Law Firms Warned on Debt Recovery

SRA  is now dealing with ensuring law firms, involved with debt recovery work, have proper control over what is being done in their name. Many law companies dealing with this matter have been warned, as the authority has noticed that cases, where solicitors working with debt recovery companies are in danger of breaching the Code of Conduct have increased.

Solicitors, dealing with two different cases, who failed to maintain their independence have been handed out fines and costs orders, counting over £140,000. Many other law firms have received a warning note, letting them know advising firms on putting their independence at risk, or being involved in overly aggressive or misleading correspondence

David Middleton, SRA executive director for post-enforcement, said: ‘While we are committed to working constructively with firms, we will take enforcement action against regulated persons who fail to address the issues and risks associated with debt recovery work. We expect firms to ensure they supervise all work their name is attached to.’

The first case referred to a solicitor, working with a debt recovery company, whose nature of arrangement was found irresponsible and resulted in a breach of his duties. The solicitor was fined £40,000 and ordered to pay costs of £35,000.

In our opinion, it is very important to have all necessary legal documents in place, and what is more, in cases like this it is advisable to request a document, drafted especially for you.

In the second case, the relationship between the solicitor and the debt recovery company was compromising his integrity and independence. The arrangement meant the solicitor had recklessly misled the court by facilitating the conduct of litigation by the debt recovery company.The solicitor was fined £15,000 and ordered to pay costs of £50,000.