Clients of solicitors who had misappropriated their money received more than £27 million last year from the profession’s compensation scheme, new figures have revealed. The sum, which covers the year to 31 October 2021, is 162% up on the previous year. The increase in payments resulted in the deficit for the year rising 67% to £10m, once contributions from the profession are taken into account.
The compensation fund annual report and financial statements, published this week as part of Solicitors Regulation Authority board papers, state that the fund received or reopened 1,260 claims in 2021, up from 1,120 the year before, and closed 1,360.
At the end of the year 537 claims were open (2020: 637) with a total claim amount of £75.4m (2020: £84.6m). The fund was able to recover £1.1m from solicitors in 2020/21 compared with £2.5m the previous year.
Accumulated funds at 31 October 2021 were £50.6m, compared with £60.6m at 31 October 2020. Reserves are expected to fall further during 2021/22, following a period in which the cash balances in the fund were increased to cover expected higher levels of claims.
A contribution of £40 per individual and £760 per firm that holds client money (2020/21: £50 and £950 respectively) was approved by the board in July 2021. This will kick in for the practising fee year 1 November 2021 to 31 October 2022.
The fund makes discretionary grants to clients who have suffered losses as a consequences of the dishonesty of a solicitor or an employee or manager of a regulated firm. The majority of these grants arise from claims made following an intervention by the SRA into the practice of a defaulting practitioner. From 1 June 2021 the activities of the SRA transferred to Solicitors Regulation Authority Limited, a company limited by guarantee.