Warning notice

Bogus law firms and identity theft

Issued on 26 March 2012

  1. There are serious and continuing risks to the public arising from the activities of criminals and criminal gangs who are setting up bogus law firms or bogus branch offices of genuine law firms with the intention, usually, of stealing mortgage loans. This warning notice provides information about the threat and advice about how to protect yourself and others from it.

  2. We are deploying our resources to mitigate the risk in various ways including rigorous authorisation processes, use of intelligence, urgent investigation, removal of records from Find a solicitor and publication of warnings.

  3. It is important to bear in mind, however, that we do not regulate the people who are perpetrating these frauds and our powers over them are relatively limited. However, in one case where sufficient evidence was available, we obtained a injunction against an individual preventing him from having anything to do with any law firm in the future. If we obtain sufficient evidence to take such steps in any case, then we will do so.

  4. It is important to share some of the indicators of these frauds to maximise the chances of prevention.

  5. If you become suspicious about a law firm for any reason, please contact our Red Alert Line as a matter of extreme urgency since some frauds are carried out very quickly.

  6. Bear in mind that you may come across these frauds in different contexts. Of course, you must keep an eye on any indication that your firm is being targeted or its name being used improperly. If you discover this, you should contact the SRA and your insurers, including consideration of legal action such as by way of injunction either to stop misleading statements or to freeze assets if money has gone missing. If there is any evidence of a crime having been committed, you should also inform the Police.

  7. There are risks to you and your firm. For example, in Lloyds TSB Bank PLC v Markandan and Uddin [2012] EWCA Civ 65 the firm that was said to be the victim of the fraud was still held liable for breach of trust in paying away mortgage monies.

  8. Some practical things you can do:

    1. Search your firm's name on the internet from time to time, since that might bring up a false office—it may be worth considering doing the same with the names of some of your partners or staff;

    2. Check your firm and individual details on the Law Society's Find a solicitor web page—in case someone has misused your name to set up a false office;

    3. Be alert to suspicious incidents such as transactions that others seem to think your firm is dealing with when you are not;

    4. Look out for alerts and warnings on the SRA website about bogus firms.

  9. Law firms dealing with conveyancing transactions or other work also sometimes become suspicious of firms on the other side and again it is important that such suspicions are reported and acted upon immediately.

  10. Some examples of factors giving rise to suspicion are1

    • errors in letterheading—in one case the bogus office had letterheading which misspelt the name of the town in which it was supposedly based;

    • no landline telephone number—note that numbers beginning with 07 are mobile telephone numbers;

    • inconsistent telephone or fax numbers with those usually used by the firm;

    • telephone calls being diverted to a call-back service;

    • a firm apparently based in serviced offices;

    • email addresses using generic email accounts—most law firms have addresses incorporating the name of their firm; if in doubt, check the genuine law firm's website to identify its contact email address. You may well notice a difference;

    • sudden appearance in your locality of a firm with no obvious connection to the area, probably not interacting with other local firms at all;

    • a firm appearing to open a branch office a considerable distance from its head office for no obvious reason;

    • a firm based in one part of the country supposedly having a bank account in another part of the country—this is a strong indicator and has been seen several times;

    • a client account apparently overseas—this is a breach of rule 13.4 of the SRA Accounts Rules and is a major red flag;

    • a strange or suspicious bank account name—such as the account not being in the name of the law firm you are supposedly dealing with either at all or by some variation.

  11. If you become concerned, you should consider checking some of the above points yourself. Because of the possibility of the theft of the identity of a genuine solicitor, it is worth trying to speak to the solicitor concerned. For example, if the solicitor is supposedly at one particular office but is also based at a head office of the firm, you could speak to the head office preferably after verifying its genuine nature, perhaps by contact with the senior partner.

  12. You should check the Find a solicitor website since there are sometimes bogus law firms which have not sought registration with the SRA and will not appear there; but bear in mind also that the nature of identity theft is that fraudsters may have obtained some form of registration by fraudulent misstatement to the SRA and therefore an entry on Find a solicitor should not be taken as verification that the firm is genuine.

  13. Do not assume that the SRA or the Police can take direct steps to protect your firm. We each will do what we can although we will be focused on fraud prevention and you must not exclude the possibility of urgently seeking an injunction particularly if you are in possession of the most direct evidence and indeed if action is required very urgently. In such circumstances, we will seek to assist as much as we properly can in light of the evidence and any order of the court.

Notes

  1. These do not necessarily individually establish a serious problem but are factors to be considered.