The Solicitors Regulation Authority has warned that firms falling victim to fraudsters setting up bogus practices in their name could be held accountable if they have not acted to prevent identity theft.
In its risk outlook update, published yesterday, the SRA said that the number of reports received about bogus firms is rising.
In 2013, the SRA dealt with 548 reports of people purporting to be legitimate firms or solicitors, an increase of 57% on 2012. In the first eight months of 2014, the figure had reached more than 450 and is expected to far exceed last year’s total.
The SRA said 46% of all reports involve the identity theft of a law firm or solicitor – often through the cloning of a genuine firm’s website. A further 37% posed as an individual or firm, most of the time with bulk ‘fishing’ letters to clients.
The SRA said increased awareness of the problem may be driving the rising numbers, but it maintained that the trend is ‘concerning’.
‘Bogus firms pose significant risks to the interests of consumers of legal services as well as the wider public,’ the update says. ‘This is particularly important as the scope for obtaining redress or compensation for victims of bogus firms is limited. Where a bogus firm takes advantage of ineffective systems and controls on the part of a genuine law firm, it too may be held liable.’
Advice to firms to combat fraudsters includes carrying out regular internet searches for mentions of their firm or staff and being alert to suspicious circumstances such as when clients think the firm is dealing with certain transactions, when it is not.
In conveyancing transactions in particular, solicitors should carry out verification checks on any other professional involved, and transfer money held in trust only when the sale has reached completion.