An attempt by the Law Society to strike out a negligence claim arising from a false entry on its Find a Solicitor tool has failed.
Commonly used within the industry to identify Law Society accreditations and practice areas, the tool enables the details of a solicitor to be checked instantly.
Firm Schubert Murphy had initially used the tool to do just that. During a property transaction, the firm wanted confirmation that the vendor’s solicitor was regulated and were met with a positive result.
However, it later emerged that the entry Schubert had relied upon was false – they had in fact been dealing with a fraudster. Initially using the name of a retired solicitor, the criminal had applied to amend this to ‘John Dobbs’ before applying to the Solicitors Regulation Authority (SRA) to obtain a practising certificate. He then sought their approval to work as a sole practitioner under ‘Acorn Solicitors’ – the firm that Schubert had searched for using the Find a Solicitor tool.
The main ruling was delivered by Lord Justice Beatson who highlighted the reliance placed the tool within the industry and that its use was encouraged by the Law Society itself. Going beyond the remit of a regulatory duty, he mentioned that provision of the tool was more akin to marketing, stating that it goes further than the requirements of the regulator.
“I consider that it is arguable that the actions of the Law Society, which has control over the registration of solicitors, created the risk that it would be relied on and the opportunity for fraud and did so in a way going beyond the confines of its statutory regulatory obligations under the 1974 and 2007 Acts.”
Given the reliance placed on the tool, particularly within conveyancing transactions, the emergence of this case is alarming.
The SRA have made it clear that protection of client funds should remain paramount, with firms warned of the consequences of failing to implement necessary checks and procedures on a wide-scale basis. At a time where the risk of fraud is growing, firms need assurance that their chosen strategy will work effectively each time it is used.
Chris Harris, Managing Director of Lawyer Checker said: “This case is particularly alarming, particularly at a time when identity theft is at record highs. It’s important that firms are aware of fraud at all times and doing everything that they can to ensure money is being sent to the right place.
“The recent SRA Risk Outlook 2017/18 says, ‘considering using systems such as Lawyer Checker to verify that what is described as the contact or bank information for a third-party law firm is genuine’ so this just highlights this is an issue that firms need to take action against, before it’s too late.”