Monitoring of Legal Services – Other – Compensation for Fraud
The Scottish Legal Aid Board (SLAB) was given a role in monitoring the availability and accessibility of legal services in the Legal Services (Scotland) Act 2010. Our role is to ascertain whether people or organisations are experiencing systemic problems getting the help they need from solicitors, whether paid for by legal aid or on a private basis.
This paper sets out data collected in relation to compensation for fraud, and SLAB’s initial assessment for the purposes of its monitoring duty. The paper is intended to address the availability of legal services for fraud compensation specifically, rather than for fraud generally (e.g criminal defence services in fraud cases).
Feedback will help us to develop our overall understanding of possible problems with access to solicitors for the area of fraud compensation.
Overall context for legal services and compensation for fraud
Fraud is an offence which can result in significant costs for victims. As such, compensation for losses may be a primary goal for victims seeking advice or support.[1] Fraud can take a range of forms (for instance mail order scams, identity fraud, or large-scale financial fraud), whilst victims of fraud can also be of varying types (for instance individuals, businesses of various sizes, charities, and local or central government). The type of advice (including legal service) required may vary accordingly.
The overall level of fraud in Scotland is unclear and to some extent difficult to measure (due to under-reporting[2] and the lack of a single definition of fraud).[3] In addition, there appears to be little data available which outlines the overall volume of compensation actions: it is therefore difficult to draw clear links between the overall levels of fraud, the probable volume of compensation actions, and likely demand for legal services in this area.
Whilst fraud is a criminal offence, there may be opportunities for civil legal action to be taken by victims, particularly in relation to compensation. Criminal and civil actions may be taken in tandem, or civil litigation can be pursued where a criminal prosecution is not taken forward. A report by the Fraud Advisory Panel (regarding UK-wide fraud) suggested that the ‘high overall attrition rate’ among criminal fraud cases has lead to a growing need to pursue civil actions where possible.[4]
The Fraud Action Panel note that there are a variety of non-criminal options available for those seeking fraud compensation, including civil litigation and asset recovery, and insolvency proceedings where appropriate.[5] More broadly, we expect that there is a relatively broad range of organisations which victims of fraud can approach for support and advice, and that some cases (e.g credit card fraud, where the victim may be able arrange compensation from their bank) may not require the victim to approach a third party at all.[6] It could be concluded that there is wide range of support for victims of fraud including both traditional legal avenues and wider support and advice, though the National Fraud Authority has noted that ‘the plurality of bodies involved does also create challenges in reporting for many victims,’ with the quality of advice provided also varying significantly.[7]
Role of solicitor services
Desk-based internet research suggests that there are few Scottish firms dealing specifically with fraud compensation. In terms of the overall role of solicitors in this area, given that ‘many frauds are never investigated, and even fewer ever make it to court,’[8] the overall volume of work done in this area by solicitors and/or advocates may be relatively small.
There is no civil legal aid code which relates specifically to applicants who are seeking compensation due to fraud. Whilst legal aid is not available for small claims, the Fraud Action Panel nonetheless suggested that ‘the small claims track can offer a low cost and effective option for some.’[9] As with the other areas of law in which the small claims procedure can be utilised, we do not expect that solicitors play an important role in small claims actions relating to fraud compensation.
In terms of privately-funded legal services in this area, the Fraud Advisory Panel suggests that civil actions tend to be utilised primarily in high value cases, noting that fraud litigation specialists tend to have few small businesses or individuals (unless they are ‘high net worth’) amongst their clients. The Panel also suggests that ‘losses must exceed £30k at the very least, and more realistically £100k before a private sector fraud specialist will take a case,’ [10] concluding that ‘it seems likely that only a small proportion of fraud reported to Action Fraud would be amenable to civil (ie non criminal) litigation and asset recovery.’ [11]
This may suggest that legal services in this area are utilised primarily by larger businesses, and those individuals with sufficient funds and high-value claims. The firms involved may be accordingly large, with specialised asset recovery teams to act in such cases.
Geographic Coverage
As suggested above, given the lack of data (including legal aid-related) which we currently hold on the links between overall levels of fraud, reported fraud, and the number of compensation actions, we are reluctant to draw any conclusions about the availability of legal services in relation to urban/rural factors in Scotland Whilst there have been some suggestions made about particular fraud ‘hotspots’ in Scotland, we do not hold information on whether legal services in relation to compensation are also concentrated in specific locations.[12]
Reports of problems with access to solicitors
We have noted above the lack of information available on the volume and distribution of fraud compensation actions. In terms of problems relating to legal services in Scotland, we have no data available to us, nor reports made to us which suggest that the existence of a systemic access problem in the area of compensation for fraud, in general terms. We have not been made aware of any specific instances of problems in this area.
Overall summary of the availability and accessibility of legal services
We expect that for compensation arising from fraud, there will be legal services available primarily on a private basis, and focussed primarily on the top-end, high-value market, particularly for larger businesses. There may be a relatively wide range of organisations which individuals and businesses can approach for assistance or advice. The market for legal services for individuals in this area may be somewhat smaller, and again, aimed mainly at clients with relatively high-value claims.
From the evidence available, our initial conclusion is that there is not a systemic problem with access to solicitor services, caused by issues with availability.
Probability that a systemic access problem is occurring / Reports of actual instances of problems with access / Exposure[Probability x Reports]
1 (low) –
5 (high) / 1 (no reports) –
5 (consistently reported systemic access problems) / 1–4 Green
5-14 Amber
15-25 Red
Fraud: compensation / 1 / 1 / 1
Questions
· Do you have any comments or information on the extent of demand for legal services in this area of law?
· What do you expect the extent of the private market for legal services is in this area of law?
· For individuals with a relatively low-value claim for fraud compensation (for instance people who fall victim to mail scams) would you expect there to be any significant role for solicitors, or would you suggest that most of these cases are resolved through alternative avenues?
· In terms of the firms operating in this area of law, do you expect that cases are concentrated in a few specialist firms, or spread more widely? In a more general sense, do you have any comments on the numbers and availability of solicitors with specific expertise in defamation law?
· Do you have any comments on the availability and accessibility of relevant legal services on a geographic basis? In particular, are appropriate legal services available in rural areas?
· Are you aware of any further organisations who we may wish to consult with regarding this area of law?
Consultees
· CIFAS
· Fraud Advisory Panel
· COPFS
· Action Fraud
· SCOTSS
· Citizens Advice Scotland
The Scottish Legal Aid Board 4
[1] Fraud Advisory Panel, 2013, Obtaining redress and improving outcomes for victims of fraud, p4
[2] CAS, 2011, Crimes of Persuasion, p13
[3] There are various estimates of the level of fraud available, measuring a variety of different types of fraud. For instance, Action Fraud states there were 2,718 Scottish cases reported to them between November 2014 and March 2015 (see http://www.actionfraud.police.uk/fraud-statistics); Scottish Government data notes there were 6,913 frauds reported to the police in 2014-15 (see http://www.gov.scot/Publications/2015/09/5338/downloads#res484777); at the UK level, CIFAS reported that ‘in 2014, there were 276,993 frauds recorded by their members (Fraudscape 2014); whilst a 2014 Citizens Advice Scotland report (Scammed and Dangerous) noted that the number of enquiries made about bogus selling rose by 14% in 2013-14.
[4] Fraud Advisory Panel, 2013, Obtaining redress and improving outcomes for victims of fraud, p4
[5] Fraud Advisory Panel, 2013, Obtaining redress and improving outcomes for the victims of fraud, p5
[6] For instance, for criminal proceedings victims could approach the Police, Crimestoppers, Procurator Fiscal services and Serious Fraud Office; whilst more broadly, bodies such as Trading Standards services, CIFAS, Action Fraud, and CABx may be able to offer advice.
[7] National Fraud Authority, 2009, Support for victims of fraud: an assessment of the current infrastructure in England and Wales, p12
[8] Fraud Advisory Panel, 2013, p4
[9] Fraud Advisory Panel report, 2013, p5
[10] Fraud Advisory Panel, 2013, p4
[11] ibid
[12] We note that CIFAS (Fraudscape 2014) have previously identified Glasgow as a fraud ‘hotspot’, and that an Experian analysis (http://www.experian.co.uk/blogs/latest-thinking/heat-maps-highlight-fraud-hotspots/) suggests that there are ‘more and more rural hotspots’ in the UK. However, as suggested above, we are not sighted as to the geographic distribution of compensation actions, and thus make no conclusion on the availability of legal services in terms of urban/rural factors for such actions.