Up to £39.5 million of client funds have been ‘misused’ following the shock closure of Sheffield based-law firm Proddow Mackay.

According to the Solicitors Regulation Authority, the ongoing invesitgation is one of the largest and most complex everr undertaken.

A spokesperson for SRA said: “We can confirm that our ongoing investigation into the PM Law Ltd involves a sophisticated suspected fraud, involving the improper removal and misuse of around £39.5 million of client funds.

“The intervention into PM Law is one of the largest and most complex ever undertaken. The PM Law group was made up of 11 companies, 25 offices and more than 30 trading names spread across Yorkshire, Cumbria, Berkshire, Derbyshire and London.

“We are continuing to contact and support thousands of former clients of PM Law impacted by the firm’s sudden closure.”

The Sheffield branch, located on Shepcote Lane, was closed down on February 2 which abandoned many clients in the middle of ongoing cases and left hundreds of employees out of work.

Steven Jolly, 70, retired teacher formerly from West Yorkshire, was one of the many clients to PM before the closure.

In response to this new update he said: “On hearing that PM Law have misused £39.5m of client funds, I am left feeling dumbfounded that regulations could be so poor that solicitors can abuse their customers to such an extent. Clients have been let down enormously.

“In regards to my case I am feeling more optimistic now. My SRA caseworker had recommended that we are reimbursed for our losses. It is reassuring that they are close by looking at each claim and giving a considered reply.”

Mr Jolly had been in connection with PM Law for 10 months with PM property lawyers acting for him and his partner in regards to the sale of their purchased house.

In February Mr Jolly said: “The closure of the firm was discovered by chance when I received a bill with interest for Stamp Duty from HMRC . This has resulted in my wife and I being out of pocket by over £2200 as we paid the bill to avoid further penalties. PM Property Lawyers were meant to have paid it.”

The Solicitors Regulation Authority (SRA) intervened after the closure, prioritising applications to fund with the highest demand.

A spokesperson for SRA said: “Intervention into PM Law had been one of the largest and most complex it had ever undertaken, involving 25,000 emails and letters, and 17,000 inquiries.

“We are continuing to handle hundreds of further claims to our compensation fund. The total value of these potential claims to-date, including those already paid out, is an estimated £21.52m. This figure may increase further if, and when, more applications come forward.”

Paul Hastings, SRA Director of Client Protection said: “We are continuing to do all we can to support former clients of PM Law, including by reuniting them with their money or files.”