A quarter of firms have also been targeted by cyber criminals
The Solicitors Regulation Authority is urging law firms – and the public – to be vigilant, with reports of bogus firms doubling since 2012.
In its annual Risk Outlook report the SRA cautions that bogus firms and cyber security continue to be widespread issues for the legal sector.
Bogus firm reports to the SRA has doubled since 2012 to more than 700 per year in 2014 and 2015, with almost half of those involving criminals copying the identity of an existing law firm. Bogus law firms can directly target the public, or genuine law firms with a view to deceiving them into sending money or information. Earlier this year the SRA launched a law firm search to help people confirm whether a firm is legitimate.
Paul Philip, SRA chief executive, said: “Many of the risks we are highlighting will be familiar to those in the legal sector. However, this does not make them old news – the challenges around areas such as cybercrime are changing rapidly and require constant vigilance. Well informed staff and good processes are just as important as antivirus systems in staying cyber secure.
“We want to see firms proactively making sure their clients are also aware of the risks in this area. For instance, we would recommend that people avoid sharing bank details over email, or transferring money before confirming the source of any request.
“We also know there are far too many people who either cannot afford, or choose not, to access legal services, with 63% saying they do not think legal advice is affordable. We are reforming the way we regulate to free up solicitors, and open up the market to healthy competition. We want providers to respond by playing their part in creating new, more affordable services that respond to the needs of the public and small businesses.”
A quarter of firms have also been targeted by cyber criminals, with nearly one in 10 attacks resulting in money being stolen. In the Risk Outlook, the SRA stress that firms must understand that protecting themselves is as much about people and training, as it is technology. Most cybercrime involves an element of trickery such as the use of fake emails or phone calls to access information such as passwords.
The report highlights one of the newest of these tricks, CEO fraud, where senior law firm figures are impersonated and staff, such as people in the accounts team, are ordered, often by email, to transfer money to pay an invoice. Such scams often take place on a Friday, so as to give the criminals more time to avoid detection.
Greg Bryce, managing director of SearchFlow, said: “The figures released by the SRA serve as another stark reminder of the growing risk of fraud that the legal sector is exposed to. SearchFlow is committed to offering world class solutions to protect conveyancers against the threat of fraud. Working with both lenders and law firms to provide the most effective solution to help reduce the risk, our clients, at no additional cost, can benefit from using Lender Exchange, a unique secure web portal that enables users to check the validity of not only a law firm but the account details of the law firm acting on the other side of the transaction. This initiative that has been driven by lenders’ desire to reduce risk and verify the law firms on their panels and has made great progress recently.
“The industry is now making great strides in helping combat fraud within the conveyancing sector. However, the challenges are changing rapidly and require constant vigilance. Often the weakest link in cybersecurity is the person using the PC, laptop, tablet or smartphone and there is a growing need for the industry to work together to educate not only professionals but homebuyers on best practices to stay safe online.”
Lender Exchange offers access to the largest set of verified conveyancing firms in England and Wales, equating to over 95% of the active conveyancing market and therefore offering the most comprehensive check on solicitor’s details in the market.
