Conveyancing and the case for reform
12 December 1995
I am labelled an outspoken critic of the proposals fronted by John Edge for the introduction of a minimum fee scale for conveyancing (The Lawyer, 14 November). Yes, I am against the proposals but I am also totally in favour of good quality conveyancing being carried out for much greater reward than it is currently possible to obtain.
It should be noted that although conveyancing accounts for about 10 per cent of gross fee income to the profession, it results in almost 55 per cent of claims to the Solicitor's Indemnity Fund and Compensation Fund.
In 1993, the Law Society became concerned about the effect the stalled property market was having on conveyancing and convened a working party to look at conveyancing services. The group produced a report, Adapting for the Future.
Unfortunately, despite a request from the then president Rodger Pannone for the profession to respond because of the paper's importance, only 329 firms did so, of which 236 firms opposed all changes proposed.
At a Law Society Council meeting in December 1994 the property and services committee decided to take no further steps towards banning joint representation of borrower and lender.
Unfortunately, the question of joint representation became the focus of the report and as a result the issue was sidelined.
The report emphasised the implications of the change in the domestic conveyancing market and the consequences on conveyancing for many high street law firms. It said if conveyancing could no longer support such firms, then the structure of many practices could no longer be sustained.
Of particular interest and relevance to the current argument was the third chapter of the report, 'The control of conveyancing prices'. Scale fees were abolished in 1972 but by 1993 some practitioners had pressured the Law Society to re-establish them, with government support, through the Solicitors Remuneration Order. However, the Government would not support this move, so the issue was dropped.
Other alternatives suggested in 1993 included making a Practice Rule, the introduction of a recommended scale of fees by the Law Society, and action by law societies to determine a band of charges within which all firms would be required or advised to set their fees. But the adoption of any of these suggestions would have resulted in an immediate request from the Director General of Fair Trading, using his powers under the Fair Trading Act 1973, for an undertaking to withdraw any arrangement covering conveyancing prices.
In the absence of an appropriate undertaking the matter would be referred to the Monopolies and Mergers Commission for investigation. The Law Society was advised it would be hard to persuade the MMC that any of the three options were in the public interest. The OFT said it was not concerned with the level of fees charged by solicitors provided there was no collusion between firms in the fixing of minimum charges. Adoption of any of the three proposals would contravene this ruling.
If the council wanted to restore scale fees by making a Practice Rule it would have to demonstrate that it had acted in the public interest. This would also require the consent of the Master of the Rolls. And as such a measure would deal with low charges rather than over-supply it was considered that some solicitors would still undercut the scale fee to attract more business.
Adapting for the Future also recommended the introduction of a conveyancing quality mark. This is an excellent idea which would reduce the supply of conveyancing and increase the charge for it. The suggestion was that any solicitor who, despite being qualified, practised conveyancing for reward and did not have a conveyancing quality mark would not be covered by insurance. Also, any lender who included on its panel a solicitor who did not have the conveyancing mark could not claim negligence or fraud against that solicitor.
Until such a standard is introduced the Law Society should emphasise that firms which disregard mortgage lenders' instructions and good conveyancing standards would have to repay to the SIF and the Compensation Fund any sums claimed by the lender client or the general public client.
For the past two years some of us have been saying that conveyancing practices have to change and it was a great shame that Adapting for the Future received such a poor response because so much of its contents should have been implemented.
The introduction of a Practice Rule is not the right way forward. Stamping out negligence and law breaking and introducing a good quality service is what is needed and this is perfectly possible to achieve.
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