Lawyers face levy to pay for mortgage fraud claims

SOLICITORS are facing a special levy for the second year running to pay for a massive rise in dishonesty.

Last June, the Law Society demanded a levy of pounds 1,000 per partner to boost the profession's compensation fund. However, officials are warning that a payment of at least as much again will be required in 1993, largely as a result of a growth in mortgage fraud.

Figures released at the Law Society's national conference last week showed that grants paid out of the funds are likely to rise from pounds 11.7m in 1991 to more than pounds 14m this year. In 1986, grants amounted to less than pounds 2m. Other statistics show that pay-outs have increased fivefold in real terms over the past 20 years.

The decision to request a special levy in June sparked a vigorous debate over the role of sole practitioners, who are responsible for most pay-outs from the fund. The Law Society demanded tighter controls on sole practitioners, some of whom expressed fears that there would be a backlash against them.

But Law Society officials insisted last week that larger practices were still willing to back sole practitioners, emphasising the theme of the Birmingham conference: One Profession.

Single-practitioner firms pointed out that they were not the only lawyers guilty of mortgage fraud, which the police estimate to be worth about pounds 1bn a year.

A paper drawn up by the Law Society attempts to offer firms guidance in detecting fraudulent colleagues. 'Do you have colleagues who regularly get in early, stay late at the office and never take holidays?' it asks. 'Do you know someone with a dependency problem on such as alcohol or gambling? Is it you?'

A senior policeman in the Metropolitan Police fraud squad told a seminar on conveyancing that solicitors are tricked by mortgage fraudsters because they overlook the 'basic, the trivial and the obvious'.