Bogan and Dubow really are behind the times. Modern geological theory suggests that dinosaurs became extinct because of some sudden disaster to strike their habitat and not because of any difficulty they had in adapting to changing conditions. The link between the Solicitor Estate Agencies and the Compensation and Indemnity Fund is simple.
Setting up an estate agency business in a highly competitive property market is a risky commercial venture needing considerable capital and excellent business skills.
Leading City institutions have lost billions of pounds in recent years trying to become estate agents and Hambro Countrywide made a substantial loss last year on their pure estate agency business.
The two substantial defaults in Surrey arose because the Solicitor Estate Agencies were a commercial failure and solicitors were tempted to use client money to keep the businesses afloat.
If solicitors wish to venture into non-legal businesses, such as estate agency, they should be free to do so with as few restrictions as possible, and we wish them well. However, those of us who wish to stick to pure legal work should not be put at any financial risk if these businesses do not live up to the high promises made by Bogan and Dubow, and client money is thereby lost.
After all, when the Compensation Fund was established, it was never contemplated that it would be underwriting these types of commercial risks.
If being an estate agent is as easy as they make out, client money can be protected by fidelity insurance of other arrangements, leaving the Compensation Fund, in particular, backing only the more financially unadventurous of us. After all, we don't want to be hit, like the dinosaurs, by a sudden disaster.
Kingston upon Thames