The costly curse of the shoddy conveyancer

While only a quarter of solicitors offer conveyancing services, claims against them for poor work account for 55 per cent of claims to the Solicitors Indemnity Fund.

Worse still, two thirds of the total value of SIF claims are paid out in relation to poor work by residential, commercial and property and mortgage solicitors. And with solicitors now facing an extra SIF bill of £454.5m following an over optimistic forecast by the fund, the future looks bleak.

The situation has sparked growing resentment and anger from within the profession towards what Law Society vice-president Phillip Sycamore labels “unrepentantly incompetent solicitors”. Yet despite the strong words, so far there has been little political will to solve the problem and there is still no consensus on a solution.

The last concerted attempt to tackle the issue was in 1995, when the then president, Martin Mears, and vice president, Robert Sayer, attempted to exclude solicitors who charged cut price fees from the fund on the grounds that it was the cheaper conveyancing practitioners who were causing all the problems.

The move prompted a bitter debate within the Law Society, with several members of the council claiming that the plan would penalise those firms who could charge lower fees because they were more efficient.

The plan was ditched when external consultants warned that no outside insurer would touch conveyancing solicitors. There was also growing speculation that the Master of The Rolls, Lord Bingham, would not approve such a plan

In December 1995, the proposal was included in a consultation paper which appears to have disappeared without trace.

Robert Sayer, still vice-president, then took a second stab at the issue. He proposed that conveyancing solicitors should pay a separate premium of up to £200 on every conveyancing transaction deal, in effect establishing a separate SIF fund for conveyancing work.

The policy quickly floundered amid similar objections to those voiced over Mears' and Sayer's first idea.

The Law Society has now embarked on its latest bid to tackle the problem – a task force comprised of council members and independent practitioners from a variety of fields.

Tim Readman, chair of the sole practitioners group and a member of The Law Society Indemnity Insurance Review Group, suggests shoddy solicitors should be rooted out and thrown out of the profession. “You can no longer expect people with excellent records to go on paying for the sins of others.” he said.

But Richard Hegarty, chair of the Law Society's property and commercial services committee, warns such a policy would be fraught with difficulties. “You are talking in terms of 60 per cent of all firms having had a claim against them,” he said.

Hegarty believes the key to solving the problem is tackling the lenders. He points out that while 65 per cent of SIF pay outs relate to conveyancing claims, 70 per cent of that money is going to the lenders.

He said lenders have often taken on financially high-risk clients and then later successfully blamed solicitors for not warning them of the risk. “We have got to stop the banks using our funds to underwrite their lending,” he said.

So far, this has proved immensely difficult. A set of Standard Mortgage Instructions, which would set the terms of engagement between lenders and solicitors, was recently put on hold by the Office of Fair Trading, which was concerned about inclusion of fixed fees for solicitors in the proposed package.

Hegarty says negotiations to get around the problem are, “in the balance.” But while the profession grapples with the problem, the private sector is ready to step in.

London & European Title Insurance Services, with the backing of Guardian Insurance, is offering a mortgage title insurance which they say would see the private sector assume the risk for poor conveyancing work.

Sceptical solicitors say any private sector insurer would soon come running back to the SIF if costs for clumsy conveyancing spiralled. Yet as dozens of firms say they face financial ruin if their SIF contributions continue to increase, the time for scepticism, debate and division is fast running out.