Professional practice updates 2014

Professional Practice Updates December 2014

Land Registration etc.(Scotland ) Act 2012-Definition of Designation
New Scottish Standard Clauses
Update on Sheriff Baird's decision on the wording of Powers of Attorney

Updated information on Advance Notices
Draft forms for preparation of Advance Notice
Form for registering a notifiable Land and Building Transaction Tax transaction
CML Handbook Compliance Checklist
Vulnerable Clients Guidance
CML Lenders' handbook

Land Registration etc.(Scotland) Act 2012-Definition of Designation

The Professional Practice team has received a number of enquiries recently in relation to deeds which have been submitted to the Land Register for registration but which have been rejected on the basis that they did not include the correct designation of parties to the deed e.g. the registered office of a lender. We raised this with the Registers of Scotland who advised that this is a statutory requirement in terms of the definition of “designation” set out in Section 113 (1) of the Land Registration etc. (Scotland) Act 2012 [ http://www.legislation.gov.uk/asp/2012/5/section/113]

That must include, for non-natural persons, the legal system under which they are incorporated or otherwise established and, if a number has been allocated under the Companies Act 2006, that number. Accordingly, the applicant must provide the Registers of Scotland with that information either in the deed or on the application form failing which the application for registration will be rejected.

New Scottish Standard Clauses

The Scottish Standard Clauses, which are designed to represent a Scotland-wide approach to standard clauses for use in residential conveyancing transactions, are now available.  Please click here for a PDF for the registered extract.

Update on Sheriff Baird’s decision on the wording of Powers of Attorney

The Inner House of the Court of Session has heard a Special Case raised in respect of the validity of a continuing power of attorney in substantially the same form as that which was in doubt following the opinion of Sheriff Baird at Glasgow in the case of Application for guardianship in respect of W (13 May 2014). The court, which delivered its decision at the conclusion of the hearing on Wednesday 10 December, decided that the form of words used was valid. 

The form of words in both W and the Special Case was substantially as follows: 

“I, [name], residing at [address] appoint [attorney] to be my continuing attorney in terms of section 15 of the Adults with Incapacity (Scotland) Act 2000”. 

The Inner House was asked if the power of attorney was valid having regard to the provisions of section 15(3)(b) of the 2000 Act, which requires that the power of attorney incorporates a statement which clearly expresses the granter’s intention that the power be a continuing power. The court answered the question in the affirmative. 

The court also considered the requirements of section 15(3)(ba), which provides that where the continuing power of attorney is exercisable only if the granter is determined to be incapable in relation to decisions about the matter to which the power relates, the continuing power states that the granter has considered how such a determination may be made. PoA

The court decided that section 15(3)(ba) did not apply as that provision came into force in 2007, after the power of attorney which was the subject of the Special Case was granted in 2004. However, it observed that had the deed been granted today, 15(3)(ba) would not apply as the deed took effect on registration rather than upon incapacity.

The court confirmed that written reasons would follow separately in due course.

Updated information on Advance Notices

There has been some uncertainty as to when it is and is not appropriate to use an Advance Notice. Whilst this must be a matter for professional judgement according to the circumstances of the individual case, Professors Brymer, Gretton, Paisley, Reid and Rennie would suggest that, as a rule of thumb, an Advance Notice should be used where a classic letter of obligation would have been used, but that where a classic letter of obligation would not have been used one would not normally expect to see an Advance Notice. Accordingly, in the normal case the Professors consider that there is no need to request an Advance Notice in a dual representation scenario when the solicitor is acting for both the borrower and the lender.

Draft Forms for preparation of Advance Notice

Professional Practice has been receiving enquiries from solicitors regarding draft Forms for preparation of Advance Notice (which are prepared by the Seller’s Agents) and the revisal of them by the Purchaser’s Agents. The electronic facility presently available from Registers of Scotland does not allow a draft to be prepared and revised. Therefore the Property Standardisation Group has prepared styles which can be used as drafts until such time as the Registers have made the facility available. These drafts can be accessed from the following links:-

Advance Notice Application - First registration
Advance Notice Application - Part of Registered plot
Advance Notice Application - Whole of a Registered plot

Form for registering a notifiable Land and Building Transaction Tax transaction

Registers of Scotland advised that shortly anyone registering a notifiable Land and Building Transaction Tax transaction in the Books of Council and Session will require to complete the Books of Council and Session application form (the move will take effect by virtue of an order under s.67 of the Land and Buildings Transaction Tax (S) Act 2013 and is expected to be effective from 1 April 2015). This is a back-up for the keeper to help confirm whether or not a transaction was notifiable. Currently, there is no requirement to complete the form and only around 30% of applicants do when registering a document in the Books of Council and Session.  The Law Society was asked to advertise the change and encourage users to get into the practice of completing the form now.

Download the form

CML Handbook Compliance Checklist

The CML have issued a handbook compliance checklist which members should have regard to when acting for lenders in residential conveyancing transactions.

Revisals to Vulnerable Clients Guidance focusing on issues relating to young people

The Profession will be aware that the Society issued Guidance in relation to Vulnerable Clients and also Continuing and Welfare Powers of Attorney in 2013.

It is confirmed that The Vulnerable Clients Guidance will be adjusted from 1 December 2014 to confirm that it applies whenever a client or prospective client of whatever age may lack full capacity, whether having attained the legal age of capacity or not.

Paragraph 3 of the original Guidance has been updated to delete references to specific reports but continues to state both the scope and purpose of the Guidance.

The categories of situations set out in paragraph 20 of the Guidance have been well received by the profession and two further situations have been added focusing on issues that may be relevant to young people.

 

CML Working Party Update-Amendments to Lenders’ Handbook for Scotland-1 December 2014

The CML Working Party, which was established in November 2013 following the “no” vote against the separate representation of borrowers and lenders in residential conveyancing transactions at the Society’s SGM in September 2013, has been in negotiations with the CML with a view to seeking amendments to the Scottish version of the CML Handbook.

A number of amendments to the Lenders’ Handbook for Scotland were introduced on 1 December 2014 and we would draw members’ attention to the above noted summary of amendments.

 

Professional Practice Updates November 2014

Guidance on Land Registration Etc. (Scotland) Act 2012
Signing of advance notices by solicitors
The Scottish Arbitration survey

Guidance on Land Registration Etc. (Scotland) Act 2012

The implementation of the Land Registration etc. (Scotland) Act 2012 on 8 December 2014 (“the Designated Day”) will change many aspects of conveyancing practice.  The Property Law Committee has updated its guidance to cover the new statutory duty of care to the Keeper, the new criminal offence, where no or limited examination of title has taken place, notificaitons, pre-registration reports and Registers Direct.  This can be found at Section F Division C of the Society’s Rules and Guidance.

Practitioners are encouraged to familiarise themselves with the new guidance, and that published by the Keeper, in advance of the Designated Day.  The Keeper’s guidance is currently being added to and can be found at: 

http://www.ros.gov.uk/2012act/general_guidance.html

Signing of advance notices by solicitors 

Following consultation with the Property Law Committee, the Professional Practice department has issued advice and information on the signing of Advance Notices by Solicitors.

Read clause 32 of our Letters of Obligation and Advance Notices guidance

The Scottish Arbitration survey

This is a joint initiative by the University of Aberdeen, the Law Society of Scotland, and Burness Paull, supported by the Chartered Institute of Arbitrators and the Scottish Arbitration Centre, to collect data and report upon arbitration use, attitudes and trends.

Arbitration is a process for determination of disputes by an appropriate person of skill. The starting point to achieve a greater diversity for the use of arbitration, is an understanding of the particular needs of different end users. Those who choose arbitration as the appropriate method of dispute resolution are often non contentious lawyers and advisers, who advise clients on the appropriateness of an arbitration clause when entering into contracts. The views of all advisers, not just those directly involved in dispute resolution and arbitration, are therefore important, and invited in this survey.

The survey is open until 12 November 2014.

Take the survey now.

If you have any questions please email Derek Auchie, at the University of Aberdeen (d.auchie@abdn.ac.uk).

Professional Practice Updates October 2014

Lender Exchange Terms and Conditions Update

Guidance on Land Registration Etc. (Scotland) Act 2012

Update on Power of Attorney (PoA) Validity Issue

Updated Guidance on Letters of Obligation to Cover Advance Notices

Registers of Scotland to close before Designated Day

Lender Exchange Terms and Conditions Update

Since the Lender Exchange final Terms and Conditions were published in the professional practice section of the Society’s website on 30 July 2014 the Professional Practice Committee (“the Committee”) has considered the final Terms and Conditions and raised concerns in relation to Clauses 5.1 and 5.5 (the Law Firm’s Obligations). 

The Committee expressed concern in relation to Clause 5.1 as currently drafted which provides that the Law Firm is obliged to supply “data” in relation to the Firm and the Partners etc. Having supplied that data Clause 5.1 goes on to say that “Decision First shall not amend the Data inputted into the System by or on behalf of the Law Firm without notifying the Law Firm”. The Clause does not however say that Decision First will not amend the data without first referring the proposed data change to the Law Firm. It can simply change it and tell the Law Firm retrospectively that it has done so. Potentially this has very serious implications. These implications are exacerbated when taken in conjunction with Clause 5.5 as this provides that the Law Firm is solely responsible for the legality and accuracy of the data input into the System even though it appears that that data can be changed by Decision First without any input from the Law Firm. 

Following the Committee’s representations Decision First have given a general undertaking to review the Terms and Conditions and update them based on feedback from regulators and lenders where it is appropriate to do so. We understand that the amended terms will be issued as a global update to all firms who are registered with Lender Exchange as a broadcast message. 

Decision First have also confirmed that they will obtain consent from a Law Firm before making any changes to the data which the Law Firm has supplied. In the words of Decision First the reality is that this will only happen when firms ask it to change something that they cannot, as the system does not permit any of Decision First’s staff to amend data submitted by a Law Firm without involving IT and getting into the heart of the database. Decision First have advised that this is something they will only undertake as a last resort and with the permission of the firm/individual in question.

 

Guidance on Land Registration Etc. (Scotland) Act 2012

The implementation of the Land Registration etc. (Scotland) Act 2012 on 8 December 2014 (“the Designated Day”) will change many aspects of conveyancing practice.  The Property Law Committee has updated its guidance to cover the new statutory duty of care to the Keeper, the new criminal offence, where no or limited examination of title has taken place, notificaitons, pre-registration reports and Registers Direct.  This can be found at Section F Division C of the Society’s Rules and Guidance on the website. 

Practitioners are encouraged to familiarise themselves with the new guidance, and that published by the Keeper, in advance of the Designated Day.  The Keeper’s guidance is currently being added to and can be found at: 

http://www.ros.gov.uk/2012act/general_guidance.html

Update on Power of Attorney (PoA) Validity Issue

The last update was provided on Professional Practice Updates in August 2014 which can be found at the bottom of this article.
The Office of the Public Guardian have updated their website to say “Further to the opinion expressed by Sheriff Baird, which cast doubt on the validity of powers of attorney drafted in what is a standard form, the Public Guardian has instructed detailed legal advice on the most appropriate option to achieve clarity on this. The Public Guardian wishes a procedure which gives an opportunity for PoA validity issues to be fully explored.”
Further updates will be issued as soon as the information becomes available.

 

(August 2014) Powers of Attorney and Sheriff Baird's Opinion - Update

1. Current situation:- Sheriff Baird issued an Opinion in a case involving Clydesdale Bank to the effect that certain wording which followed a style provided by the Office of Public Guardian was not sufficient to constitute a valid continuing Power of Attorney and therefore such a Power of Attorney was invalid. Numerous other Powers of Attorney use the same style as the one which Sheriff Baird considers to be invalid.

2. The Office of Public Guardian (OPG) have issued a statement to us as follows:-

The Public Guardian has been made aware that the Clydesdale Bank has decided not to pursue its appeal against the decision of the Sheriff at Glasgow.  The Public Guardian is conscious that the decision raised a number of issues, including that of the validity of the power of attorney in question.  The Public Guardian is in the course of making an application to Glasgow Sheriff Court under s.3 of the Adults with Incapacity (Scotland) Act 2000 in order to obtain directions from the Sheriff on a number of those issues.  The Public Guardian does not expect to comment further while that application is pending.

3. The procedure to be followed by the OPG should give an opportunity for PoA validity issues to be fully explored.

4. Meantime, it is noted that Sheriff Baird is a Sheriff at first instance and that his Opinion is not binding authority on other Sheriffs.

5. Further updates will be issued as soon as the information becomes available.

6. Sheriff Baird's Opinion can be accessed from this link:-http://www.scotcourts.gov.uk/search-judgments/judgment?id=3d4d88a6-8980-69d2-b500-ff0000d74aa7

 

Updated Guidance on Letters of Obligation to Cover Advance Notices

The implementation of the Land Registration etc. (Scotland) Act 2012 on 8 December 2014 (“the Designated Day”) will change the current practice of granting letters of obligation.  The Property Law Committee has updated its guidance on letters of obligation to include the new Advance Notices regime, which can be found here.  Practitioners are encouraged to familiarise themselves with the new guidance in advance of the Designated Day.

 

Registers of Scotland to close before Designated Day

To facilitate the smooth transition to their new IT systems, Registers of Scotland (“RoS”) has confirmed they will need to take the Land Register and the General Register of Sasines, and the associated systems like Registers Direct and ARTL, offline on Thursday 4 and Friday 5 of December. This means that all applications under the 1979 Act need to be received by them by 4.30 pm on Wednesday 3 December. The Register of Inhibitions will remain open and searchable through RoS’ customer service centres, as will all other registers.
Further detail will be outlined on RoS’ 2012 Act website.

 

Professional Practice Updates September 2014

Lender Exchange Master Policy Implications

The Society’s brokers Marsh Limited have reviewed the indemnity provisions in the Lender Exchange Terms and Conditions in relation to the potential implications for cover under the master policy for professional indemnity insurance.

The Society wishes to express its thanks to Alistair Sim of Marsh for his assistance in preparing this note.

Read a summary of the position

Professional practice updates August 2014

Cyber Security Checklist

Lender Exchange Update - Final Terms and Conditions

Powers of Attorney and Sheriff and Sheriff Baird's Opinion - Update

 

Cyber Security Checklist

Stay safe online, on the phone and face to face

Following recent cyber attacks against Scottish firms the Technology Sub Committee has prepared the undernoted checklist which solicitors should consider.

Online

• Never give banking or personal details to anyone you don't know or trust. This information is valuable, so make sure you protect it

• Always log onto a website directly rather than clicking on links in an email

• Ensure your anti-virus, malware and firewall protection is up to date on all devices, from servers and PCs to tablets and smartphones

On the phone

• Always ask for the name of the individual you're speaking to and who they represent. Verify their identity with the company's head office on a different phone

• Never give out personal, credit or online account details over the phone unless you made the call and the phone number is from a trusted source

• It's advisable not to respond to text messages or numbers you don't recognise - they may be charging you at higher rates and receiving calls may be very expensive

Face-to-face

• Always ask for identification and remember you don't have to let them into your premises and they must leave if you tell them to

What to do if you have been scammed

• If you spot a scam or have been scammed, report it and get help. Contact Action Fraud on 0300 123 2040 or online. Contact the police if the suspect is known or still in the area.

Useful links, guidance and further information

Guide to banking online - Bank Safe Online provides advice and tips on using online banking securely and with confidence

Get Safe Online - Free expert advice, providing practical advice on how to protect yourself, your equipment and business against fraud, identify theft and the like

Microsoft Safety & Security Centre - Software Operating system Supplier providing targeted advice to Microsoft users

Action Fraud - UK National Fraud crime reporting centre

 

Lender Exchange Update - Final Terms and Conditions

Since the last lender exchange update issued on 3 July 2014, the Society has been advised by Decision First that the new conveyancing panel management system Lender Exchange, which is being facilitated by Decision First, will be launched on 4 August 2014. In the interests of openness and transparency, we attach a copy of the final Terms and Conditions we have received from Decision First and which were previously provided to us on a strictly confidential basis. We would draw members' attention to the legal advice which the Society obtained on the previous version of the draft Terms and Conditions which was published on 21 May 2014 and in particular the new amendments to the confidentiality and termination provisions. We would also remind members that by accepting the Terms and Conditions firms are bound by them and any applicable lender specific terms and conditions.

 

Powers of Attorney and Sheriff Baird's Opinion - Update

1. Current situation:- Sheriff Baird issued an Opinion in a case involving Clydesdale Bank to the effect that certain wording which followed a style provided by the Office of Public Guardian was not sufficient to constitute a valid continuing Power of Attorney and therefore such a Power of Attorney was invalid. Numerous other Powers of Attorney use the same style as the one which Sheriff Baird considers to be invalid.

2. The Office of Public Guardian (OPG) have issued a statement to us as follows:-

The Public Guardian has been made aware that the Clydesdale Bank has decided not to pursue its appeal against the decision of the Sheriff at Glasgow.  The Public Guardian is conscious that the decision raised a number of issues, including that of the validity of the power of attorney in question.  The Public Guardian is in the course of making an application to Glasgow Sheriff Court under s.3 of the Adults with Incapacity (Scotland) Act 2000 in order to obtain directions from the Sheriff on a number of those issues.  The Public Guardian does not expect to comment further while that application is pending.

3. The procedure to be followed by the OPG should give an opportunity for PoA validity issues to be fully explored.

4. Meantime, it is noted that Sheriff Baird is a Sheriff at first instance and that his Opinion is not binding authority on other Sheriffs.

5. Further updates will be issued as soon as the information becomes available.

6. Sheriff Baird's Opinion can be accessed from this link:-http://www.scotcourts.gov.uk/search-judgments/judgment?id=3d4d88a6-8980-69d2-b500-ff0000d74aa7

 

Professional practice updates July 2014

Powers of Attorney and Sheriff Baird's Opinion - Update

1. Current situation:- Sheriff Baird issued an Opinion in a case involving Clydesdale Bank to the effect that certain wording which followed a style provided by the Office of Public Guardian was not sufficient to constitute a valid continuing Power of Attorney and therefore such a Power of Attorney was invalid. Numerous other Powers of Attorney use the same style as the one which Sheriff Baird considers to be invalid.

2. The Office of Public Guardian (OPG) have issued a statement to us as follows:-

The Public Guardian has been made aware that the Clydesdale Bank has decided not to pursue its appeal against the decision of the Sheriff at Glasgow. The Public Guardian is conscious that the decision raised a number of issues, including that of the validity of the power of attorney in question. The Public Guardian is in the course of making an application to Glasgow Sheriff Court under s.3 of the Adults with Incapacity (Scotland) Act 2000 in order to obtain directions from the Sheriff on a number of those issues. The Public Guardian does not expect to comment further while that application is pending.

3. The procedure to be followed by the OPG should give an opportunity for PoA validity issues to be fully explored.

4. Meantime, it is noted that Sheriff Baird is a Sheriff at first instance and that his Opinion is not binding authority on other Sheriffs.

5. Further updates will be issued as soon as the information becomes available.

6. Sheriff Baird's Opinion can be accessed from this link:- http://www.scotcourts.gov.uk/search-judgments/judgment?id=3d4d88a6-8980-69d2-b500-ff0000d74aa7

Lender Exchange Update - Final Terms and Conditions

Since the last lender exchange update issued on 3 July 2014, the Society has been advised by Decision First that the new conveyancing panel management system Lender Exchange, which is being facilitated by Decision First, will be launched on 4 August 2014. In the interests of openness and transparency, we attach a copy of the final Terms and Conditions we have received from Decision First and which were previously provided to us on a strictly confidential basis. We would draw members' attention to the legal advice which the Society obtained on the previous version of the draft Terms and Conditions which was published on 21 May 2014 and in particular the new amendments to the confidentiality and termination provisions. We would also remind members that by accepting the Terms and Conditions firms are bound by them and any applicable lender specific terms and conditions.

Cyber Security Checklist

Stay safe online, on the phone and face to face

Following recent cyber attacks against Scottish firms the Technology Sub Committee has prepared the undernoted checklist which solicitors should consider.

Online

• Never give banking or personal details to anyone you don't know or trust. This information is valuable, so make sure you protect it

• Always log onto a website directly rather than clicking on links in an email

• Ensure your anti-virus, malware and firewall protection is up to date on all devices, from servers and PCs to tablets and smartphones

On the phone

• Always ask for the name of the individual you're speaking to and who they represent. Verify their identity with the company's head office on a different phone

• Never give out personal, credit or online account details over the phone unless you made the call and the phone number is from a trusted source

• It's advisable not to respond to text messages or numbers you don't recognise - they may be charging you at higher rates and receiving calls may be very expensive

Face-to-face

• Always ask for identification and remember you don't have to let them into your premises and they must leave if you tell them to

What to do if you have been scammed

• If you spot a scam or have been scammed, report it and get help. Contact Action Fraud on 0300 123 2040 or online. Contact the police if the suspect is known or still in the area.

Useful links, guidance and further information

Guide to banking online - Bank Safe Online provides advice and tips on using online banking securely and with confidence

Get Safe Online - Free expert advice, providing practical advice on how to protect yourself, your equipment and business against fraud, identify theft and the like

Microsoft Safety & Security Centre - Software Operating system Supplier providing targeted advice to Microsoft users

Action Fraud - UK National Fraud crime reporting centre

Update on Power of Attorney - Decision by Sheriff Baird

In the wake of legal opinion from Sheriff Baird, Sheriff of Glasgow and Strathkelvin who determined that the power of attorney considered by him was invalid , the Law Society of Scotland is advising solicitors to review the wording of powers of attorney document. Sheriff Baird found that the style of the power of attorney document used by the Clydesdale Bank in a particular case was not in accordance with section 15 of the Adults with Incapacity (Scotland) Act 2000.The power of attorney document used by the bank was in the style of those available on the Office of Public Guardian website and widely used.

We are aware that the Sheriff's decision is under appeal and will continue to keep members updated as we receive further information. In the meantime we are advising solicitors to review any power of attorney documentation they hold and consider whether they should alter the wording. In that connection we note that the Office of Public Guardian have placed additional News on their website to the effect:-

"19 June 2014 PoA additional wording

Following a recent opinion expressed by Sheriff Baird on the style PoA on our website, which is similar in its terms to that used by many Firms, our samples now contain additional wording. This clarifies, for the avoidance of doubt, that what was intended by the granter was the creation of a continuing power of attorney, notwithstanding the direct reference to section 15 which of itself creates a continuing power of attorney and notwithstanding the recall provision i.e. that the power of attorney remains in force until recalled in writing by the granter or otherwise until their death.".

The Society notes that the continuing power of attorney samples on the OPG website now include the words:-

"I declare that I intend that this power of attorney shall be a continuing one which shall continue to have effect even if I shall have lost capacity in relation to the matters in this deed.".

Members may wish to further peruse the new samples available on the OPG website.

Revisal to Guidance on Continuing and Welfare Powers of Attorney

The Profession will be aware that the Society issued Guidance in relation to Vulnerable Clients and also Continuing and Welfare Powers of Attorney in 2013.

The Guidance in relation to Continuing and Welfare Powers of Attorney has been further revised. In particular, Practitioners should consider, when dealing with instructions for Continuing and Welfare Powers of Attorney and the issuing of correspondence to proposed Attorneys, the terms of Rule B 2.1.7 as is highlighted within the Guidance. It is suggested that the appropriate course, where Solicitors when writing to proposed Attorneys, asking them to confirm their willingness to be appointed, that they should be advised of the fact that there are legal consequences arising from such an agreement and that they should consider taking independent legal advice, as per the terms of Rule B 2.1.7.

Practitioners who are writing to proposed Attorneys, requesting that they sign, or authorise signature of, the registration application form, should consider the proposed Attorneys are entering into a Contract of Mandate with the associated legal consequences and therefore, when writing to non-clients regarding such matters, Solicitors should comply with Rule B 2.1.7.

If Solicitors choose not to write in terms of Rule B 2.1.7, it is recommended that the Solicitor's file show why they chose not to do this.

Courts Reform Bill

We are pleased that the Scottish Government has agreed to lower the exclusive competence for cases to be heard in the Sheriff Court from £150,000 to £100,000 however we continue to have concerns that the limit is too high. We have suggested a limit of £50,000.

We welcome the idea that personal injury cases should be taken out of simple procedure in specialist injury courts but we wonder why  personal injury cases were not taken out of simply procedure in courts across Scotland.

Raising Concerns' Guidance

The Regulatory Committee identified risks around a lack of clear guidance for when solicitors have a duty to raise concerns about their work or that of other solicitors.

The Regulatory Committee considered the options for a rule or for guidance presented by an independent consultant.  After detailed consideration it was decided that we would issues guidance, monitor matters arising, and review in the future to see if guidance was being effective, or further thinking on a rule was needed.

The new guidance will be effective from 1 August 2014.

Lender Exchange Update

Since the last lender exchange update issued on 21 May 2014, the Society has had a productive meeting with Decision First who are facilitating the new conveyancing panel management system Lender Exchange.

The Society has highlighted a number of concerns raised by members with Decision First and we have been given assurances that we will be provided with the final set of the Terms and Conditions which we will publish in the interests of openness and transparency when we are able to.

We have been advised that Lloyds Banking Group and Santander will communicate with their panel firms within the next 3-6 weeks to notify them of the impending launch and the procedure for this.

Accordingly, members who are on the Lloyds Banking Group and Santander panels should be alert to the prospect of being contacted by these lenders and Decision First.

 

27 June 2014

Professional practice updates June 2014

Register of Insolvencies and Accountant in Bankruptcy

URGENT ALERT - Register of Insolvencies not up to date, and risk to solicitors and their clients 

Powers of Attorney - URGENT (30 May 2014)

Register of Insolvencies and Accountant in Bankruptcy (26.6.14)

Members will be aware from our previous intimation on the Website that a problem has been experienced with the Register of Insolvencies having network difficulties resulting in the Register not being updated since midnight on Thursday 19 June. This has impacted on settlement of conveyancing transactions. 

The Society can confirm that the problem now seems to have been resolved and the latest update from the Accountant in Bankruptcy reads:-

Thursday 26 June 2014 08:15

The network issues affecting the RoI have now been resolved. The data has been updated and the relevant files are available for download.

Apologies for any inconvenience


URGENT ALERT - Register of Insolvencies not up to date, and risk to solicitors and their clients (25.6.14)

The Society wishes to notify members of a current issue with the Register of Insolvencies which is run by the Accountant in Bankruptcy (an agency of the Scottish Government).  It is currently experiencing  considerable 'network problems' and is only up to date as at 20 June. A statement of the current position on the AIB website is as undernoted:-

Wednesday 25 June 2014 13:00

Network issues across Scottish Government continue to have an impact on the RoI . Our IT department have managed to get a version working, however, the data available is only up to date as of Friday 20th June. IT continue to work on the issue and will have it resolved as soon as possible.

AiB switchboard staff have no further details when the RoIl will be fully operational

Apologies for any inconvenience

The risk for solicitors and their clients is that up to date information from the Register of Insolvencies regarding whether (A) sellers have any entries noted against them in the Register of Insolvencies which would prevent the sale of a property from settling, or (B) purchasers have any entries noted against them in the Register of Insolvencies which would prevent their mortgage loans proceeding, is not available for the settlement of the transaction.

Although the Register of Insolvencies is stated to be up to date "as of Friday 20thJune" it is apparently the case that no information is available on the Register of Insolvencies after midnight on Thursday 19 June.

Notwithstanding the above, it is understood that information relating to bankruptcies is still being supplied to the Registers of Scotland and is then appearing on the Register of Inhibitions. Accordingly details of bankruptcies after midnight on Thursday 19 June are still appearing on the Register of Inhibitions although the Register of Inhibitions is only available to be searched a day later than the Register of Insolvencies.  Therefore the Register of Inhibitions would still appear to be "up to date". 

The position would seem to be that a bankruptcy which is registered on say Day 1 can be sent by the AiB to the Registers of Scotland on Day 1 and should arrive with the Register of Inhibitions on Day 2 and be noted by them. The entry in the Register of Inhibitions while received and noted on Day 2 will not be available to be searched against until Day 3. However, the entry in the Register of Insolvencies would normally be available to be searched against on Day 2, thus the one day difference between the Register of Insolvencies and the Register of Inhibitions.

As a result of this, the LSS consider that letters of obligation issued using the information in the Register of Inhibitions would still meet the criteria of "Classic" letters of obligation. The wording of our Guidance on this is:- 

"Is there anything needed to make the obligation classic apart from the actual obligation itself?

There are four conditions which must be complied with, where applicable.  These are:-

a search must have been carried out immediately prior to the date of entry including, in Sasine cases a search in the computerised presentment book.  The CML Handbook provides that the search in the Personal Registers be no more than three working days' old but in all other cases the Conveyancing Committee accepts that both Property and Personal Register searches can be up to seven days' old (five working days' old); In calculating the number of days, the Committee considers that you should count from the settlement date back to the date to which the Search is certified as being correct (as opposed to the date on which it was issued).".

The LSS cannot give legal advice to its members on this matter and it will be up to members to consider the position carefully in relation to any particular transaction. However, LSS does not feel that members would necessarily be in breach of their obligations to settle transactions on the basis of the Personal Search (search in the Register of Inhibitions) only, without the current additional benefit of the Register of Insolvencies. Hopefully the whole matter will be resolved shortly.


Powers of Attorney - URGENT (30 May 2014)

It has come to the attention of the Society that Sheriff Baird at Glasgow Sheriff Court has issued an Opinion holding that a Continuing Power of Attorney in favour of  the Clydesdale Bank was invalid on account of it failing to set out information required by Section 15 of the Adults with Incapacity (Scotland) Act 2000. Sheriff Baird's decision is understood to be  under appeal.

The style of Power of Attorney used by the Clydesdale Bank in the case, used similar wording to the style of Power of Attorney which is provided on the website of the Office of the Public Guardian.  The Sheriff has acknowledged in his Opinion, that the consequences of his decision could be that Powers of Attorney prepared in a style similar to that of the one in relation to which his decision was made, could be invalid and therefore of no effect during the granter's incapacity. This could have very serious implications for all solicitors, granters of Powers of Attorney, Attorneys, and members of the public, where the Power of Attorney has been prepared in a similar style.  The Society are considering the issue further, but in the  interim, members are advised to review and  consider whether they should alter the wording in Powers of Attorney prepared by them.

Members are also referred to:-

1. A Statement issued by the Office of the Public Guardian today which is in the following terms:-

This article brings to practitioners' attention a potential issue with the commonly used continuing power of attorney style raised within a recent opinion [1] of Sheriff Baird, Sheriff of Glasgow and Strathkelvin.

The Adults with Incapacity (Scotland) Act 2000 states that a continuing power of attorney shall only be valid if, inter alia, "it incorporates a statement which clearly expresses the granter's intention that the power of attorney be a continuing power"[2].  The majority of deeds submitted to the Public Guardian address this by narrative in the opening clause often akin to "person X to be my continuing attorney ("my attorney") in terms of section 15 of the Adults with Incapacity (Scotland) Act 2000" (the Act).   A "continuing attorney" is a person on whom a continuing power of attorney is conferred [3].

Section 15(1) is explicit that the power of attorney shall … continue to have effect in the event of the granter becoming incapable [in relation to decision about the matter to which the power of attorney relates].  A reference to section 15 has been treated by the Public Guardian as a clear statement that the granter intends the power to have continuing effect.

The Scottish Law Commission considered whether the clause which imparts a continuing power of attorney should be prescribed; they concluded that any words showing that the granter clearly intended the document to confer continuing authority should suffice [4].

In addition to the standard reference to section 15 there is often a 'recall clause' which expressly indicates that the document is to remain in effect until a recall in writing or until the granter's death - which has been treated as an express statement that the powers are to have continuing effect.

To date, a document so styled has been sufficient to satisfy the Public Guardian that the granter has offered a clear expression of their intention that the deed is to be a continuing power of attorney and thus that the statutory requirement is met. However, practitioners' attention is drawn to the divergent views on this matter in order that they can determine if a more explicit reference is required.

As with all judgements of this type, Sheriff Baird's opinion/decision is subject to appeal.

Sandra McDonald

Public Guardian

 


[1] AW39/14 Valid Creation of Continuing Power of Attorney Application for Guardianship in respect of NW. Opinion of Sheriff John A Baird, Esq, Advocate Sheriff of Glasgow and Strathkelvin at Glasgow.

[2] Section 15(3)(b) Adults with Incapacity (Scotland) Act 2000

[3] Section 15(2) Adults with Incapacity (Scotland) Act 2000

[4] Scottish Law Commission Report on Incapable Adults 1995  Paragraph 3.8

  

2. An article in the Law Society Journal

3. The opinion of the sheriff on the ScotCourts website.

Professional practice updates May 2014

Lender Exchange Update 

Briefing Note on the Terms and Conditions of the Lender Exchange website (the "Ts&Cs")

IMPORTANT NOTICE. This note is provided by the Law Society of Scotland to assist its members. However, it does not constitute legal advice from the Society nor is it a substitute for members' own detailed review of the Ts&Cs. This note is based on a version of the Ts&Cs provided to the Society by Decision First Limited (DFL) and dated 10th April 2014. However DFL has not granted the Society permission to publish these Ts&Cs themselves.

The Society has not endorsed or approved the Ts&Cs, or indeed the Lender Exchange website itself. The Society cannot approve the Ts&Cs as they represent a commercial contract between Decision First Limited and the relevant firm, in which the Society has no locus.

As explained below, it is possible the Ts&Cs will vary over time. We therefore recommend that members and firms considering registering to use the Lender Exchange service carefully review the then-current version of the Ts&Cs before registering, and seek their own advice if in any doubt as to the effect of the Ts&Cs.

1. As might be expected for a set of standard trading conditions drafted by a service provider, the Ts&Cs are generally favourable to DFL as the operators of the Lender Exchange website. Their exposure to liability is limited and in most instances the balance of risk struck by the Ts&Cs is in their favour at the expense of the subscribing law firm.

2. Firms should be aware that in addition to the Ts&Cs, specific additional conditions may be imposed in relation to particular lenders and DFL has the ability to modify the Ts&Cs from time to time. Whilst DFL must post the modified Ts&Cs on the Lender Exchange website, they are not obliged to bring changes to the specific attention of individual subscribers so it will be incumbent on firms to monitor the website regularly.

In addition, subscribers must adhere to the User Guide, which is a separate document under DFL's control and which DFL may change. The Society has not seen the User Guide, and firms should carefully review it alongside the Ts&Cs. Should firms not be happy with the modified Ts&Cs or User Guide (for example if the modifications introduce new onerous requirements on the firm) their only option is to terminate their subscription to the site under the termination provisions mentioned in paragraph 4 below. This cannot be done in the first year of subscription however.

3. The Ts&Cs are clear that the Lender Exchange system and its associated software remain at all times the property of DFL. It is a web-based system and the firm does not obtain any proprietary rights in the system or software itself. DFL also reserve the right to modify the system and software, and their functionality, at any time.

4. Subscription is for an initial 12 month period, and then automatically renews for successive 12 month periods thereafter. The subscription may be terminated by the firm at the end of the first year provided it gives 3 months' prior notice to DFL.

After the first year, subscription may be terminated on only 14 days' notice although firms should note (a) there is to be no pro rata refund of fees if subscription is terminated part-way through a year and (b) termination of subscription to the site may affect the firm's membership of a lender's panel.

5. The subscription fees are described simply as being those notified by Decision First from time to time, so may change. Subscribing firms are undertaking to pay those fees in accordance with a direct debit mandate provided by Decision First.

6. The Ts&Cs provide for each firm to have only 2 members of staff authorised to use the Lender Exchange system: an "Authorising User" who is authorised by the firm to approve its use of the system, and an "Approving User" who is the person permitted access to input and maintain the data submitted to the system. There is no provision for alternates or substitutes, so firms need to be aware of the risk of these individuals being ill or absent, or leaving the firm at short notice as this may affect a firm's ability to use the system.

Firms are responsible for the actions of their nominated users. Each user will have a secure password which must be kept secret, and the firm is obliged to ensure unauthorised persons do not use or gain access to the Lender Exchange system.

7. Firms should be aware that they are responsible for ensuring viruses are not transmitted to the Lender Exchange system, and to that end must use industry-standard anti-virus software and firewalls.

8. The scope of data which is to be uploaded to the system is open-ended and its description should be read closely before registering. The Ts&Cs do not themselves define in detail what the data will comprise, and there could well be "mission creep" as over time DFL, or lenders through DFL, could require additional information to be provided.

Firms have to keep the data updated regularly (whenever it changes and at least once every 90 days) and also agree to a general "catch-all" obligation to comply with reasonable requests made by DFL or any lender.

9. The firm is wholly responsible for obtaining all necessary consents for the data to be uploaded and used. For example, where the data comprises personal data of partners or staff (as it inevitably will in relation to matters such as compliance for anti money-laundering purposes) then consent should be obtained from those individuals, particularly if sensitive personal data is involved. Consents should include specific consent for the data to be used for the purposes of credit checking. DFL does not within the Ts&Cs offer guidance or assistance to firms in relation to the obtaining of consent. In order to be effective, such consent must be informed, and individuals should be told (prior to granting consent) who will have access to their data, how long for, and for what purposes.

Reference should be made to the Data Protection Act 1998 and the Information Commissioner's website for guidance, as the onus is on firms to procure the appropriate consents.

Firms are also responsible for the legality, reliability, accuracy, completeness and quality of the data they upload.

10. DFL agrees to comply with the requirements of the Data Protection Act when it comes to personal data, which would include an obligation to adopt appropriate measures to prevent loss or damage to personal data, or unauthorised access to it. It also grants an indemnity to the law firm in relation to losses which the firm suffers arising from a breach by DFL of its data protection obligations.

However, that aside, DFL is obliged only to follow its own standard archiving procedures when it comes to the data, and in the event of loss of or damage to the data, DFL's obligation is only to use reasonable endeavours to recover data from its archive.

11. Although the contracting party under the Ts&Cs is DFL, data may in fact be shared with a range of other companies. Further the data will presumably also be shared with the Lenders although this is not explicitly stated in the list of other companies provided. 

12. The Ts&Cs contain a very wide-ranging set of exclusions and limitations of liability on the part of DFL. The financial cap on liability to a subscribing firm is set at subscription fees paid in the preceding 12 months.

13. The Ts&Cs contain an unlimited indemnity by the firm in favour of DFL in respect of a range of risks including:

a. use of or access to the Lender Exchange system or software by unauthorised persons;

b. failure to obtain necessary consents (whether under data protection legislation or otherwise) to upload data;

c. failure to ensure the accuracy etc of the data uploaded;

d. failure to adhere to the User Guide;

e. uploading of defamatory or other unlawful material (whether by the firm, any user, any member of the public or any third party user); and

f. any fees due to the firm from Lenders or third parties.

14. In addition to the usual provisions allowing either party to terminate for material breach or insolvency on the part of the other, DFL may terminate the agreement in the following circumstances:

a. If its relationship with "the Lender" is terminated. Note it is not clear whether termination of the relationship with one Lender is sufficient to trigger this right, where DFL might still have continuing relationships with other Lenders.

b. If instructed to do so by the Lender where the firm is no longer on the Lender's panel. Similarly, it is unclear how this would work if the firm ceased to be on one Lender's panel but remained on those of others.

c. If the firm undergoes a change of control. As defined, this could be triggered by changes in the composition of a practice as partners, members or shareholders leave or join it.

ENDS

Members with observations or questions for the Society arising from this note should in the first instance contact Alison Mackay of the Society's professional practice team by telephone 0131 476 8353 or by email alisonmackay@lawscot.org.uk

21 May 2014

Consultation on the Home Report

Home Reports have now been in operation for over 5 years and on 5 December 2013 a Consultation document was issued by Scottish Government as the first stage of a policy review of the Home Report. The second stage of the five year review will involve a research study due to begin late Spring/early Summer 2014 which will consider and build on the Interim Review and the findings from the consultation to evaluate how the Home Report has performed over its five years of operation. It will also contain a market analysis to provide a comprehensive review of Home Reports.

The Society has prepared a Response.

The Response has provoked some press interest in relation to the Society's view on the cost of Home Reports and the effects of this upon the seller and Ross Mackay, convener of the Law Society of Scotland's Property Law Committee has said:-

"Since the introduction of Home Reports we have received clear anecdotal evidence from our members that there have been numerous examples of sellers being unable to place their property on the market, as the upfront costs have simply been too high.  For people who have to sell their property for financial reasons and who simply can no longer afford their mortgage payments, it is exceptionally difficult for them to meet the cost of a Home Report in addition to essential advertising and marketing costs.   The combination of a difficult selling market with this rise in selling costs has in our view contributed to the rise in both repossessions and sales by distressed sellers."

Professional practice updates April 2014

Advice and information - Appearance of counsel without an agent

Civil Justice Committee comments on the Sheriff Principal Taylor's Review of Expenses and Funding of Civil Litigation in Scotland

Advice and information - Appearance of counsel without an agent

Introduction

Under a ruling which came into force on 24 September 2013, the Dean of the Faculty of Advocates has provided that it is permissible for properly instructed counsel to appear at any hearing in civil proceedings without the attendance of an instructing agent

Following this ruling, the Scottish Legal Aid Board issued guidance on its approach to charges for solicitors appearing with counsel as instructing agents. The guidance provides that "In relation to entries in accounts in civil cases relating to attendances behind counsel at appearances on or after 24th September 2013, solicitors may expect to be asked to confirm why attendance behind counsel was required."

Advocates are instructed to appear by solicitors and until the recent Ruling, Advocates could not appear without the client's solicitor or a representative from the solicitor's firm being in attendance.

The Society has met with the Faculty of Advocates to discuss the relationship between counsel and solicitors in the light of the ruling. The intention, as it was explained by the Faculty, is for the ruling to provide solicitors with greater flexibility to determine how to run a case, and to address situations where the attendance of two professionals may not be necessary and may not be cost effective. The Faculty submit that it will be clear in most situations whether or not it is appropriate for counsel to appear without an agent. The intention is for this ruling to apply predominately in hearings dealing with distinct arguments on points of law, and procedural hearings. However, there is nothing to prevent the practice being applied to any kind of hearing.

There is currently no formal data to indicate whether, and if so, how many, solicitors are applying the new Ruling.  Likewise, there is no formal data from legal aid practitioners on the impact the Ruling has had on legal aid accounts.  The Society will continue to monitor the position and to request feedback from practitioners.    In the meantime, in the absence of evidence of how the Ruling is operating in practice, the purpose of this note is not to provide direct Guidance, but rather to inform by highlight concerns, and recommendations to solicitors who are operating under the Ruling.   A number of the considerations cannot be answered at this time, such as the judicial response to Advocates appearing without an instructing agent.  It is anticipated that over time, such issues may become clearer or that further direction might be provided from the Faculty or Court.

Issues for consideration

The potential for solicitors to agree with counsel that counsel may attend a meeting without an instructing agent raises a number of areas for consideration. Solicitors should consider on a case-by-case basis whether this is an appropriate choice, and in doing so may find it helpful to consider the following issues and questions. The solicitor should be aware of these issues, and discuss arrangements and potential scenarios with counsel and the client.

  • The management of the relationship between client, solicitor, and counsel
    • What are the client's views and how will these be taken into account when determining whether it is appropriate for both solicitor and Counsel to attend?
    • What is the relationship and ability of the client to communicate with counsel in the absence of the solicitor?
    • Will counsel explain procedure or process to a client in the absence of the instructing solicitor?
    • What is the obligation on counsel to report discussions with the client to the solicitor?
    • Who prepares a report of the court attendance and how is this communicated to the client?
    • What is the cost to the client if counsel prepares the court attendance report?
    • Under what circumstances will it be appropriate for counsel to consult with the client directly if the direction anticipated for the hearing changes and the solicitor is absent?
    • Under what circumstances will it be appropriate for counsel to exercise power to take a decision on concluding the case without the input of the instructing solicitor?
  • The relationship between solicitors and advocates
    • Solicitors and counsel will need to agree in what circumstances counsel might insist on attendance and how much notice is required if a solicitor's attendance is being insisted upon.
  • Cost
    • Solicitors should be clear as to the reasons why attendance is necessary, and consider how to justify their role in the proceedings and attendance at a hearing in situations where there may be pressure to minimise costs by not attending hearings with counsel.
    • Solicitors will need to consider how they will satisfy themselves as to how the hearing was conducted for the purposes of making payment to counsel.
    • If a hearing requires to be adjourned because the instructing solicitor is required or because Counsel insists on their attendance (notwithstanding previous agreement that attendance is not required) who will be liable for the payment of any expenses this might generate?
    • What is the anticipated response from judges and sheriff's on the proposed Ruling and how will they deal with possible delays if instructing solicitors are called upon during a hearing in order to advise or assist their client?
  • Complaints
    • If a complaint is made linked to the attendance or non-attendance of a solicitor at a hearing, a solicitor should expect to be able to demonstrate that all reasonable steps were taken to explain the decision to attend or not to attend, and the consequences of the different options to the client.
  • Legal Aid
    • Solicitors should monitor how practice develops over time in relation to SLAB's interpretation of the guidance in relation to justification of attendance.
    • It is recommended that a note from counsel be kept on file confirming that counsel agrees and requires the solicitor to be present at a particular hearing.

Feedback

If you have feedback or further queries about the Ruling the Society would like to hear from you.  Please contact MarinaSinclair-Chin@lawscot.org.uk in relation to civil legal aid matters and CoralRiddell@lawscot.org.uk or FionaJRobb@lawscot.org.uk for issues arising from the Ruling that fall outwith legal aid.

 

Civil Justice Committee comments on the Sheriff Principal Taylor's Review of Expenses and Funding of Civil Litigation in Scotland

The Society's Civil Justice Committee did not consider each of the recommendations made in the review but instead focused on general themes as follows;-

Qualified one way cost shifting - QOCS

The Review recommends the proposed introduction of a qualified one way costs shifting regime ("QOCS") to apply to all personal injury claims.  This would represent a significant departure from the traditional "expenses follows success" rule that currently exists.

A successful pursuer will still recover expenses from the defender but where a pursuer is unsuccessful he will not have to pay the defenders any expenses, except in certain limited circumstances.  The protection afforded by QOCS may be lost if the pursuer has acted fraudulently or has acted unreasonably in raising or conducting the action.

In addition, should a defender make an offer of a sum of money to the pursuer in the form of a judicial tender and the pursuer rejects the offer but is awarded less by the court, the benefit of QOCS will be reduced. The pursuer in such circumstances will still retain 25% of the damages awarded. At present, the pursuer may win the litigation but still have to pay some money by way of expenses to the defender.

Sheriff Principal Taylor has suggested that the introduction of QOCS "will remove the spectre of the pursuer being bankrupted by an adverse award of expenses".

QOCS has been in operation in England and Wales following the implementation of the Jackson Reforms.  However the pre-Jackson expenses regime in England and Wales was markedly different to Scotland. In England the issues were recoverability of success fees and After the Event insurance premiums. In Scotland these costs are not recoverable from defenders.

The Committee discussed the issues in relation to QOCS in great detail. In particular some members of the Committee identified that that there was no direct comparison with England and Wales where is could be argued that the introduction of QOCS could be seen as a quid pro quo in respect of referral fees. In Scotland  there is a ban on the payment of referral fees which comes from the Society's prohibition on sharing fees with non- solicitors.

The proposal to introduce QOWCS was welcomed by Pursuer's solicitors.

In contrast the view of Defender's solicitors is that where a defender in a personal injury action seeks to have his rights vindicated and succeeds in the defence of the action justice should dictate that he is awarded expenses and indeed is able to recover these.

As a result of the very divergent views within the Committee in relation to QOCS it is difficult for the Committee or indeed the Society to be either supportive or critical of this proposal.

Referral fees

The Committee welcomed Sheriff Principal Taylor's comments regarding the non-existence of a compensation culture in Scotland. In particular the Committee agreed that in Scotland there have been far fewer in-roads made by claims management companies.

The Review proposes that only regulated bodies should be entitled to charge a referral fee.

This is contrary to the current position in England and Wales where a ban on the payment of referral fees in personal injury cases was introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

The Review also proposes that a "regulator" of claims management companies should be set up, whilst there should also be a prohibition on such companies cold calling prospective clients.

The Committee were unanimous in expressing some concern in relation to legitimising referral fees.

The Committee also suggested that the removal of the Rule which prohibits a solicitor sharing fees with a non-solicitor   (Rule D9.2) could have implications for the wider profession.

Cost of litigation

Though not specifically highlighted in the Review the Committee supported a restructuring of the Table of Fees. Currently there are two problems namely the disparity between recoverable expenses and costs and the lack of certainty for litigants.

The Committee went on to discuss obstacles to full recovery. These include the distinction between party/party fees and solicitor/client fees.

The Committee agreed that rates for Commercial work should be increased and more use should be made of additional fees.

The Review also recommended that the judiciary should become more involved in the management of the expenses of the court process. In particular it was recommended that a system of expenses management, based on budgeting, should be introduced as a pilot in courts with commercial procedures.

The Committee agreed with the proposal that judges should be involved in deciding the appropriate expenses which should be awarded but were concerned that this proposal would only be effective if the judiciary are provided with appropriate training. Concern was also expressed that, as in England and Wales, a great deal of judicial time might get spend on deciding expenses.

Damages based agreements

The Review recommends that these "no win-no fee" agreements, where fees are calculated as a percentage of the damages recovered, should become enforceable.

At present, only claims management companies are able to enforce these agreements in Scotland.

The maximum percentage to be deducted from damages in personal injury cases would be set on a sliding scale ranging from 2.5% to 20%.  In addition to the success fee, solicitors will also be able to retain the judicial expenses recovered from the defender.

The Committee agreed that in general the proposals in relation to Damage Based Agreements could be welcomed by both the Committee and the Society.

The Committee went on to express some reservations with the suggestion that there should be an obligation on the pursuer's agents to disclose the means of funding. Some of the Committee members thought that this would give a tactical advantage to defenders particularly in situations other than personal injury where there would be no possibility of QOCS.

There was also concern about a cap on additional fees at 100% and the setting of an additional fee in advance.  The Committee agreed that additional fees should be at the discretion of the court on cause shown.

Civil Justice Committee comments on the Sheriff Principal Taylor's Review of Expenses and Funding of Civil Litigation in Scotland.

03 April 2014

Professional practice updates March 2014

Lender exchange panel management update

Faculty criminal appeal service FAQ's

Long Leases (Scotland) Act 2012

Consultation on the Court Reform (Scotland) Bill

Lenders' terms of panel membership and issues arising

Lloyds Banking Group - Stamp duty land tax incentive

 

Important - Lender exchange panel management update

The following statement was issued on 12 March 2014 to members with an interest in conveyancing.  If you would like to receive updates from the Society on matters relating to residential property and conveyancing, please log in and update your details by choosing 'residential property' as an area of work.  Please also ensure that your profile includes a valid email address.

Dear colleague

I am writing to you about a serious and developing issue which is important for all firms carrying out residential property work.  I have written separately to all cash room partners, asking them to pass this information to those members within their firms which work in conveyancing.

Last autumn, we were advised by the Council of Mortgage Lenders (CML) about a new conveyancing panel management solution facilitated by a company called Decision First. Decision First will provide a "gateway" between solicitors and banks involved in the scheme for the purpose of panel management.  The objective is to help lenders streamline the panel management application process for the benefit of both solicitors and lenders.

Decision First has now developed a single interface called 'Lender Exchange'. This system will allow panel firms to keep lenders up to date with any changes to their practice.  The scheme means that conveyancing panel members only need to provide their details and supporting documentation once to those lenders involved in the scheme.  Lenders will then use information from this database to make their own decisions about membership of their conveyancing panels.

We know that Decision First will charge panel firms a single annual fee for use of the Lender Exchange system.  We are deeply concerned about such a charge which we believe presents an unnecessary cost to process information.  The Society already holds this kind of information about solicitors and we have openly expressed our willingness to provide this information free of charge to lenders.  This would save our members from having to process this material again and prevent them from having to pay the fee to Decision First.

Lloyds Banking Group wrote to the senior partners of all firms on its conveyancing panel at the end of November 2013. They advised that all firms on their conveyancing panel would have to provide the required information via the Lender Exchange interface by the end of quarter 1 2014 if they were to remain on the panel. Santander has also written in similar terms to firms on its conveyancing panel.

I would like to make it clear that we continue to have deep concerns about this new system of panel management.

We worked with our colleagues at the Law Society of Northern Ireland and wrote a joint letter last December to all UK lenders in which we stated our serious concerns about the proposed new conveyancing panel management solution and requested that lenders who plan to implement this solution delay doing so until they can be appraised of our concerns.

We also carried out an online survey of our members in November 2013. The main issues of concern raised were the clear increased administrative burden, increased costs and no guarantee that by participating in the scheme solicitors will get onto lenders panels.

We have recently received a copy of the draft Terms and Conditions from Decision First which members would have to agree to and comply with.  These were provided to us for our review on a strictly confidential basis with no promise of any views we have being taken into account.  We have been pressing Decision First for permission to share them with you and our other members in the interests of transparency. However, Decision First has refused to allow this.

I have been contacted by members over recent days.  It concerns me that an impression appears to have been given to suggest that the Law Society of Scotland has somehow approved or endorsed these terms and conditions.  This is not the case.

Whilst we have been given the opportunity to review the Terms and Conditions on behalf of our members we cannot approve them. The Terms and Conditions represent a commercial contract between Decision First and the relevant law firm in which we would have no locus. The Society has however highlighted concerns in relation to jurisdictional and data security issues to Decision First.

We strongly advise our members to be cautious in releasing commercially sensitive and other data to Decision First without sight of the draft Terms and Conditions. Decision First has advised that the latest version of the draft Terms and Conditions will be available at the end of this week.  We will publish these on our website once we are in a position to do so.

We are now issuing more regular updates on this and other conveyancing issues to those of our members who have indicated they are involved in residential property work.  I would encourage those within your firms who would like to receive these updates and who do not current do so to log on to the members section of our website, tick the appropriate box and ensure they have a specific individual email address on record.

Finally, if you or colleagues have any questions about this then please contact my colleague Alison Mackay from our professional practice team by telephone 0131 476 8353 or by email alisonmackay@lawscot.org.uk

With best wishes,

Lorna Jack

Chief Executive

Law Society of Scotland

Faculty criminal appeal service FAQ's

Faculty Services Limited, a service company for the Faculty of Advocates, has established the Faculty of Advocates Criminal Appeal Service.  We have received a number of queries from our members about this service.  We encourage members to read our responses to some of the frequently asked questions.

Faculty Criminal Appeal Service FAQs

Long Leases (Scotland) Act 2012

For those members involved with Conveyancing and Long Leases, there is a letter from The Scottish Government to the Society, dated 7 March 2014, which sets out key provisions and other important information regarding the Act. The link to the letter is:-

Long Leases - Letter from Scottish Government

Consultation on the Court Reform (Scotland) Bill

The Bill was introduced on 6th February 2014 and seeks to implement recommendations contained in the Report on the Scottish Civil Courts Review (2009) which was led by Lord Gill.

The Scottish Government Justice Committee expects to consider written submissions and to take evidence during March and April, before reporting on the Bill's general principles towards the end of May.

The Society's Civil Justice Committee is working with the Society's Criminal Law Committee and Acces to Justice Committee to provide both written and oral evidence on the Bill.

The Bill proposes-

  • an increase in the privativative jurisdiction of the sheriff court from £5,000 to £150,000
  • creation of a new office of "summary sheriff"
  • establishment of a specialist personal injury court
  • creation of a Sheriff Appeal Court and
  • changes to the way to raise a judicial review

If you would like to send comments to the Society, in relation to the Bill, please contact Fiona Robb.

Lenders' terms of panel membership and issues arising

The "no" vote at the SGM in September 2013, against the separate representation of borrowers and lenders in conveyancing/security transactions, has not diminished the desire of lenders to actively manage panel membership.

Notwithstanding the establishment of a Law Society Working Party, the purpose of which is to negotiate fairer and more relevant rules in the CML Handbook for Scotland, lenders and lender groups continue to approach panel members on an individual basis with revised Terms of Membership.

A recent example brought to the attention of the Society's Property Law Committee was attached to a two page letter from Lloyds Banking Group. (Both a copy of the letter and the Terms of Membership can be made available on request: professionalpractice@lawscot.org.uk)

Of the closely typed two page A4 letter all but three short paragraphs related to the proposed Lender Exchange Scheme.

The attached Terms of Membership were first mentioned in the penultimate paragraph of the letter. Significantly the Conveyancing Panel Manager was not looking for a signed acceptance of these, stating there would be an assumed acceptance of them if the panel member continues to accept instructions to act for any mortgage lender in Lloyds Banking Group. Only non acceptance required to be communicated along with return of any instructions.

In turn the Professional Practice Committee was asked to consider the confidentiality issues raised by the revised Terms of Membership.

One term provides a right to Lloyds Banking Group to inspect all documents and files relating to transactions carried out on behalf of any lender within the group. It was viewed that this wording may set up a contractual obligation that might not otherwise apply. If a solicitor was to refuse access to all files where this term has been accepted there might be a difficulty in defending an action for access to the files either on a contractual basis or in terms of Section 1 of the Administration of Justice (Scotland) Act 1972 even although separate files had been established as to what belongs to the borrower/purchaser client as opposed to the lender client.

In addition this term, and provisions that might be adopted to manage its effect, brings into sharp focus the tensions between duties of confidentiality and disclosure that may require a solicitor to cease acting. To compound the complexity such duties are probably both contractual and ethical.

It has to be remembered that where two or more clients are instructing the same solicitor in relation to the same matter neither of them is entitled to plead confidentiality in relation to joint business.

Other terms, that specify for the provision of information about the firm and its employees as may reasonably be required by Lloyds Banking Group, could prove problematic in relation to credit checks and searches against current employees.

Finally the terms may be changed by Lloyds Banking Group from time to time subject to at least 14 days' notice.

The Professional Practice Committee is keen that these points be highlighted to the profession, particularly for the benefit of those who may not yet have seen the Lloyds Banking Group's revised Terms of Membership, but also as a reminder to all solicitors of the need to consider carefully the implications of such terms of membership, particularly where there is an assumption of tacit acceptance.

Professional Practice Committee

Lloyds Banking Group - Stamp duty land tax incentive

It has come to the attention of the Society that Lloyds Banking Group are offering (on qualifying mortgage applications made between 4 March and 6 May 2014 inclusive) an incentive relative to first time buyers. Lloyds will pay a sum equal to the Stamp Duty Land Tax where the purchase is in the 1% SDLT Band (over £125,000 - £250,000) and a £250 cashback where the purchase price is below the 1% threshold (0 - £125,000). There is no incentive being offered for purchase prices exceeding the 1% band.

Lloyds have stated that the SDLT incentive payment will be made via CHAPS within 7 -10 days of the completion date. If the solicitor is relying upon the incentive payment to pay the Stamp Duty then that could result in the Stamp Duty not being paid until 10 days after settlement which would cause major difficulties.

The matter has been considered by representatives of the Property Law Committee who have considered that the appropriate way to proceed is for the solicitor to insist on receiving the SDLT payment upfront from the client/purchaser (to enable the Stamp Duty to be paid immediately after settlement) and thereafter to refund it to the client/purchaser only once it has been remitted to the solicitor by Lloyds.

The Committee reminds members that the primary obligation is to ensure prompt registration of documentation and anything else will be contrary to the interests of the purchaser and the lender.

24 February 2014

Professional practice updates February 2014

Consultation on home reports

The Society's Property Law Committee is responding to the Scottish Government Consultation on Home Reports.

The Consultation is in 3 sections-

Section 1 - whether the Home Report is meeting its objectives and if these objectives are still the right ones.

Section 2 - how the Home Report operates in the current market, by exploring topics raised by stakeholders and the general public since the introduction of the Home Report costs, commissioning, production, marketing, timescales, access, enforcement, access to mortgage finance, exceptions and redress.

Section 3 - the content, layout and usefulness of the Home Report documents.

The consultation closes on 27 February. If you would like to Property Committee to consider your comments please contact Mark Shepherd by 12 February.

RoS Liaison Working Party

The Land Registration etc. (Scotland) Act 2012 ("the Act") which will introduce a number of substantial changes in property law is due to be implemented in autumn 2014. The Society and the Registers of Scotland are working closely together via the RoS Liaison Working Party to ensure that the Act is implemented smoothly. The Working Party is meeting on a fortnightly basis to ensure that the policies, processes and systems which will underpin the Act meet the needs of both solicitors and the Keeper. The Working Party has been assisting the Keeper in formulating guidance on the Act for the Society's members.  A series of briefing notes and frequently asked questions will be published on the RoS website on subjects including advance notices, the cadastral map, the one shot rule and prescriptive claimants.

03 February 2014

Professional practice updates January 2014

CML Working Party update

Following the "no" vote against the separate representation of borrowers and lenders in conveyancing transactions at the SGM in September 2013 a small Working Party of the Society's Council has been established to meet with the Council of Mortgage Lenders (CML) with a view to negotiation of the CML Handbook in order to frame fairer and more relevant rules for Scotland.

The Working Party has met twice and talks have commenced and encouraging progress been made in relation to the proposed amendment of the CML Handbook in order to make it more suitable to reflect Scottish practice and procedure.  It should be noted that any changes to the CML Handbook require to be approved by the CML Legal Advisory Panel and Handbook Oversight Group before final sign off by a sub group of the CML Executive Committee.

A full progress report will be provided to the Society's members at the AGM on 4 April 2014.

19 December 2013