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-reporting2 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
1
Fraud Advisory Panel, 2013, Obtaining redress and improving outcomes for victims of fraud, p4
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
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The Scottish Legal Aid Board
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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
5
Fraud Advisory Panel, 2013, Obtaining redress and improving outcomes for the victims of fraud, p5
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
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The Scottish Legal Aid Board
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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
1 (low) –
5 (high)
Fraud:
compensation
1
Reports of actual
instances
of
problems
with
access
1 (no reports) –
5 (consistently
reported systemic
access problems)
1
Exposure
[Probability
Reports]
x
1–4 Green
5-14 Amber
15-25 Red
1
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-highlightfraud-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.
The Scottish Legal Aid Board
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Questions
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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
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CIFAS
Fraud Advisory Panel
COPFS
Action Fraud
SCOTSS
Citizens Advice Scotland
The Scottish Legal Aid Board
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