You would be forgiven for thinking that the President spends all day, every day worrying and debating about legal aid. Sure, it has been, and will continue to be, an anxious topic for the Society and the profession, not to mention the population. However, another subject is nearing the apex of the anxiety pyramid, after bubbling about for some months.
I am talking about separate representation in residential property transactions – “sep rep”, to give it a jazzy title that has achieved traction. For non-conveyancers, put simply the current position is that when acting in a purchase, the solicitor can make use of an exception to the conflict of interest rules and act for both buyer and lender. This has been the way of things for ever, and seems on the face of it uncontentious. But no longer.
It seems to be a by-product of the economic collapse that lenders have changed their stance on the actings of their panel solicitors. In what we now think of as the good old days, building societies (remember them?) and banks more or less left firms to get on with transactions, and as long as there was a clear title and a registered security, they were not often interested beyond that.
Now it is all change. Where there has been a default by a borrower, and negative equity has kicked in to cause a loss for the lender, many of them are now wanting to scour the actings and the files of the “shared” solicitor to see if the solicitor has breached his or her obligations under either the loan instructions (“Item 17 on p 5 – aha! We’ve got you, you didn’t check the buildings insurance policy before ordering the funds!”) or the dreaded Council of Mortgage Lenders Handbook. Many members will be aware that breach of obligations by a solicitor can indeed lead to appearing before the SSDT for professional misconduct (though it needs to be pretty serious or serial for that to happen), and/or a claim against the professional indemnity insurance policy – which is ultimately what the lenders want access to, to shore up their losses on lending. By far the majority of claims against the Master Policy arise out of mortgage problems.
Pursuit of excellence
As a result of this sea change, many solicitors are asking whether it is worth acting for banks if this increased risk is part of the deal. The sep rep movement has grown, and in a number of events including a recent Glasgow Conveyancers’ Forum debate I attended, the majority – though by no means a complete majority – have voted or indicated they wish to separate out the jobs, and leave the lenders to hire their own solicitors. This immediately removes the risk.
The matter is to come up at the Society’s AGM on 22 March, and in various forums the debate will continue. Other risks arise – will sep rep increase costs for clients? Will using two different solicitors in one transaction slow down the conveyancing process to the danger of missing dates of entry? Will lenders’ solicitors be sufficiently slick in their operation to meet required time limits?
There is no doubt the lenders, through the CML, are not keen on this, but they can’t have their cake and eat it. If they want to keep a tight grip on solicitors, the solicitors must have the choice of engaging or not, and if they engage, the playing field must be level. But on the other side, solicitors need to ensure their game is up or upped – a complete defence to any claim or complaint is that every part of the instructions has been carried out, and demonstrated to be so in your file or case management database.
I tend to think that this important question of separate representation is actually secondary. The main thing – and this is true of all areas of legal practice – is excellence. Conveyancing is a process; it has traditionally been an art as much as a science, and skill and knowledge are important ingredients. But as technology has developed (land registration, online searching, word processing, electronic payment, standard missives… ARTL?), the transaction has become more regularised, automated, and predictable.
The profession has changed, risen in quality and skill, and my wish and intent is that we press on with technical and technological innovation so that the conveyancing transaction becomes an IT-driven failsafe process where you actually have to make a conscious decision to err, as the system will always default to the straight and narrow. The requirements of lenders can be programmed in – quite literally red flashing lights would come on if you try to settle without, say, a clear form 12 or an executed security.
This is not dumbing down. It is the perfection of the conveyancing process, and it is within our reach. Until then, wearing my suburban conveyancer’s hat, I am, though no more than on balance, for sep rep. I hope you engage with us in the discussion.
In this issue
- Remember, remember?
- Equal justice for all?
- Compatibility: devolution issues reborn
- Profiting from the past
- RTI for PAYE - are you ready?
- Reading for pleasure
- A modest proposal – civil marriage ceremonies for all
- Opinion column: Alistair Dean
- Book reviews
- President's column
- Fee review: as you were
- Time to draw a line?
- The pay gap: seeking a cure
- Wealth management: Personal injury trusts - how to best invest
- Wealth management: Discretion - the model of choice
- Wealth management: Inheritance tax - discounts up front
- Wealth management: Pensions - time to look ahead
- Whose privilege is it, anyway?
- FLAGS unfurled
- Percentage game
- Rent, rent and rent again
- Sport, rights, and the internet
- An innocent mistake?
- Scottish Solicitors' Discipline Tribunal
- The trouble with in-house lawyers
- Lease of life for the High Street?
- PSG update
- Vacant and ready
- ABS in waiting
- Better ways: where to start?
- Keeping errors in check
- Ask Ash
- How not to win business: a guide for professionals
- What does a speculative fee allow?
- Law reform roundup