Solicitors caught up with Russian mafia, regulator warns

Criminality within the solicitors’ profession has reached the level where the Russian mafia have become involved, it emerged yesterday.

In a startling revelation, the Solicitors Regulation Authority (SRA) said that as it has modernised its approach and applied the necessary resources, “we’ve uncovered very significant levels of misconduct in firms, extending up to and including dishonesty, money-laundering and other criminality”.

SRA executive director Samantha Barrass said: “These include, just at present, multi-firm frauds involving multi-million pound overseas investment funds, multi-firm conveyancing frauds, and money laundering involving the Russian mafia.”

Further, she said, the SRA’s financial stability exercise has “led to the discovery of the high prevalence of poor and dishonest behaviour in firms experiencing financial difficulty”.

Ms Barrass explained: “With the impact of greater competition we are seeing a significant number of failing firms in the lower and middle tiers of the profession. Where we have had to intervene, it’s difficult to think of a case where we have not had to follow up on the conduct of at least one member of the firm.”

At the same time, the SRA has seen its early engagement with troubled law firms reduce the number of interventions, which typically cost £70,000 but can be much more for larger firms – had the SRA needed to intervene in Cobbetts, for example, it would have cost around £6m.

Ms Barrass said that in the years prior to 2009 there were typically around 80-90 interventions a year. In 2010 and 2011 this number reduced to around 60 and in 2012 it dropped again to 37.

“By working with firms proactively we’ve managed to oversee pre-packs, takeovers or orderly wind-down of many firms,” she said.