A suspected £39.5 million fraud by a northern law firm – which owned Cumbria’s Butterworths Solicitors – is being investigated.
Butterworths branches across the county – owned by Sheffield-based PM Law Group – closed suddenly on February 2.
Posters were put up at branches, including those in Cockermouth, Carlisle, Penrith, Kendal and Hensingham, saying: “Due to regulatory matters, the PM Group businesses carried out in within this building can no longer trade.”
The Solicitors Regulation Authority, which monitors law firms to make sure they are complying with the rules, launched an immediate investigation.
Today, April 17, it said its investigation involved a sophisticated suspected fraud, involving the improper removal and misuse of £39.5 million of client funds.
The intervention into PM Law was one of the largest and most complex ever undertaken by the authority, it said.
PM Law group was made up of 11 companies, 25 offices and more than 30 trading names spread across Yorkshire, Cumbria, Berkshire, Derbyshire and London.
The regulator is continuing to contact and support thousands of former clients of PM Law impacted by the firm’s sudden closure.
As of April 17, support given so far includes:
- 92 claims, totalling £9.31 million, have been paid to former clients from the SRA Compensation Fund
- A further £6.8 million has been paid out from money held within the firm at the time the SRA intervened1
- 25,000 emails or letters have been sent to people identified from the seized files as having live matters
- 17,000 enquiries have been dealt with
- 9,300 live files have been returned to clients (with a further 20,000 transferred in bulk to insurer clients)
The authority said it was continuing to handle hundreds of further claims to its compensation fund.
The total value of these potential claims to date, including those already paid out, was an estimated £21.52m, it said.
The figure may increase further if, and when, more applications come forward.
The regulator has introduced a prioritisation schedule for processing applications to the fund, this applies to claims linked to both PM Law and any wider applications relating to other law firms.
Under the schedule the order in which claims are dealt with will be based on the risk of harm faced by those making them.
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.”
To help support former clients the authority said it had moved extra staff into its compensation fund team.
It added that the regulator’s intervention agents were also continuing to work round the clock, including weekends, to handle client queries.
