PM Law: Suspected fraud
The Solicitors Regulation Authority’s (SRA) investigation into PM Law “involves a sophisticated suspected fraud”, with the improper removal and misuse of £39.5m of client funds, the regulator has revealed.
It has also paid out £16m to the Sheffield-headquartered group’s former clients.
It described the intervention into PM Law as one of the largest and most complex it has ever undertaken, involving 11 companies, 25 offices and more than 30 trading names spread across Yorkshire, Cumbria, Berkshire, Derbyshire and London.
A fortnight after PM Law suddenly closed its doors in February, the SRA confirmed that it had uncovered a “potential fraud” but could not at that stage say how large it was.
As of last week, 92 claims, totalling £9.3m, have been paid to former clients from the SRA Compensation Fund – up from £3.7m in the last update at the start of March – with “hundreds” of further claims in train worth a further £12.2m.
It has moved extra staff into the compensation fund team to help deal with them.
The SRA has also paid out £6.8m from money held in PM Law’s client accounts at the time it intervened.
At the same time, the SRA has introduced a new approach to prioritisation of applications to the compensation fund – for both PM Law and more generally – under which it will deal with claims based on the risk of harm faced by those making them.
It stressed that this would “not impact the likelihood of whether any individual claim is successful when considered”.
The intervention agent, Yorkshire firm Gordons, has sent 25,000 emails or letters to people identified from the seized files as having live matters, dealt with 17,000 enquiries, and returned 9,300 live files to clients, with a further 20,000 transferred in bulk to insurer clients.
The SRA said Gordons’ staff were working “round the clock, including on weekends, to handle client queries”.
Paul Hastings, the SRA’s director of client protection, said: “We are continuing to do all we can to support former clients of PM Law, including by reuniting them with their money or files.”
Law Society chief executive Ian Jeffery praised the SRA for moving “quickly” in its investigation and acting “with openness and transparency”.
He continued: “However, a case this large coming so soon after Axiom Ince and SSB Group, reinforces the need for the SRA to focus on their core regulatory role and deliver the changes needed to reduce the risk of future large-scale collapses and re-build consumer confidence.
“The compensation fund provides crucial protection and reassurance to consumers. It is unfortunate the SRA has had to use the fund in this case and we hope any increase to the fund will be kept to a minimum.”
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