2016 – Lawyer Checker round up

Whilst the rest of the world was in turmoil during 2016; the many celebrity losses and the ‘post-truth’ of Brexit and Trump, Lawyer Checker saw a phenomenal year of growth and development. The company was thrilled to enjoy some significant award wins in 2016. In July, at the Modern Law Conveyancing Awards, the hard work and dedication of the team was rewarded with a win of the coveted Innovation of the Year Award and our esteemed MD, Chris Harris, was the recipient of the Lifetime Achievement award proving that in half a lifetime you can achieve an awful lot. The latter part of the year saw Lawyer Checker’s Account and Entity Screen product presented with the Best Anti- Fraud Award by the Mortgage Finance Gazette proving that the lender market really values the due diligence and risk management qualities that the products offer.

The conveyancing industry itself saw some noteworthy decisions made in the courts over the course of 2016, and it could be said that these decisions left Conveyancers feeling that things were unclear. What is clear however, is that adhering to Principle 10 and placing the protection of client money remains paramount and going into 2017 needs to be at the forefront of all Conveyancers minds.  

The case law and its impact:

Purrunsing – No sides taken:

After the whirlwind and stress of the changes to Stamp Duty, April presented itself with a court decision in the case of Purrunsing . It was held that professional representatives for both a buyer and a seller were jointly liable for failing to undertake due diligence in respect of a fraudulent seller of a vacant property. The fraudster had a ‘job’ in Dubai and so was looking for a quick sale. The fact that Conveyancers on both sides of the transaction can be equally liable to protect clients’ money following property fraud, irrespective of who they are acting for, served to heighten the importance of knowing who your client is and where you are sending monies to.

Spring and Summer passed without much drama other than the moans by the Remain camp to the Brexiteers. The housing market slowly got back on track when people realised that whilst ‘Brexit means Brexit’ it did not present an immediate issue for them and their homebuying or selling.

Conveyancers listened to their clients who were still trying to get over the fact that they had missed the boat in purchasing a second home before the higher rates in Stamp Duty had kicked in whilst continuing to juggle the never ending pile of files that is at the heart of this increasingly demanding and difficult job.

Little was known about a court case looming which would present a result further impressing the industry to understand the importance of knowing your client and knowing where you are sending both client and lender funds to.

Murky waters – Who is liable now?

The landmark judgement of P&P v Owen White and Catlin made its way into the industry’s conscience and confusingly took a different stance from the Purrunsing judgement made earlier in the year.

This case also concerned the fraudulent sale of a vacant property in London – the seller again with a ‘job’ in the UAE. The decision differed when there appeared to be very similar circumstances; whilst both cases had used the Law Society’s Code for completion by post, there was two different editions used. Purrunsing had used the 1998 edition of the Code meaning that the funds must be held on trust pending satisfactory completion and therefore meaning that there was a successful claim made by Mr. Purrunsing.

On the other hand, in the favour of Owen White and Catlin, the 2011 edition of the code had been used. This edition contained wording that if completion take place immediately upon receipt of the funds sent by the buyer, and thus those funds were never held ‘on trust’ by the seller’s solicitors. The claim therefore failed on that, and other bases.

Luck rather than judgement?

The fact that Owen White and Catlin succeeded where Mr Purrunsing’s lawyers failed is purely because the wording of the two codes differs, inexplicably, slightly. Throughout 2017 there will be no doubt that Conveyancers across England and Wales will be reviewing their completion arrangements to ensure they do not fall foul to this particular area of the process.

Despite seller’s Conveyancers seeking to hide behind the Owen White and Catlin judgement, sophisticated frauds can and will still occur.

The effect on the consumer – your client?

In the latter part of the year there was the terrible story of Max and Davinder Deluca who lost almost £98,000 to fraudsters.

Both parties were duped by the fraudster – a nightmare scenario? It certainly was for Solicitors, Powell & Co of Sutton Coldfield, who were conned by a fraudster posing as their clients Max and Davinder Deluca. The fraudster also managed to generate fake emails posing as both parties: 

1.     They reassured the Delucas that the transaction was successful by presenting themselves as their conveyancers, Powell & Co, 

2.     They defrauded the real bona fide conveyancers at Powell & Co by posing at the Delucas.

Powell & Co were tricked into transferring the £98,000 proceeds from the Deluca sale to an account owned by the fraudster, not the Deluca’s actual account.

It was only when, over a week later, the Deluca’s question the whereabouts of their cash with Powell & Co that they discover that the payment was made to an RBS account, rather than to their Barclays account.

The Delucas are now having to live in a one bedroom annex whilst they wait to see if they will get their money back. The SRA are investigating.


SRA – ‘Conveyancing theft biggest cybercrime problem’:

At the end of last year, the SRA published figures demonstrating that emails hacks of conveyancing transactions are the most common cybercrime in the legal sector – £7m in losses were reported over 2016.

Three-quarters of cybercrimes reported to the industry regulator in 2016 were some form of ‘Friday afternoon’ fraud. The majority of cases involved conveyancing.

The Friday afternoon fraud, known as such because transactions processed just before the weekend are most typically targeted; limiting the chance of detection and thus buying the criminals time they need to disappear without trace.

Paul Philip, SRA Chief Executive, said in December 2016: “Cybercrime is now the most prevalent crime in the UK. Cybercriminals are not just after money but sensitive information, so law firms are an obvious target. 
“It is the job of firms to take steps to protect themselves and their clients’ money…..Conveyancing fraud can see people lose their life-savings. We also want to see firms making sure their clients are aware of the risks. For instance, we would recommend that people avoid sharing bank details over email, or transferring money before confirming the source of any request.”

Lawyer Checker – providing the products the industry needs:

Mid- 2016 Lawyer Checker launched its Consumer Bank Account Checker, a risk management product which specifically tackles the age-old AML problem of ‘know your client’ and helps assist law firms in understanding that their client’s account details are verified.

Whether sending or receiving client funds, how do you really know whose account details you have? Consumer Bank Account Checker validates the source or destination of funds.

Powered by Experian’s unrivalled consumer database, this product can be implemented into the transaction process prior to the movement of any funds between a firm and their client. Giving an instant response delivered right to your inbox, flexible payment options and a UK team of support staff, Consumer Bank Account Checker offers the best protection for your firm and your client’s funds.

With most of the industry now aware of Lawyer Checker and the risk management products that are on offer, the fact these fraudsters are not going away means that each Conveyancer needs to be ensuring that they are placing their risk management processes and the handling of client money at the top of their agendas for 2017.

Know your client, know who you are sending funds to – through the implementation of Lawyer Checker products, Account and Entity Screen andConsumer Bank Account Checker, law firms can demonstrate to both client and lender alike that the protection of client money is paramount in this fight against fraud.

Make 2017 the year your firm fights the fraudsters – Sign up for a webinar today.

Associate News is provided by Legal Futures Associates.
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