Case can now go to trial
The Law Society of England and Wales has failed to strike out a negligence claim after a “fraudster” and a bogus law firm appeared on its ‘Find a Solicitor’ (FAS) search function.
The Court of Appeal, upholding an earlier ruling, rejected the Law Society’s application for summary judgment and/or for the claim to be struck out due to what Lord Justice Beatson described as the “fact-sensitive” nature of the case.
Schubert Murphy, a now defunct North London outfit, was in 2010 instructed to act for a purchaser in a property case. The firm was told ‘John Dobbs’, a lawyer at ‘Acorn Solicitors’ in Rotherham, was representing the vendor. In fact, John Dobbs was a fraudster who had stolen the identity of a retired solicitor and Acorn Solicitors was not a legal outfit.
A partner at Schubert Murphy decided to check the FAS database, which enables members of the public to search for the names of solicitors, their qualification dates, their firms, and more. Incredibly the fake details of John Dobbs and his sham outfit were listed. Money was transferred to the fraudster, and Schubert Murphy has now claimed damages for negligence.
Schubert Murphy, which says it’s no longer trading because of the incident, argues that the Law Society owes a duty of care to solicitors and others who use its FAS facility. Furthermore, it claims it was not able to benefit from the Law Society’s compensation fund because the sham solicitor was not an actual solicitor.
Despite Mr Justice Mitting siding with Schubert Murphy at first instance the Law Society appealed, arguing that regulators do not generally owe a duty of care in these scenarios.
Rejecting the appeal, Beatson said that the Law Society had “specifically encouraged” the use of its FAS system and had failed to recommended that users undertake “any other checks”. Beatson, joined by Master of the Rolls Sir Terence Etherington and Lady Justice Gloster, continued:
By choosing to provide the facility, and in the light of the nature of the facility… I consider that it is arguable that the actions of the Law Society, which has control over the registration of solicitors, created the risk that it would be relied on and the opportunity for fraud.
He continued: “The determination of whether a duty arises in the present circumstances is fact-sensitive. It requires the answers to several questions which cannot be determined without further inquiry into the facts.” These include: whether the relationship between the parties was sufficiently proximate, and the wider purpose and consequences of imposing a duty in these circumstances, or not.
He concludes that a full trial is a “more appropriate forum” for these questions to be considered.
A spokesperson for the Law Society said:
We note the judgment and will be considering it in detail over the coming days. It would be inappropriate for us to comment further at this stage.
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