Rather unwittingly, and not out of choice, we have become something of a lightning rod for the "No" campaign opposing separate representation. Our interest is not a political one but the passionate belief that it would be a terrible decision both for the public and the profession, as set out in earlier articles.
We wanted to find out the facts. Our desire to do so produced the following results.
1. A poll of the top 100 conveyancing firms in Scotland indicated:
- an overwhelming rejection of separate representation amongst those who actually do conveyancing for a living;
- an almost zero experience of circumstances where these busy conveyancers had withdrawn from a transaction or been involved in a transaction where the other side had withdrawn from acting for the lender because of conflict of interest.
2. Discussions with those solicitors principally involved in Scotland with repossessions, to ascertain the picture behind the claims, and particularly whether these represented the image portrayed by supporters of separate representation of rapacious lenders searching for a scintilla of evidence by which they could make a claim against hapless solicitors, did not support the position put forward by the proponents of separate representation, certainly from the point of view of the mainstream lenders. Rather, they suggested that a large proportion of the increasing claims arose from the actings of solicitors who were no longer practising. The subtext supported the position as we had always suggested: one of standards.
3. We contacted Marsh, who indicated that they could not release information without the agreement of the Society’s Insurance Committee. We asked the Society if they could help, because it was not certain that the information would be forthcoming. The Society has agreed that we will have information on the percentage by number, and by value, of residential conveyancing claims arising, and not arising, from the CML Handbook, before the SGM.
4. Proponents of separate representation advised us that we were "asking the wrong questions" and it was the start of an entirely different causation for separate representation than had been promoted. It was suggested to us that essentially solicitors needed to be saved from themselves in dealing with lenders and the only way of doing that was to enforce separate representation.
5. There was much heat and light about people receiving letters from lenders and requesting files on cases that followed repossession. It appeared however for the overwhelming majority of the profession that whilst they may have received such letters, they did not receive any claim following them. Our understanding is that such letters were only written in cases where fraud was suspected by some party involved in the transaction.
The tectonic plates move!
The original draft rule changes were, in our view, unworkable. Totally unconnected with our views, but perhaps connected to various concerns expressed to the Society, a revised set of draft rules was issued. These do not appear to improve matters, and indeed it appears to have been accepted by the Society that they are unworkable and will not pass the Regulatory Committee.
This resulted in a proposed amendment to defer the decision (an explanation of this is provided here), and an amendment that would deal with the concerns of the larger firms who belatedly realised how problematic the rule change would be for them.
But in our view the chimera that the whole issue is not about standards evaporated in an exchange of comments that took place online between ourselves and proponents of separate representation. An article from Ken Swinton acknowledged that some solicitors are not able to deal with the circumstances acting for both purchaser and lender which may ultimately involve a claim. He quotes such people as being "innocents abroad".
Unintentionally, Ken Swinton has made the strongest argument possible against separate representation. He, and other prominent members of the profession who have associated themselves with the separate representation argument, argue that solicitors cannot be trusted to act on behalf of both a borrower and lender.
It is now out in the open. It has absolutely nothing to do with conflict of interest as we have stated all along. It is to do with standards.
Such a view will be seized upon by those who argue that the problem is not the CML but the standard of solicitors. They will say that Scottish solicitors themselves believe that their skills are insufficient to deal with modern conveyancing transactions. So, instead of dealing with the bathwater, these proponents of separate representation want to throw out the baby.
The vote on Monday
To use the vernacular beloved of the financial crisis, the amendments that have been tabled appear to be an effort to "kick the can down the road" and to placate the concerns of the larger firms, who proponents of separate representation may now hope will lose their gathering interest in voting "no".
For those larger firms, they should be careful of the feeling that their battle is now won; although such firms largely do not carry out residential conveyancing, they act for many housebuilders and developers who are involved with residential conveyancing. For those housebuilders and developers who may promote, as an example, part exchange, separate representation will be an unmitigated disaster.
There is absolutely no doubt that change is required, but it is now time to deal with the baby and not the bathwater. Accordingly we believe that a "No" vote will allow the profession to concentrate on what matters: the introduction of a conveyancing system fit for the 21st century which accommodates the needs of the public, the profession and the lenders.
Three vast improvements that can easily be made now
For us, the whole process has been valuable in opening our minds to contrary viewpoints and issues that may have not been considered previously.
We offer three changes that could be agreed upon immediately, which would improve the position markedly going forward while changes to the system are agreed.
1. When there was a rash of frauds including Mr McCabe, the Society acted at the time to reduce the potential for such issues. Leslie Cumming, at the time, when asked how the changes would deter a committed fraudster, responded that they would not but that they would deter somebody who was perhaps unwittingly being led astray. This is similar to Ken Swinton's "innocents abroad". Solicitors would require to complete an intelligent form before submitting a report on title to a lender, which form would highlight potential vulnerabilities. The fact that these potential vulnerabilities are shown in black and white would deter the "innocent abroad". Such intelligent forms already exist in other areas and would allow solicitors the benefit of the thinking processes of experienced practitioners.
2. Consumer organisations criticised the current position, whilst opposing separate representation, for not being transparent. They are right. Much in the same way as lenders require to provide a KFI to people obtaining a mortgage, solicitors should require to provide a KFI to their clients at the commencement of the conveyancing transaction involving a lender, which clearly and unambiguously explains the role of the lender and the solicitor in acting for both borrower and lender.
3. Information about clients is of course confidential, but the efficacy of the system can be vastly improved by solicitors sharing information as to the circumstances of a transaction. That system, which can again be carried out by an intelligent form, will deter circumstances where solicitors unwittingly become involved in back-to-back and other similar arrangements. This does require solicitors to understand that the conveyancing system requires some slight compromise as regards their personal viewpoints and responsibilities to other solicitors. We have been experimenting with a partial version of such a system, which broadly is accepted, but we do receive a number of excoriating comments from perhaps the more traditional solicitors or those who are critical of volume conveyancers. A full version of this system would effectively assist in the fight against the problems that have been experienced.Allan Radlow is senior partner and executive principal, McVey & Murricane