The Solicitors Regulation Authority has already started to make emergency payments from the compensation fund to distressed former clients of law firm network PM Law.
The regulator revealed today it had received more than 50 applications to the fund and had begun issuing payments to clients with the most urgent need.
The fund is usually earmarked to reimburse money that has been stolen or not been accounted for by a firm, or where the firm did not have insurance in place. But emergency funds are available where clients have made a deposit with a firm and need immediate access to that money – for example in a property transaction - and claimed back later.
The SRA, which intervened into PM Law and its network of practices last week to protect client interests, is investigating the firm but has not disclosed any further information about what has been found so far.
Amid speculation that the Serious Fraud Office is also investigating, a spokesperson for the SFO told the Gazette: 'In line with long established practice to avoid prejudice to law enforcement activity, we can neither confirm nor deny any investigation into this matter.'
The SRA's intervention has the potential to be the biggest it has ever undertaken. The regulator has attended 24 offices belonging to PM Law across Yorkshire, Cumbria, Berkshire and Derbyshire, taking possession of files and money, including clients’ funds. This includes accessing the firms’ case management systems, which has identified tens of thousands of live cases.
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Contact has been made with more than 100 clients who have urgent matters relating to litigation and conveyancing cases. The SRA has also notified more than 100 courts about the firm’s closure and the impact this could have on urgent litigation matters.
Paul Hastings, SRA director of client protection, said: ‘We have been working hard to protect the people impacted by the closure of PM Law. Our intervention agent has identified tens of thousands of live cases, many of which involve sensitive and important matters such as personal injury claims, house sales, and probate issues.
‘We appreciate that this may be a stressful time. Clients can rest assured that our agents are diligently working through these files to identify and contact them.
‘Our goal is to get to everyone as soon as possible, prioritising those in most urgent need. We have, for example, made several emergency grants to allow clients to move house when they had already exchanged contracts.’
Bradford firm Gordons has been appointed as the intervening agent to handle PM Law files. The network extended to more than 30 trading names and the SRA intervened to shut down 11 firms in total.
PM Law and its affiliates closed overnight earlier this month, with staff told they were being redundant as they arrived at work or logged on remotely. The initial information provided to clients extended to handwritten signs placed in office windows saying the business had closed.
Any money in the firm’s bank accounts at the time of intervention will be held by the SRA in its statutory trust fund and then returned to clients.
