The Solicitors Regulation Authority (SRA) is investigating the collapsed PM Law Group, consisting of 11 companies and 25 offices across the UK, over the “improper removal and misuse” of £39.5 million of client funds.

Sheffield-based PM Law, which specialised in personal injury, wills and conveyancing, closed without warning on 2 February this year, not even telling the 600-strong workforce, who found out they were out of a job via notices posted in the windows of the firm’s premises.

A spokesman for the SRA said that the regulator is doing all it can to support former clients of PM Law, adding that many of these clients faced “significant upheaval at a stressful time”, as 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.

The SRA said that its intervention into PM Law has involved 25,000 emails and letters and 17,000 inquiries.

As of 17 April, 92 claims totalling £9.31 million had been paid to former clients from the SRA Compensation Fund.

PM Law paid out a further £6.8 million from the funds it held at the time of the intervention and returned 9,300 files to clients.

The SRA estimates that more than £21 million of claims have been made to the Compensation Fund so far.

Roger Isaacs, Forensics Partner at Milsted Langdon, said: “The sheer number of claims and the figures involved here are astonishing. Allegations of client money being misused on this scale are bound to be concerning for the public, who trust firms with their money and may now be left wondering how something like this could happen and if it could happen to them.

“Client money is supposed to be ringfenced and subject to strict oversight, so it is difficult to understand how suspected issues of this magnitude could have developed without warning signs appearing much earlier.

“If these allegations are found to be true, serious questions will need to be asked about what role was played by the firm’s auditors who will have had to have reviewed the operation of the firm’s client account.

“For funds to be missing on this scale certainly suggests that there may have been deliberate misappropriation of funds by those in control of the firm.  No doubt the SRA will next consider whether there is any prospect of recovering monies that may have been stolen. If recovery action is to be taken, a full forensic accountancy review will almost inevitably be required.”

Sources: BBC News