SRA Compensation Fund Claims: A Complete Guide
Introduction
The SRA Compensation Fund may provide financial redress where money has been lost because of a solicitor's dishonesty or failure to account for client funds.
This guide explains:
What the Compensation Fund is
Who can apply
The types of losses that may qualify
How applications are made
How claims are investigated and decided.
The Compensation Fund is governed by the Compensation Fund Rules and operates on a discretionary basis. It is not a substitute for professional negligence litigation and not every loss involving a solicitor will qualify.
What Is the SRA Compensation Fund?
The Compensation Fund is administered by the Solicitors Regulation Authority and is funded by contributions from regulated solicitors and law firms.
Its purpose is to provide a potential source of redress where clients and others suffer financial loss arising from solicitor dishonesty or failures to account for money received. The Fund is distinct from professional negligence insurance.
Negligence claims concern acts or omissions in legal work. Compensation Fund claims typically concern missing money.
Examples include:
Misappropriated client funds
Missing completion monies
Estate assets that cannot be accounted for
Trust funds that have disappeared.
Money lost following an SRA intervention.
A successful application is not automatic. Each claim is assessed individually under the Compensation Fund Rules.
Who Can Apply?
Potential applicants may include:
Clients
Executors and personal representatives
Beneficiaries
Trustees
Businesses.
The key issue is not the identity of the applicant but whether the loss falls within the Compensation Fund Rules.
When Can a Claim Arise?
The most common Compensation Fund claims involve Solicitor dishonesty.
Examples include:
Theft of client money
Diversion of estate assets
Misappropriation of trust funds
False accounting
Failure to Account
A claim may also arise where money received by a solicitor cannot properly be accounted for.
Examples include:
Missing completion monies
Undistributed settlement funds
Unexplained client account shortages
Missing estate assets
SRA Interventions
Claims frequently arise after the SRA intervenes into a solicitor's practice and discovers accounting deficiencies or missing client money.
Insolvent or Closed Law Firms
Where a firm has ceased trading, entered insolvency or has no realistic means of repaying clients, the Compensation Fund may provide an important route to recovery.
What Losses May Be Recoverable?
Common categories include:
Client Money
House purchase deposits
Completion funds
Settlement monies
Client account balances
Probate and Estate Assets
Sale proceeds
Estate funds
Inheritance monies
Trust assets held within estates.
How Do I Make an Application?
A strong application normally contains evidence that the money existed, evidence that the solicitor received it, evidence that the applicant was entitled to it, evidence that the money cannot be accounted for.
A clear chronology can also assist in explaining how the loss arose.
How Does the SRA Decide Claims?
The SRA may review financial records, intervention files, regulatory material, correspondence, probate and trust documentation.
Further enquiries are common and applicants may be asked to provide additional information.
The decision-maker will assess whether the loss falls within the Compensation Fund Rules.
Can I claim if my solicitor stole my money?
Potentially yes. Dishonesty is one of the principal circumstances in which Compensation Fund claims arise.
Can I claim for missing inheritance money?
Possibly. Executors and beneficiaries may be able to claim where estate assets have been misappropriated or cannot be accounted for.
Can I claim if a law firm has closed down?
Potentially. Closure or insolvency of a firm does not prevent a Compensation Fund application.
Do I need a solicitor?
No. Yet prudent and strategic legal advice can often make the difference in terms of how the claim is understood, the underlying evidence, and the persuasive force of any such application. It is sensible and often proves necessary to have taken legal advice.
How long does a claim take?
There is no fixed timescale. The duration will depend upon the complexity of the claim and the evidence required.
Can I challenge a refusal?
Depending on the circumstances, review procedures or public law remedies may be available. It is prudent to obtain legal advice before making a claim, because a strategic application can only be protective of any further claim.