Joint representation “oils the system”, says McVey
Scotland’s largest law firm conveyancer has thundered into the separate representation debate, critiquing the move as “politically motivated, opportunistic, regressive” and “anti-competitive”, and a “calamity” for solicitors and consumers.
In its submission to the Law Society of Scotland’s (LSS) consultation on separate representation – which will be voted on by members next week – McVey & Murricane said that if it was made mandatory in property lending transactions, the survival of most Scottish property-focused law firms would be threatened.
Senior partner Allan Radlow and managing consultant Jonathan Edwards – the authors and both experts in volume conveyancing – said the financial crisis had revealed “a plethora of shoddy activity on the part of professionals” acting on behalf of lenders.
They accepted that low-volume conveyancers should be squeezed out of the market: “It is in the interests of the public, the lending industry and the survival of conveyancing among solicitors to allow competition and provide lenders with greater confidence.
“Yes, that will mean solicitors in Scotland who carry out a handful of conveyances a year not being instructed. And yes it means that conveyancing will become more commoditised.”
To avoid separate representation, they suggested a temporary ‘stability fund’ could be created, with a £20 contribution made by clients in each transaction where a lender was involved.
Based on 2012 figures, this would produce around £2.5m and this sum would be applied to claims relating to the “repossession wave” occurring as a result of the financial crash and the Council of Mortgage Lenders handbook being policed more effectively.
The authors continued: “Standards-based conveyancing can readily cope with acting for both the lender and purchaser. There are so many areas in the world where much greater intrinsic conflict of interests are dealt with by standards or regulation…
“At a time when the property market is beginning to revive it would be a disaster to add an extra layer of cost and problems. It would promote a public perception of solicitors as “fat cats” who are only interested in lining their own nest.”
They took particular issue with a suggestion in the LSS consultation that the extra cost of separate representation to the consumer – up to £400 for buyers and up to £100 for sellers – might be absorbed by lenders or that the public would be willing to pay more.
It would not, they said, adding: “An ‘advantage’ of SR [separate representation] is stated to be reduced panel management costs for lenders, the benefit of which can be passed onto the consumer. Any such benefits will be dwarfed by the cost of SR and the cost of a higher number of referrals to lenders for instructions arising from SR.”
The authors were also scathing about the notion that mortgage fraud might be disrupted by separate representation. “Absolutely no evidence is offered to back up this claim,” they insisted.
Declaring their support for keeping joint representation, they said: “The value of joint representation is that in the vast majority of cases there is a single common interest between borrower and lender.
“The solicitor acting for both the borrower and lender measures the circumstances and, having regard to the essential elements of the case… makes a value judgement. It is the oil that makes the system work.”
Sep Rep is not the best way forward but lenders must explain why some firms are being removed from panels and why some appeals against action that fail. Transparency, efficiency and fairness is all that most conveyancers ask for.