As much as £39.5m in client money could be missing from the collapsed PM Law group, the Solicitors Regulation Authority revealed today. In an update, the regulator reiterated that the collapse of the network is being treated as a suspected fraud. PM Law and its group of 11 companies, 25 offices and more than 30 trading names closed suddenly in February, with the SRA intervening two days later.
The amount of missing client money is second in scale only to the Axiom Ince group, where around £64m went missing, and will put enormous pressure on the compensation fund paid for by solicitors and firms.
As of the end of last week, the SRA had paid £9.3m in 92 claims from former clients of the Sheffield-based group and its array of firms. Hundreds of further claims are expected to be made by people trying to claim back their money and the burden on the compensation fund is predicted to be around £21.5m.
The SRA has paid out £6.8m from money held by the firm at the time of intervention.
A total of 25,000 emails or letters have been sent to people identified from the seized files as having live matters, and 17,000 enquiries from clients have been dealt with. The SRA has returned 9,300 live files to clients and a further 20,000 files in bulk to insurer clients.
Extra staff have had to be seconded into the compensation fund team and intervention agents are working evenings and weekends to handle client enquiries.
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The magnitude of the task of compensation is such that the SRA has had to prioritise which clients to deal with first. Clients buying a house to live in where contracts have been exchanged are being dealt with immediately, followed by those earlier in the conveyancing process.
Clients who paid upfront for legal services that were not completed will have their claims processed within three months. Applications relating to trusts and probate matters will take up to six months, while claims for money lost in commercial transactions will take up to nine months.
Paul Hastings, SRA 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. Some of those affected were in the process of buying or selling a home, facing the risk of collapsed moves, or losing their deposits. Others were dealing with delayed probate matters, often while managing bereavement and outstanding estate administration.
'Many of the former clients faced significant upheaval at a stressful time, so we have been determined to provide as much support as possible.'
Law Society chief executive Ian Jeffery, said: “The latest update by the SRA reaffirms the serious situation facing clients. The SRA has moved quickly in its investigation and has already paid out 92 claims to former clients. We continue to be encouraged that the SRA has acted with openness and transparency.
'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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