee chairman Mike Dailly claimed the changes could save £40 million.”
Top Scots QC Paul McBride, who is a Board member of the Scottish Legal Aid Board was reported to have “slammed the proposed changes as "preposterous.” and said further : "SLAB exist to enable access to justice and to make sure legal aid delivers the maximum value for the taxpayer. The board serve a vital role and save the public an enormous amount every year. The idea of putting lawyers in charge of administering money to themselves is preposterous and unworkable. "This is like putting Homer Simpson in charge of a doughnut factory."
While debate still rages on whether the SLAB Chief Executive made the remarks or not, I revealed earlier this week some Scottish lawyers most certainly do have the ability to count their own bank accounts, where : In just one of the cases brought to the attention of Diary of Injustice over the past year, an apparently small but well known law firm in the Scottish Borders was found to have dozens of bank accounts where client funds had been lost on a regular basis and worse still, one of the solicitors in the law firm has, according to information seen by Diary of Injustice, 23 different bank accounts in different banks & different names, some using variations of his own name, others allegedly in his family members name with control signed over to him.