Following last month’s Lockton article on some historic causes of property-related Master Policy claims, a look at potential future issues with a focus on conveyancing in this COVID era and beyond

COVID-19 has shaken the legal world, and the tremors will continue for some time. Vaccine hopes are high, but it is clear by now that even after the dust settles and “normal life” resumes, the legal world will look very different.

Conveyancing and property services have, with the help of technology and legislative changes, continued to be provided throughout the pandemic, but there have been many logistical as well as risk management challenges.

In the professional indemnity world, conveyancing is largely viewed as high risk. Certainly, a high proportion of PI claims against solicitors arise from conveyancing transactions. For conveyancers, the need to focus on reducing and managing risk has, perhaps, never been greater.

What are the risks, and how can they be managed?

Remote working

Remote working, or working from home (WFH), is the new norm. When national lockdown restrictions were imposed in March, many solicitors had no option but to convert their kitchen/diningroom/garden shed into a makeshift office. Eight months on, what was viewed as a temporary solution to a unique problem is a way of working that is here to stay. Certainly, more flexible working combining home and office looks likely to continue.

Whilst WFH can have many benefits for firms and employees, it poses additional risks. Firms will need clear policies on WFH so as not to dilute any risk management procedures which apply when working in-office. Challenges in maintaining an adequate client service need to be addressed.

In a standard purchase transaction, for example, practitioners will engage the client, take instructions at the outset and throughout, adjust relevant documents with the other agents, review and report on title, attend to completion and thereafter to registration of title. Pre-COVID, each of these stages is likely to have been carried out in-office using established procedures, lines of communication and systems of supervision all designed to manage risk and ensure the client receives a good service. Remote working brings with it an urgent need for all office procedures and systems to be reviewed, adapted and, crucially, checked for efficiency.

Small things matter. For example, the quality of home printers or scanners can compromise the quality of annexations like plans. Scanning a document by low resolution scanner for a client to print at home, sign and re-scan at similar resolution may reduce legibility of coloured boundary lines to a point that the plan is unacceptable to the Land Register. (That is a real life example!) The lesson is to scrutinise not only final technical validity, but the overall quality of end product.

Face-to-face meetings with clients are, largely, not possible at present. Practitioners must ensure that appropriate identity checks are carried out. Videoconferencing tools should be used, where possible. These can also ensure there is adequate and effective communication with clients. Now and moving forward, it may be necessary to build additional time into transaction timescales in order to deal with more protracted signing and pre-completion procedures, and amendments to the registration process.

Document management and storage of title deeds also need to be considered. It is important that any tasks that practitioners, working remotely, delegate to administration staff working in-office are clearly communicated and checked to mitigate the risk of documents being lost or sent to the wrong recipient.

Top tips

An effective central diary system is essential, particularly with WFH when physical files and papers are out of sight and possibly out of mind.

Ensure team meetings continue, even if not face-to-face, to ensure the team knows what is to be dealt with in the coming week and deadlines (e.g. for registration or submission of offers) are not missed.

Studies suggest that we are much more likely to be distracted and make errors, reading information on screen as opposed to hard copy. Lack of IT equipment, printers etc in the home environment is a challenge, but continue to print title deeds or complex agreements for review, if at all possible.

Lack of supervision

Lack of supervision of employees is a regular factor in claims for professional negligence in property transactions. Supervision is undoubtedly more difficult when employee and supervisor are not in the same room. Practitioners should ensure that guidelines on how matters are dealt with and signed off by supervisors continue to apply to WFH, and are implemented. Communications binding on the firm, reports and certificates of title should continue to be checked by partners/senior employees, and junior colleagues should be encouraged to ask as many questions as they would in-office. It is important that junior employees feel supported and confident in asking for assistance when needed.

Residential conveyancers are currently experiencing a welcome boom following the easing of the restrictions, as homeowners and first time buyers seize the opportunity to move, while restrictions allow. Many firms have recruited additional staff to cope with current transactions. It is important that transactions are dealt with by appropriately skilled and supervised staff, particularly during busy periods when the risk of a mistake or omission is high. This risk is obviously exacerbated when people are under pressure and working alone at home.

Here again, keep in mind that the simple (in the office) action of asking a question of a more experienced colleague, or getting a second opinion, is not so simple with WFH. If, for example, there’s a possible issue in a title sheet, you can’t look around to see if a colleague is available to chat. You can’t then just walk over and speak to them. They need to see the document on screen, at the same time as you, and you then need to talk about the issue. Even with videoconferencing tools, remote pointing to a dubious boundary isn’t quite the same.

The temptation for someone needing guidance to think it’s all too hard and “take a view” is real.

Top tips

Supervision is key – at the beginning, during and at the end of a transaction. With WFH, regular virtual meetings are recommended, and preferable to purely email communication.

Post-completion checklists are essential and should be completed and signed off before a file is closed.

Law firms will need to think about how they achieve and maintain regular contact with trainees to offer support. The Law Society of Scotland has published a set of hints and tips for supervisors and managers, as well as articles and blogs with suggestions for employers: you can view it here.

Fraud

Changing working practices give fraudsters opportunities to find new ways to operate. Property professionals need to be more vigilant than ever and alert to the risks. Remote working and fewer face-to-face meetings increase the risk of identity fraud. Fraudsters are extremely innovative and will quickly exploit any vulnerability caused by remote working.

Top tips

Ensure that anti-money laundering guidelines are strictly adhered to.

Bank account details should not be shared by email but confirmed ideally on the telephone or in person, even if done virtually.

Communicate to all staff to be extra vigilant on these matters, as in times of disruption, such as this pandemic, fraudsters see an opportunity to increase their activity, for example by encouraging solicitors to open emails which could prove harmful to solicitors’ systems.

Lender claims

Across the globe the pandemic has caused the loss of many lives and livelihoods. There have been redundancies and more will potentially follow when the furlough scheme ends. The unfortunate consequence is that individuals may default on their mortgage repayments. Professional negligence claims at the instance of lenders will follow.

Top tips

Firms should continue to ensure that employees are provided with training on the UK Finance Mortgage Lenders Handbook (previously and more commonly known as the CML Handbook), and that they comply with its reporting requirements. Now would be a good time for some refresher training.

Implementing a CML Handbook compliance checklist for each transaction may assist. Some firms may already have this or want to design their own, but the Society has produced a checklist which firms may find useful: you can view it here.

Legislative and procedural changes

A number of legislative changes have addressed practical issues posed by the pandemic, and further guidance affecting property transactions continues to be published. Practitioners need to stay up to date with legislation and Government guidelines and ensure that advice given to clients is compliant.

Property transaction procedures have also had to adapt, most notably registration. Registers of Scotland now operates an electronic applications system which has proved very successful and has been heralded as a better, more secure way of submitting applications. However, as with any change to established processes, particularly when the new process is a digital one, practitioners need to ensure that they provide employees with training on the new system and have appropriate internal guidance on its use.

Top tips

Firms should issue specific guidance on the use of the new online system, including who is permitted to submit registration applications and the process for those being checked and approved pre-submission to avoid errors being made.

Regularly review the Society’s COVID update page on its website for information and any changes in guidance.

Mental health

The negative impact that the pandemic is having on mental health is unsurprising, and well documented. Lack of social interaction, isolation, uncertainty, worries about health and finances, threat of redundancy, anxiety about a return to work following furlough, pressures of juggling family life and work – these issues are affecting the majority of practitioners, in varying degrees.

Effective risk management extends beyond reviewing procedures, policies and processes. Poor mental health can lead to many work performance issues, which in turn increase the likelihood of claims. It is important that practitioners take care of their own mental wellbeing and look out for colleagues who may be struggling to adapt to the changes brought about by COVID-19.

Beyond COVID

Conveyancers have had much to adapt to in 2020. The profession has dealt well with these challenges and it is fortunate that, now the appropriate legislative and procedural changes are in place, services can continue to be offered effectively. Property is an area where new law and procedures are common, so practitioners are used to adapting to change. Conveyancing can be a risky business; however practitioners can take simple steps to reduce and manage the risks created by the remote and technology-reliant ways of working that have become essential during the pandemic and beyond.

The Author

This article was authored for Lockton by Lindsay Ogunyemi, director, and Emma Keil, senior associate, DWF

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