“This leaves the question as to what size Council should be.  Council members believe a group of 46 members strikes the right balance between the desire for a smaller Council and the need for effective representation for solicitors.

"The Scottish solicitor profession is increasingly diverse with often differing issues facing different parts of the country and different sectors.  That is why it is so important to ensure those varied views and issues are properly represented on the Council.

"Over recent weeks, there have been calls from some members for a radically smaller Council.  However, the current Council believes such a change would have big implications for the Society which would need to be properly considered and consulted on with members.

"It is now for our members to review and discuss these changes at the AGM and I would encourage as many members to either attend in person in Perth on 31 May or appoint a proxy to vote on their behalf."

Against that we have to consider the comments of a former CLSS member who took a different view when he wrote to the current vice president, as follows :

Dear Vice President,

I made two points in my letter. The first was that the Society had not agreed in general meeting to exercise the power in section 1A of Solicitors (Scotland) Act 1980 to act as regulator of Licensed Providers. You have not answered this point. The power to act is in the hands of the Society not of the Council. It is not a function of the Council to make such a decision under section 3 of the Act. You make arguments in favour of Council policy, but the decision rests with the members.

What is at stake for members of the Society is the reputation and standing of Scottish solicitors, described by some as "the solicitor brand". That reputation has been hard-won and can be easily lost. I have seen no attempt by the Council to explain to members the extent to which external ownership of law firms is proposed or what work they have done to assess the risks for members, and their reputation as Scottish solicitors, which may be associated with external ownership of law firms.

If the Society as regulator grants licences to Licensed Providers, it grants express approval to organisations which according to the statute must have some degree of external ownership. But the Society is a members’ organisation. The implications of the 2010 Act are beginning to be better understood. As you yourself have persuasively pointed out, they may be damaging to many members. Members are entitled to decide whether the Society should exercise its power.

To obtain the support of members at a general meeting, the Council needs to explain clearly and precisely to the members what it proposes to do and how it proposes to deal with the risks of such a major change.

The Council is bound to act within the law. If your argument is that a referendum in some way takes precedence over the requirements of the statute and the Constitution, it is wrong in law.

My second point was not a legal point but a governance point. We are now told that the Council will propose to members that it will in future comprise 30 solicitors elected by constituency, up to 7 co-opted solicitor members and 19 non-solicitor members, making a total of 46.

The regulatory functions of the Council, including making regulatory rules under any relevant enactment, are defined in section 3F of the 1980 act. Under section 3B the Council must exercise their regulatory functions through its regulatory committee and must not interfere unduly in the regulatory committee's business.

Members are firstly entitled to be told by the Council what its remaining functions are. Secondly they are entitled to an explanation of why Council considers that its proposed change to 46 members constituted as is proposed, is now an appropriate governance model. It may be that Council formed in this way will not be a good model to provide effective governance for its new functions.

One possibility of dealing with the problem would be to set up a separate representative committee along similar lines to the regulatory committee. There are other possibilities. However members should not be asked to accept a governance arrangement without an explanation of why the proposed change will be appropriate for its new circumstances.

WS

This page is available to those members who have logged into the website to publish and exchange views. Those who would like to cast a vote in the issue but are unable to attend the AGM are invited to print out, complete and post in (not fax or email) the form of proxy attached below to authorise SLAS Council to vote on their behalf.

SLAS Council is willing to travel to other parts of the realm and the rush of invitations is awaited.

Secretary

1The notice given by SLCC of this enquiry is insufficient to enable the solicitors’ profession to give collegiate consideration to and to make a considered decision upon the very important issue as to whether or not this sensitive information should be disclosed..

2. The cost of this exercise has to be borne by the solicitors’ profession and no information has been provided as to whether that cost has been estimated and as to whether the exercise will be cost effective.

3. No information is given as to whether or how SLCC has satisfied itself that this exercise falls within its statutory remit and its entitlement to expose solicitors to these costs.

3. The SLCC request does not advise as to whether or not there is any obligation on the part of solicitors to provide this information.

4. Information held by solicitors is private whereas information held by SLCC is subject to Freedom of Information enquiry, disclosure and publication.

5. Law Society officials recommend that firms disclose this information to SLCC.

6. Solicitors do not have any obligation to disclose this information to SLCC.

7. A better option might be for the information to be gathered within the profession where it would remain confidential and beyond the scope of Freedom of Information enquiry and only the conclusions be transmitted to SLCC. This might be achieved through the faculty structure or through the Scottish Law Agents Society.

8. Any research carried out at this stage might helpfully include enquiry into the extent to which the current complaints system accommodates abuse of process by persons who are dissatisfied with proper legal findings

9. The best initial response to this enquiry might be to ask for a further period of time to enable the foregoing issues to be considered and resolved.

Members are invited to submit their own reflections and suggestions in relation to this development.

This aim is underpinned by five objectives.

• Excellent solicitor professionalism and reputation
• Our members are trusted advisers of choice
• Our members are economically active and sustainable
• The Society is the professional body and regulator of choice
• The Society is a high performing organisation”

IF the Society is to promote its members as the trusted advisers of choice how can it also promote the Society as the regulator of choice of non members who compete with its members?

On the one hand the statutory objective of the Society is to promote the interests of the solicitors’ profession, and on the other hand the Society, by regulating them, intends to promote the interests of non-solicitors  who will operate competitively with solicitors.

 How can the Society promote itself as the professional body regulating   other professions?

The fourth objective cannot refer to solicitors because they have no choice of regulator.

How does the Council propose to resolve these conflicts which are inherent in its expressed objectives? If it cannot these objectives need to be reconsidered.

CW

The monthly meeting of SLAS Council takes place on 26 April 2012 at 11 a.m. at 7 Golden Square Aberdeen. Agenda items include consideration of the proposals to amend the constitution of the Law Society, breaches of the CML requirements and allegations of professional misconduct, the setting up of an advice service (HELPLINE) for members of our own society and the setting up of our new education and training programme for PEAT2 in collaboration with the Royal Faculty. If members of the society would like to contribute information or views on any of these topics or would like Council to address any other matters then they should let us know by e-mail to secretary@slas.co.uk

Our trip to Aberdeen put it in my mind to look through the society's minutes to find out what had happened previously when the society had convened in Aberdeen. I found the following:

“The Nineteenth annual meeting of the society was held within the Advocates Hall, Aberdeen on Wednesday Thirtieth September 1903-John Proctor Kyd, Esquire, President, in the chair.

Doctor Barty-I have pleasure in submitting the accounts for the year. The receipts for the year ending 31st of December 1902, amounted to £726 12s 6d., And the disbursements amounted to £246 19s 6d, the balance in bank being £479 12s 8d (the accounts were approved)

...................................................................................

Solicitors (Scotland) Bill

Mr Whitelaw (Dumfries)............... the great point, to my mind, to be obtained by this Bill is the creation of a central body in Scotland which would be capable of expressing the opinions of the whole profession,............... There are questions of the education of the members of the profession and questions of discipline. I think that if we had a central body these would come afterwards, even if they did not come in the original bill. To my mind the important point is to have a central body which can represent us as a whole. Now, the great difficulty in getting through a bill of this kind is undoubtedly the existence of numerous, or rather various, large and important legal societies in Scotland, the members of which have many personal privileges, and many of which societies have large funds. I think you could understand these societies and their members hesitating to throw in their lot with us in having a bill of this kind. I can appreciate their views, although I don't altogether approve of them, but there it is.

(this legislation, proposed by our society in 1903, was enacted by Parliament in 1949)

Land Registers Bill

Mr Richard Brown (Glasgow)-........................................................ We are proud of our registers in Scotland, and when we contrast the system in Scotland with that prevailing in a large part of England we find it difficult to understand how they can get along without something in the nature of registration of writs such as we have here. There can be no doubt that Scotland is greatly indebted to its system of registration. It is admirable so far as it goes, but, as Mr Shearer (Greenock) has pointed out (in a paper presented to the meeting), it is quite possible to extend it in a beneficial direction by making it a registration of title instead of registration of writs........................................................................... The title consists of a certificate on parchment, with a neat little plan in the corner and the particular a area of ground indicated by letters and figures in the body of the deed. It is mostly printed, the blanks being filled up with the particulars applicable to the special property to which the certificate refers.

(These proposals made by our society in 1903, found their way to the statute book in 1979)”

There appears to be something in the air or possibly in the rowies of Aberdeen which brings out inspirational legal creativity not to mention genius before its time and we await with interest the outcome of our Council’s deliberations this week.

One question. Was that "central body in Scotland which would be capable of expressing the opinions of the whole profession" ever actually created?

MS 

PROXIES STILL REQUIRED

MEMBERS WILL HAVE NOTICED THAT, SINCE OUR CURRENT GAZETTE WENT TO PRESS, THE LAW SOCIETY COUNCIL’S PROPOSAL TO RESCIND THE CONSTITUTION HAS BEEN WITHDRAWN. 

HOWEVER, THE REQUIREMENT FOR SLAS PROXIES REMAINS UNCHANGED.

COUNCIL WILL BRING OTHER AMENDMENTS TO THE CONSTITUTION TO THE SOCIETY’S AGM IN MAY THIS YEAR.  . 

IF YOU WISH TO HAVE A VOICE VIA SLAS AT THE AGM WHEN YOUR CONSTITUTION COMES TO BE CHANGED, THEN PLEASE COMPLETE AND RETURN THE PROXY FORM INCLUDED WITH THE GAZETTE.

SECRETARY

3RD APRIL 2012  

Prepared and presented by Graham Gibson, Solicitor , Perth,  and SLAS Council member.

The following is the text of the covering email and 7 Questions sent to 710 solicitors in about 450 practice units on the 13th January.

The Stats from our emailing software advise that of the 710 emails sent:

• 329 were definitely opened
• 25 were bounced - mainly out of office auto replies
• 356 were unopened – this figure is not reliable as many firewalls block the emailing software from detecting whether an email was opened or not. Our experience is that the opened number is actually higher than stated and this unopened figure lower.
• 228 people clicked on one or more of the links contained in the email – the click count is always a good measure of the success of any mailshot. The breakdown of clicks is interesting.

• 218 people clicked on Disciplinary Decision on the SLAS site a total of 497 times
• 32 people clicked on Guardian Article on HSBC package a total of 40 times
• 21 people clicked on the Blemheim Finance Article a total of 29 times
• 12 people clicked on the LSS Financial Compliance update a total of 16 times

Whilst it is a great result that 218 people followed through to the Disciplinary Decision on the SLAS web site I have only had responses from about 25 firms (including one from John Scott of LSS).

I have noted the responses below alongside the original question. As the responses came by email and were often in note form I have tidied up grammar/spelling but not changed the meaning. I have also omitted comments where people were letting off steam and that would have caused offence. - Graham

Text of covering email

“CML Compliance Alert – for urgent attention of residential conveyancers

The Council of the Scottish Law Agents Society (“SLAS”) has asked that I contact solicitors involved in residential conveyancing across Scotland

(a)        to alert you to a recent Disciplinary decision that will impact on every firm’s CML Compliance procedures, and

(b)        to canvas views on what, if any, policy changes solicitors would like the Law Society of Scotland (“LSS”) to implement in light of this and other recent developments in the residential conveyancing market.

SLAS has been representing the interests of solicitors throughout Scotland since it was established by Royal Charter in 1884. It was one of the prime movers in establishing the LSS in 1949 who then took over the lead role of representing the interest of solicitors in Scotland.

SLAS’s role is to highlight and stimulate debate on issues that are of concern to the profession and where a significant percentage of the profession have a view that is contrary to the policy adopted by the LSS or any other organisation that solicitors deal with to raise these views. We aim to engage positively with the LSS, ROS, SLCC, SLAB, CML etc and to give voice to your concerns.

This case highlights a number of issues and has caused many practitioners to reflect on whether we should continue to act for both Borrower and Lender in residential conveyancing. The following are some of the points raised by various colleagues in the profession. The SLAS Council would welcome hearing your thoughts which will help shape any proposal we make to the LSS.

Consolidated Responses from LSS members to SLAS email on CML Compliance

1.         Were you aware that if your residential conveyancing Team breach any of the CML Handbook rules you risk prosecution by the LSS whether or not the Lender has complained or has suffered loss?

Narrative

See Mr Brown’s submission at page 12. If you find yourself agreeing that the Respondant was entitled to exercise her professional judgement in deciding whether or not to report a matter to the lender, you are at risk and need to review your Team’s CML procedures as a matter of urgency.

This judgement makes it crystal clear that there is, and never was, any room for exercising professional discretion on whether or not to report a breach. Whether a failure to report will be serious enough to result in a prosecution being raised is a matter of judgement for the LSS Compliance Team who carries out your inspection. However, any failure to report, irrespective of how trivial the breach, may result in a claim by the Lender if they suffer loss on the mortgage.

Responses

This is not the first case where a breach of the CML Handbook has been determined to be a breach - see Pervez case of 4 years ago. Here the issue was failure to disclose incentives but there are other cases of failure to register securities which is seen as a breach of CML Handbook as well as just plain vanilla misconduct.

In Dunlop there is mitigation - two letters sent to lenders on 18th Sept - suggests to me an Accounts Rules Inspection and those were actions as a result. LSS can investigate ex propriu motu when it finds evidence of failures to comply with terms of the whole rule book which it stumbles across on inspection. Again with the third case there is disclosure later but when it was too late to for the lender to back out.

There is no doubt that there were breaches of the Handbook - lenders perceive back to back transactions are potentially fraudulent. It seems inconceivable that the agent was unaware of the back to back transactions at settlement even if not aware of the problem at the time of sending in the certificate of title. So she must have realised she was running some sort of risk in not reporting prior to settlement.

The decision by the LSS is to prosecute. The SSDT, which is 50% lay members, decides whether to uphold the prosecution or not.

~~~

An another example of LSS Financial Compliance team treating the CML Handbook as gospel and according it a status that it was never intended to have.

~~~

I suppose LSS will argue public interest as e.g. breach of the 6 month rule usually indicates a fraud though not by any means always!!

~~~

A breach of the CML Handbook is being treated by the Compliance Team as Professional Misconduct even where there has been no complaint, claim or loss or the Lender. If the Compliance Team pursue it at all should it not be as a Service Complaint?

~~~

I firmly believe many Solicitors up and down the country have done in recent years particularly at a time, and I am thinking of the years pre 2009/2010, when lenders were voracious in their appetite to lend and quite simply couldn’t have given two hoots about whether or not properties had only been purchased weeks or even days before. 

It isn’t the first time that I have contacted a local branch of a lender to point out the fact that the loan instructions had a “purchase price” different to that which the clients were paying only to be told that the Mortgage Advisor at the branch was aware of that and that the “purchase price” in the Offer was the value.

~~~

Find a tall building!

~~~

Fancy joining me and a bunch of former solicitor for morning mojitos on the park benches?

~~~

Thanks for that and for that judgement. Might as well just pack up now and go home!!

~~~

Thank you for your e-mail of Friday 13th January regarding the above. The date seems to be appropriate having regard to the ominous contents.

~~~

Our firm were not aware that a breach of the CML Handbook Rules risked prosecution by the Law Society, irrespective of any complaint or loss from or by the Lender.

~~~

I refer to your recent email and did not know that we risk prosecution by the LSS whether or not the Lender has complained or suffered loss.

~~~

I was not aware until very recent discussions that if any member of our team breach any of the CML rules, we are at risk of prosecution.

~~~

In connection with the topics which you raised in your very informative bulletin, I think it’s probably fair to say that until recently I don’t think very many of us were aware that the risks of breaching the CML Handbook Rules were as serious as they are.  Lenders themselves clearly have very short memories in relation to their willingness to lend and their completely cavalier attitude which existed until the last couple of years or so.

 As a firm we have now spent a great deal of time, effort and money in ensuring that we are fully compliant with all aspects of the Accounts Rules, Money Laundering Regulations and the CML Handbook.

However, instances still arise particularly in relation to the CML Handbook.  I have a case ongoing at present where [a Top 20 firm].  Their client had only bought the property in [recently] and I explained to the Solicitor there that we could not settle without intimating this to the lenders.  The Solicitor at [T20 firm] expressed surprise that we had to do so as he was not aware himself that this was a requirement. 

It seems therefore that it is not just us small firms who were completely unaware of the requirement to adhere to the rules but the large firms also.

~~~

2.         Were you aware that the failure to report any breach of the CML Handbook can result in a claim against you by the Lender?

Narrative

The Marsh Annual Report 2011 on the Master Policy discloses that 25% of all claims were intimated by Lenders. A significant majority of these claims were based on failure to report alleged breaches of the CML Handbook.

The reality is that the reason that the Lender suffered loss will have more to do with our client’s financial circumstances than anything we did or did not do when processing the mortgage paperwork (See: Blemain Finance Case para 59 and following for interesting Judicial insights from the bench), but the Lenders’ argument is:

• They are our client and we owe them the same professional duty as the Purchaser;
• by accepting the Lender’s loan instructions we enter into a contractual relationship with them based on the offer of loan and the CML Handbook;
• in terms of that contract we undertake to report any breach of the Offer of loan or CML Handbook conditions before dealing with the loan funds;
• if, on a review of our file, it transpires we did not fully comply with this reporting requirement, the Lender will argue that if we had reported the matter they would not have lent and that, therefore, our breach is the direct cause of their loss.

As far as I am aware this argument has not been tested in the Scottish Courts but I understand claims of this nature, particularly, if the breach is one of the “Big Six” highlighted in Marsh’s Annual Report, are being settled by the Insurers.

Responses

Yes. Marsh advised us last year that immediately a loss is incurred on a repossession lenders scour the purchase transaction for evidence of a breach of the rules. If there is one, no matter how trivial, they will lodge a claim with Marsh and it will be paid out.

Lenders are hard-nosed commercial people with an eye to the main chance. They have identified our Master Policy cover as a way of underwriting their commercial losses. Given the terms of the CML Rules, they know they will find some small breach and that will enable them to sue us for any loss they may suffer. One could admire their commercial acumen if we were not the ones being shafted by them!

~~~

Thank you very much for your email.  The view of the three solicitors in this firm is that while we were aware that a lender could claim if we ignored their instructions, we were not aware that the claim was not restricted to consequential loss. 

~~~

Thank you for sending me the compliance alert. I was aware that a breach of the rules in the CML Handbook could result in a claim, but I did not realise that the claim was for all losses irrespective of any causal connection with the breach.

~~~

Our firm were aware that a breach of the CML Handbook could possibly result in a claim by the Lender.

~~~

Similarly I was not aware that failure to report any breach can result in a claim by the lender.

3.         Would the profession save time and money if the Insurers/the LSS were to take a test case against one of these claims by the Lenders rather than individual firms suffering the worry, Excess payments and increased annual Premiums that any claim brings?

Narrative

As any principal in any firm will confirm the PI insurance provided by our Master Policy cover is more akin to a short term loan than general insurance such as a car or buildings and content policy.

With car insurance if you have an accident you will have an Excess to pay on each claim and your premiums will rise but the total cost to you will be a very small percentage of the amount of the claim.

This is not the case with a claim on the Master Policy. We are not privy to the detail but a significant percentage of each claim is recovered from the firm by way of Excess and increase of annual premium over the next 5 years.

The Excess paid by each partner/director on each claim will be £3,000 or £6,000. The amount is capped for firms with more than 15 partners/directors at the first £45,000 or £90,000 of each claim.

A significant (but unknown) amount of any claim remaining (after payment of the Excess) is then recovered from the firm over the next 5 years through an increase in their annual PI premium.

If we estimate the average claim by Lenders to be £45,000 a 2 partner firm who referred this to Marsh for settlement could end up paying an Excess of £12,000 plus (say) £20,000 in additional PI premiums over the next 5 years. Making a total of £32,000 on a £45,000 claim.

With Marsh warning of a significant rise in the number of these claims would you agree that it would be in the interests of the profession if the Insurers/LSS were to take a test case to establish whether a failure to disclose information to the Lenders will entitle the Lender to recover any losses they might suffer on a mortgage?

Responses

I do think that it would save time and money if the Law Society would proceed with a test case but I think that the LSS do not act in our interests in these matters.

~~~

In England they have no Master Policy and all firms are worse off because of this. If lenders are our most persistent claimants they are causing our premiums to rise and could lead to Master Policy cover being withdrawn.

If this information is correct is it not justification on its own for removing exception 2.1.4(f) and replacing it with a provision that the borrower and lender must be separately represented?

~~~

Option 3 looks good!

~~~

We do not see any particular merit in a test case against a Lenders’ claim being raised – we suspect that any such case would take a considerable time to reach any resolution, and I would imagine would incur substantial expense for the profession.

~~~

I do believe that it would be in the interests of the profession as a whole if the Professional Indemnity Insurers and / or The Law Society of Scotland were to the take a test case to establish whether a failure to disclose information to the lenders would entitle the lender to recover any losses which they might suffer in a mortgage.  The way things are going there will be a great many firms who will simply end up going out of business due to claims which may be instigated resulting in increased premiums over the next five years.

~~~

In the light of this development, we would support an action against a lender in an attempt to restrict the loss to consequential losses only. 

~~~

We would support the bringing of a test case as it is outrageous that any other loss should be compensated.

~~~

My firm would be happy to make a contribution to the fighting fund as, I am sure, would many others who have been at the wrong end of a claim by lenders on exactly this basis.

~~~

Yes, I agree that it would be in the interests of us all for a test case to be taken.

4.         Would you urge the LSS to reverse its recent decision and prohibit solicitors from acting for both Borrower and Lender?

Narrative

You may take the view that the Regulatory creep this case highlights removes any remaining profit margin from residential conveyancing and that the potential for claims by the Lenders makes it too high risk.

You may take the view that the recent move by HSBC to restrict their panel in Scotland to 4 firms and to launch a keenly priced conveyacing package is a model that will be followed by other Lenders. Combine this with the on-going policy of Lenders to remove firms (particularly smaller and non-IT literate firms) from their conveyancing panels and you might take the view that it would be in the best interest of both the profession and our clients if the LSS re-asserted some influence over the situation by banning solicitors from acting for both Lender and Borrower.

Responses

When you stand back and look afresh at the current solicitor/lender relationship it is blindingly obvious why the lenders are against separate representation.

We do the work to their specification for nothing. If their poor lending decisions or a change in the borrowers circumstances cause a loss they know there is a good chance that they can recover their loss from us.

~~~

Here are a few reasons for not acting for both borrower and lender:

•     No need to consult and comply with the CML handbook ever again!

•     No need to give the ridiculous warranties demanded in the lender's Report on Title.

•     No need to spend huge amounts of (unpaid) time covering for the lender's ineptitude.

•     How many of us adequately charge for the work done in connection with a home loan or a discharge? The answer is none of us. In effect we have been subsidising both the lender and the borrower for years.

~~~

Recent additions to, and interpretations of, the CML Handbook have resulted in a far greater duty of care being owed by solicitors to their lender client than many solicitors realise, and which is in many respects greater than the duty of care owed to the borrower client. That imbalance, of itself, is a conflict; a conflict which, for the sake of the whole profession and the integrity of the Master Policy and Guarantee Fund, the Regulatory Committee should now seek to outlaw by prohibiting dual representation.

As you know, the present view of the Professional Practice Committee is that no change is required. There is a view that for the Society to seek a change would be to invite anti-consumer attacks. There are some at Drumsheugh who privately accept that there is movement towards separate representation (witness e.g. HSBC's recent pronouncement) and that in two years or so there may be a completely different landscape so far as separate representation is concerned.

Even as we speak, other lenders are engaging in 'active panel management' at the requirement of the FSA. This effectively means culling their panels. The arbitrary yardsticks thus far deployed include: low-volume of transactions; business model (no sole practitioners); dormancy; failure to pay a 'panel arrangement' fee. All of these disproportionately affect the smaller practitioner.

There are, I am told, over 600 (and increasing) sole practitioners on the Society's roll which accounts for over half the number of registered firms. If these firms are excluded from lenders panels, a large percentage of conveyancing business that might otherwise have gone to them will go to their larger competitors.

Even in these straitened times, conveyancing is still the bread-and-butter (probably 'bread-and-spread') of most small firms and if that is lost, those businesses will inevitably fold.

If the Society does nothing and simply allows lenders to dictate the speed and direction of travel, the legal landscape will have changed in two years time; the Society will be impoverished by the loss of many small firms.

~~~

Following this case it is becoming ever more apparent that separate representation is in solicitors’ interests.

~~~

It seems to me that this is evidence that the only solution for this problem is the answer "no" to question 5. Any other solution perpetuates the existing problem, does not properly protect the lenders, and gives an unfair and unacceptable advantage to remaining panel members. The exception to the normal conflict of interest rule is now shown to be a mistake.

~~~

With Santander now asking us to pay to be on their panel it is only a matter of time before they all follow suite. I believe it is a total conflict of interest to act for a lender and the client and we need to compel the lenders to pay a solicitor to represent them by refusing to act for both parties.

~~~

I have been thinking on your suggested solution to the objection from some of the profession that

"... it will make no difference if we have separate representation because the Lender's solicitors will insist we sign a Report on Title that imposes the current obligations and liabilities"

Your response was that if we remove the conflict it gives us a freedom to respond in ways that are currently not open to us and so we have not considered.

How about the LSS set out a Classic Report on Title for Residential conveyancing designed to protect the interests of its members. This is done without consultation with the Lenders but on the basis of what is fair and reasonable to all parties. The LSS then make it a Professional Misconduct issue if the solicitor departs from the Classic Report on Title. The Master Policy imposes double deductibles if the non-classic ROT is used, in same way as they do for Letters of Obligation.

It is written into the Classic ROT that the purchaser's solicitor will have no liability to the Lender if the property is repossessed and a loss sustained unless the solicitor was part of a fraudulent scheme. Any breach of the Classic Conditions will be raised prior to settlement of the transaction, if any matter is not raised it will be deemed to have been accepted by the Lender's solicitor.

This Collective approach may help convince those who are concerned about their fee income that there can be life after Dual Representation is barred

~~~

I have long felt it the case that The Law Society of Scotland should reverse its decision on the conflict of interest between borrower and lender.  There is surely a clear conflict in acting for borrower and lender. 

The recent announcement made by HSBC to restrict their Panel in Scotland to four firms begs the question “whose interests are going to be protected more – client or lender”. 

I do not believe the public want that to happen and that the public are quite happy to use their own Solicitor.  Indeed looking at the on-line comments in relation to the HSBC issue, the majority of people take the view that HSBC’s actions are ill thought and ill-conceived. 

However, with the Society wanting to ensure that Solicitors are whiter than white it should really be the case that we act for our clients and thus remove any risk from the Master Policy in acting for lenders.  Firms who act for lenders particularly if there is a small panel as in the HSBC case should clearly not be covered by the Master Policy and should have to arrange their own separate insurance in my view.

~~~

I think the time has come to debate separate representation for buyer and lender. I think that is the logical conclusion given the rise in claims and the hidden costs to us all of conveyancing for which we, of course, do not charge.

I appreciate some may baulk at this and fear losing business but the truth is there is much less business of that kind and it is actually a lot less profitable at the end of the day than we have fondly imagined given the litigiosity of the lenders in this brave new world!

~~~

I suspect the L.S. should be the vehicle for driving this forward. It will probably need a good shove however and SLAS should in my view be in the vanguard in promoting discussion.

~~~

I think that it is imperative that the LSS reverse its decision and prohibits solicitors from acting for both lender and purchaser.

~~~

Our firm would urge the Law Society to prohibit solicitors from acting for both Borrower and Lender.

~~~

Accordingly, as a way forward, our firm would like to see the Law Society reconsidering the position with regards solicitors acting for both Borrower and Lender, and we feel that a prohibition in residential transactions, as with commercial security transactions, would be beneficial to both the profession and to clients.  We are concerned that, if no further action is taken, then more and more residential conveyancing will drift towards a small number of Panel firms, more than likely based in the central belt, and we feel this clearly is not to the interest of clients and non-Panel firms.

~~~

I have circulated your email to the conveyancers in the firm and I hope that some will respond – but one never knows.  

Personally I think the time has arrived (and did some time ago) to say we cannot act on both sides of any transaction whether for buyer and seller or for lender and borrower.  

I would stress however that if that is to be the case and lenders follow HSBC then it has to be on the basis that they appoint properly qualified people to act.   Far too much time is taken up with firms who act for lenders using not properly qualified paralegals to do the work who frankly do not know what they are doing.  

A properly qualified person need not be a solicitor but they have to have a proper knowledge of the law and the relevant procedures otherwise I think the issues will remain and the lenders will simply be chasing the handful of firms who act for them and who did not ask the right questions – cynical moi?   I will try to address your questions because I think it is really important that the LSS get involved in this and represent our interests!

~~~

One benefit of not acting for the Lender is that we will not have to worry about falling out with them and will be able to tell our client (their borrower) to complain to the FSA if they are not satisfied with their, often, abysmal lending service.

~~~

We would all support a change in the rules of conflict of interest which means that different solicitors must act for the lender and the purchaser, unless the matter in question is simply a discharge or restriction of an existing security.

~~~

We have always considered that it is far too dangerous for solicitors to act for both purchaser and lender, unless the question is simply a restriction or discharge of an existing security. The same applies to re-mortgages. It would have a beneficial effect on the market if solicitors could not act for both parties and introduce choice in to the market place.

~~~

Give solicitors back their independence so that we are free to assert our clients rights against the 4 lenders who dominate the property market in Scotland. 

Currently, how many firms will have a go at a lender who has treated a client unfairly? Does the profession assert the rights of borrowers/investors who have been treated unfairly as forcibly as we should or are we unduly influenced by the loss of business from the lender if we are perceived as aggressively pursuing our client's claim.

How many of us have sued/help draft a complaint against a lender for utter incompetence at administering a loan that caused a transaction to be delayed/fall through? How many of us have prevented this situation arising by doing fire fighting (unpaid) on behalf of the lender?

Restoring solicitors’ independence would provide consumers with an advocate in the face of increasingly powerful lending institutions.

5.         Alternatively, would you vote to maintain the current exception in the conflict of interest rules that permits firms to act for both Borrower and Lender?

Narrative

You may take the view that in these straightened times you cannot risk losing the income generated from residential conveyancing. If you are not allowed to act for the Lender there is a danger your client who is purchasing may be lured away by the Lender’s offer of a deal like the one from HSBC where instructing the Lender’s solicitor to act in the purchase looks attractive.

Whilst this case highlights Regulatory creep it does not create a new offence. This issue was highlighted by the LSS in issue 1 of the LSS Financial Compliance Update dated June 2010, albeit that the focus of that update was mortgage fraud. You have now tightened your procedures so that your Team is operating within the existing Regulatory framework. If other firms cannot exercise the same level of internal management they can choose not to withdraw from the residential conveyancing market.

Responses

Our firm would prefer if solicitors were prohibited from acting for both Borrower and Lender, and so we would not vote to maintain the current exception in the Conflict of Interest Rules.

~~~

4 and 5. I do not think that solicitors should be prohibited from acting for borrower and lender. My reason for this is fear that our conveyancing fees would fall dramatically if this did take place.

~~~

I take on board that in these difficult financial times we have to consider whether we can risk losing the income generated from residential conveyancing.  However, clients will not simply stop buying properties and will discover, as many have also already discovered, that using the lender’s Panel Solicitor can sometimes be a whole lot of hassle for a small financial gain.

6.         Would you like to see the LSS re-consider its policy on enforcement of the CML Handbook?

Narrative

The retrospective nature of enforcement is a particular concern. Despite the best efforts of Caroline Flannigan, a former LSS President, and SLAS a motion was passed at the AGM/SGM last which explicitly made a breach of the CML Handbook a disciplinary offence. This led to an amendment to the Accounts Rules at 6.5.1 (c) by adding the phrase "including complying with lender instructions where the lender is a client".

The present case was raised before the amendment to the Accounts Rules and related to events that took place in 2008. Issue 1 of the LSS Financial Compliance Update was issued in June 2010 and even then the focus of that update was on preventing mortgage fraud not a clear direction that any breach of the CML Handbook would be treated as a disciplinary matter.

Before the new Consolidated Rules came into effect at the end of last year many experienced practitioners may have taken the view not to report a breach of one of the CML Handbook to a Lender on the basis that it was entirely innocent and would not adversely effect the Lender’s interest. Had it been made clear to practitioners that exercising their professional judgement in this way could result in them being prosecuted by the LSS all breaches would have been reported.

Should the LSS advise members of the Guidance issued to their Compliance Teams? Does this Guidance restrict reportable offences to the Big Six and failure/delay in registering title/Standard  Security? Is there a cut off date before which failure to comply with the Big Six is not reportable? Should the LSS follow the lead of the government in Eire and issue an amnesty? We would be interested in hearing your thoughts.

Our colleagues in the LDU advise that while consulting the Professional Practice unit at the LSS is something we should all do before the event, when we need guidance on which path to follow. However, the very strong advice from LDU is that you should definitely not seek advice from the LSS after the event where you are fairly sure you have breached the rules. If you find yourself in that position you may be interested in the new SLAS Confidential Helpline. SLAS are in the process of setting up a Confidential Helpline staffed by experienced practitioners on a voluntary basis to assist colleagues who find themselves in this position.

Responses

As the Cashroom Partner in a large firm I am horrified to discover that my neck will be on the line if someone in my firm’s Res Conveyancing Dept does not comply with the CML Handbook. 

Thank you for bringing this to my attention. I will raise this at our next Management Meeting and I am confident you will be able to count on our support.

~~~

From John Scott, Professional Practice Unit at LSS - You may be aware of the Professional Support Protocol, which is available on our website at this link:-

http://www.lawscot.org.uk/members/member-services/professional-practice

This Protocol provides as follows:-

“In order to deliver the highest level of support to members there is a requirement that confidentiality is preserved so that, with two exceptions, members can obtain advice without fear of disciplinary consequences. The exceptions are where the solicitor making the inquiry states that he/she has or may have dealt dishonestly with client’s money or where there is either knowledge or suspicion that a solicitor (rather then their client) is engaged in money laundering.”

And as follows:-

“Inquiries shall not trigger an inspection, audit, investigation etc of the inquirer’s firm.”

In the light of that Protocol, members should not hesitate to contact me or one of my colleagues in the Professional Practice Department for advice at any stage. All four solicitors in the department had extensive experience in private practice before joining the Society, which gives us a degree of empathy when dealing with enquiries.

~~~

Whilst we would certainly not wish to see firms being prosecuted for trivial breaches of the CML Handbook, we do not think that the Law Society should reconsider its current policy on enforcement.  It is presumably in the best interest of the profession to ensure that all solicitors adhere to the terms of the CML Handbook, to prohibit the claims from Lenders.

However, we would hope that the Law Society would take a practical view on any relatively trivial breach of the CML Handbook and exercise reasonable judgement in this regard.

I am sure we are all aware of certain technical breaches of the CML Handbook which may arise – not least where title deeds are delivered just prior to settlement, or loan papers, and indeed Lender’s details, are received just prior to settlement.  For example, it is presumably not an uncommon situation where there have been some historic alterations undertaken at a property for which there is no Certificate of Completion available, and I am aware that different practices operation in different areas of the country. The CML Handbook will make a general reference to taking all reasonable steps to ensure that all “necessary” documentation is available, and given the current position, I would imagine that all solicitors would now be reluctant to make the judgement to whether or not, for example, documentation for a 20 year old minor alteration was “necessary”.

As a result, in order to ensure that they are not at risk, a solicitor would be wise to intimate this to the Lender for their confirmation that they accept the position, but of course given the difficulty of actually making contact with anybody at certain Lenders who can make any decision, it may be unlikely that any decision would be reached in a reasonable timescale.  Alternatively, the Lender may simply revert matters to the solicitor and I am sure that we have all seen the situation where the Lender has advised that they are “relying on our judgement”!

I would hope that, in circumstances where some judgement has been exercised by the solicitor, and where there would be no risk of loss to the Lender, then the Law Society would not be heavy handed in such circumstances.

~~~

In connection with point 6 of your E-Mail it appears that our Society, whilst promoting themselves as one of the new regulators, still believes it should be acting as Policeman and I am aware that in addition to them now making a breach of the CML Handbook a disciplinary offence that there is a process of information sharing with the Police and other authorities. 

One has to wonder what the Society is gaining out of such actions.  I am certainly aware from speaking to other colleagues that very few, if any, would seek advice from The Law Society of Scotland given the Society’s clear statement to share information with other bodies.

~~~

We agree that the LSS rules should be changed so that they should only bring disciplinary action if there is a complaint from the lender. We are acting as agents, and the rules of agency do allow for decisions to be made by the agent.

~~~

I strongly agree that LSS should reconsider its policy.

7.         Are there any points or suggestions you would like SLAS to raise with LSS or add to the discussion?

Narrative

Responses

I think it is just a sign of them tightening up in light of things coming out of the woodwork as a result of the downturn.  A condition about this was introduced into the Combined Standard missives last October / November. 

I don't think it is the end of the world as we know it.  I believe the police are investigating several brokers and solicitors firms in connection with mortgage fraud arising out of back to backs and as you know, the Law Soc have said that they will disclose the outcome of their investigations to the police if they have suspicions.

It's all just a sign of the times. 

~~~

Thank you for the email last week and I respond as follows:

1      No

2      No

3      Perhaps that would be sensible

4      I am coming to the conclusion that we should not act for both lender and borrower

5      Perhaps not

6      Yes

7      None other than I did speak to someone at LSS who was very helpful in explaining the FSA involvement with lenders which in part is resulting in the restriction on lender panels and my answers above are in part a reaction to that first and foremost but also as now highlighted because of the CML implications.

~~~

I do believe that the Society seem determined in hanging a great number of lawyers in the country out to dry to, presumably to demonstrate to the government, the CML and others of their ability to govern members of our profession.  That is not what I thought The Law Society of Scotland was there to do.

~~~

My firm would welcome the SLAS Council making representations to the Law Society in connection with some of the matters raised.

~~~

I think that the Scottish Law Agents is the only body which truly represents the mass body of solicitors at this time and must take more action to make the LSS more accountable to us

~~~

I attach a copy of S.108 as it appears in the draft Land Registration Bill introduced in the Scottish Parliament last month, together with a copy of the Law Society submission relating thereto.

This should be of concern to all solicitors as it creates a criminal offence (punishable by up to 2 years in prison) where a solicitor fraudulently or recklessly submits a deed for registration in the Land Register.

The Law Society’s response includes the following:

“…. the use of the term ‘recklessness’ has the effect of criminalising professional service which, although unsatisfactory, falls short of fraudulent As drafted, this would cover those solicitors who make a genuine administration error in submitting an application for registration or any other dealings with the Registers of Scotland.”

The section did not form part of the Law Commission's recommendation; rather, it has been insisted upon by the Lord Advocate (and the fear is that, having been insisted upon, will prevail).

(Extract from) SUBMISSION FROM THE LAW SOCIETY OF SCOTLAND

The Society is fully supportive of, and committed to, all measures aimed at preventing and minimising any kind of fraudulent behaviour. In this respect the Society have often worked, and continue to work, very closely with stakeholders, including the Registers of Scotland.

Section 108

The Society notes that the Land Registration (Scotland) Bill, as currently drafted, creates a new offence at Section 108:

(1) A person mentioned in subsection (2) commits an offence if the person-

1. makes a materially false or misleading statement in relation to an application for registration knowing that, or being reckless as to whether, the statement is false or misleading, or

2. intentionally fails to disclose material information in relation to such an application or is reckless as to whether all material information is disclosed.

The Society wish to make the following comments on the proposed Section 108 offence:

The Society is of the opinion that the proposed provision is not necessary for two reasons, (1) the current criminal law, both at common law and under statute, is sufficient to prosecute the mischief complained of, and (2) the introduction of this offence is disproportionate to the level of threat presented.

(1) There already exist statutory and common law criminal offences which cover the mischief complained of. The common law provides for the offence of fraud, and attempted fraud which extends to false representation by writings, words or conduct. Further offences are also provided for in the Proceeds of Crime Act 2002. Part 7 sets out a number of offences (appendix 1) which relate to money laundering.

In addition, the Society is of the opinion that when a solicitor is completing and submitting registration forms they are effectively making a statutory declaration. If the solicitor provides false or misleading information in that declaration, then the making of false or misleading statements, whether intentionally or recklessly, may be pursued as contempt with the penalties that establishment of that offence carries (see Appendix 2).

As well as criminal sanctions, the Society, as the regulator of the solicitors profession in Scotland, has strict rules in place to prevent and address any kind of wrongdoing by a practicing solicitor. In particular, the Law Society of Scotland Practice Rules 2011, Rule 6 provides:

6.23.1 Every independent legal professional who is regulated by the Society shall comply with the provisions of the Money Laundering Regulations.

6.23.2 A regulated person shall demonstrate to the Society on request that the information held by him or by his practice unit is sufficient to evidence compliance with the provisions of Part 7 of the Proceeds of Crime Act 2002 and Part 3 of the Terrorism Act 2000.

Where a solicitor is found to be in breach of the Society’s Rules, then the Society may take disciplinary action against that individual or firm of solicitors.

The Society, therefore, is of the opinion that there exits sufficient deterrent in the form of existing law and practice rules to deter the mischief complained of.

(2) The Society believes that the introduction of this offence is disproportionate to the level of threat presented. The Society has not been presented with, nor is it aware of, sufficient evidence to demonstrate that the level of mischief to be apprehended is as extensive as suggested. And therefore, the Society suggests that the number of cases where current ‘difficulties’ in prosecuting the mischief under existing criminal law arise, as forwarded to support the introduction of the offence, is very small in number. The Society also believes that the very small number identified could all be prosecuted under existing criminal law. Statutory intervention to address cases which are of rarity would appear to be incongruous to the statutory process where adequate tools exist for prosecutors to pursue criminally reckless conduct by solicitors resulting in loss to a public body.

The Land Registration Act 2002, which applies in England and Wales, provides for a similar offence and mirrors, to an extent, the proposed Section 108 offence. The Crown Prosecution Service has confirmed to the Society that no proceedings or prosecutions have been brought under these provisions.

The Society is of the opinion that the proposed wording of Section 108 (1) is not sufficient to give solicitors or other applicants sufficient notice of the types of behaviour, action or inaction which may result in criminal penalties being levied or indeed deprivations of liberty ensuing. The Society hold this to be a fundamental requirement of the criminal law in our society.

~~~

The legal profession in Scotland have, quite honestly, been hung out to dry by those who are supposed to be representing us. Clearly influenced by the fact that those on the Council of The Law Society of Scotland have their own agendas for themselves and for presumably for their own firms.  I [despair] at what I see as The Law Society’s complete antipathy towards the general practitioners in the legal profession in Scotland.

~~~

The foregoing represents a great deal of work from practitioners who seek to assist the practising profession to address potentially serious problems and SLAS will now reuest the President of the Law Society to meet with a group of practitioners in order to discuss the feasibility of an amnesty in respect of technical breaches of CML as far as professional discilpine is concerned.  The insurance position, in which mortgage lenders might raise claims unrelated to such technical breaches with a view to recovering shortfalls arising from re-possessions due to adverse market condition, is a separate issue.

Members are requested to assist those  colleagues who have undertaken this task by following developments closely and by sending in their own information and views. 

Secretary

The Scottish Law Agents Society (SLAS) continues to provide the PCC program with the next delivery running from 15th to 25th May 2012. In addition, a team from the Royal Faculty of Procurators at Glasgow (RFPG) and the Scottish Law Agents Society (SLAS) has drawn up a programme which meets all of the requirements of the TCPD at the lowest feasible cost and with the minimum of disturbance to the main training vehicle while providing through a team of experienced solicitors an excellent training in most aspects of legal practice.  Our programme proposes that all trainees taking the course shall:-

• Make representations in the Sheriff Court in a contested matter.
• Analyse a model set of domestic residential missives and deal with a specific drafting difficulty.
• Analyse the pleadings contained in a genuine Closed Record and engage in legal debate thereon.
• Analyse the terms of a standard private client’s Will and adjust a variation thereto in the light of a specific instruction.
• Rehearse a scripted summary trial and respond, individually, without script, to particular difficulties arising.
• Analyse a common form of commercial lease and draw an amendment thereto in terms of a given correspondence.
• Listen to a distinguished, senior solemn trial expert describe the preparation process in detail.
• Draw a petition for the appointment for an executor dative in specific circumstances and ascertain and complete the forms necessary for the confirmation of an executor in an inheritance tax liable estate.
• Analyse a common form of offer for the purchase of commercial premises, including the business operated therein and distinguish this from a share transfer proposal.
• Listen to a senior expert practitioner describe the criminal process at Sheriff Court level.
• Take away a DVD recording of his / her own performance in specific parts of the course.
• Attend at Registers of Scotland and meet a senior official for a discussion of technical, registration procedures including the relevant, cutting edge I.T procedures.
• Meet senior officials from the Scottish Legal Aid Board and discuss the legal aid process and use of I.T. in that process.
• Meet a senior official from the Law Society of Scotland and discuss the complaints issue with particular reference to the new Scottish Legal Complaints Commission.
• Meet a representative from an environmental search company and study the modern requirements regarding the ascertainment and consequences of contaminated land and relative search procedures.
• Meet an experienced practitioner for an analysis of the fee charging process and the dangers and difficulties that can arise.
• Engage in negotiation for the settlement of an action raised in the context of nuisance, based on a genuine closed record.
• On notice given, meet a technical legal issue in an interview context with expert guidance to hand with participation in approx 12 scenarios.

In addition, the trainees taking the course will complete the the Law Society requirements for training in:-

• Professional Ethics and Standards
• Professionalism
• Professional communication
• Business, financial, commercial and practice awareness
• Substantive and relevant legal knowledge

This course eschews narrow specialisation at the stage of the traineeship but rather seeks to provide trainees with insight and practice over the broad spectrum of work undertaken by the legal profession.  It has been our conclusion that each of these areas develops the essential skills of comprehension, analysis, deduction, argument, communication and pleading which are relevant and necessary to solicitors in whatever area they come to practice.  We have observed also that this course provides also an invaluable opportunity for trainees from different parts of the country and from different areas of practice and different sizes and types of firms to meet and network with each other.  We propose to deliver the programme from April 2012 and notes of interest should be intimated by e-mail to secretary@slas.co.uk or by telephone on 0141 332 3536.

M Sheridan, Course Convenor, February 2012

Dear Secretary,

If the Society of which you are so worthy a Secretary decided to increase the subscription by 60% then I am sure that many members would simply vote with their feet and you would no doubt have a flood of resignations.

I am astonished that the SLCC proposes to increase the annual levy by 60%. I do not see how that could be justified even in good business conditions but in the current climate I would have thought that this proposed increase deserved to be described as both unreasonable and unacceptable.

Is there anything that can be done?

Yours sincerely

(Signed)

One other aspect of the SLCC has been drawn to our attention. It appears that there have been a number of litigations between SLCC and the Law Society. It seems that Scottish solicitors fund both sides of these disputes.  It is a little bit like the man who reversed his first car into his second car in the driveway.  It just seems to be a strange way to spend your money.

We are not aware of any complaints as to how SLCC gets on with its business but the nature of the institution appears to present the risk of significant damage in the future.

It is, of course, entirely within the power of the profession to operate its own efficient complaints system and render the statutory body superfluous. Comment is invited.

(a)  No applications returned as unsigned.

(b)  No cheques returned as unsigned.

(c)  No delays awaiting delivery of paper documents.

(d)  No problems regarding testing clause details.

(e)  No difficulties over physical signatures on deeds.

(f)  No other electronic process available or in sight.

It had been hoped that, by now, the ARTL process itself would have been improved and made a little more solicitor friendly.  However, our recent, informal enquiries indicate that the present process is here to stay for the foreseeable future.  SLAS has long supported and fostered the use of the ARTL process and now invites members to advise of any difficulties they have with the process so that these might be addressed and resolved.

A significant factor in the main changes which have been made to the legal profession during the past couple of decades is the fact that these changes have been made from outwith and often against the will of the profession itself. The scale fee was abolished because competition was seen to be more important than fairness and the prohibition of advertising was outlawed because business promotion was seen to be more important than professional substance. The Scottish Legal Complaints Commission was set up  in the face of the Law Society having met and exceeded all of the government’s targets in relation to complaints handling and the profession is now, by law, regulated by a committee in which both the majority and the chairman may not be solicitors. The question now arises as to whether the legal profession sees its self as an essentially independent part of the constitutional element of the judiciary and separate therefore from the legislative and executive functions respectively, or simply as another commodity supplier, to succeed or fail according to how well its members can operate computers, make up punchy catchphrases and attract investors.

The Scottish Law Agents Society seems always to have adopted the former analysis and succeeding generations of members have endeavoured to provide the profession with a collegiate basis for that interpretation and, in 1949, achieved what appeared to be the Holy Grail of constitutional, collegiate identity in the formation of the Law Society of Scotland. Now, however, in the light of the changes referred to above, among many others, that former challenge appears to have been presented afresh to the profession and this may be the time and place for the determination as to how this challenge will be met.

First of all, it has to be acknowledged that the Scottish Law Agents Society , as it stands today with a membership extending to barely 10% of the profession, does not have the resources or profile to take any significant measures on behalf of the profession.

The first step therefore may be to establish whether there is a will in the High Street profession to address the issue on a collegiate basis subject to the overarching principles of professional independence and the public interest.  This might be achieved by the extension of SLAS membership

throughout the practising profession and all practising solicitors who are not already members of this Society are invited to take out membership immediately. The existing membership might take this message to their colleagues, both in their own firms and beyond.

In the second place, we might consider what measures would be required in order to provide the 21st century consumer with the service that he has come to expect. It would require expert guidance to make an exhaustive or even useful list but, for example, solicitors might sign up to a standard of provision which includes:-

• Saturday and weekday evening availability of service , and
• Unlimited range of service provision (by virtue of effectively maintained and `updated registers of suitable practitioners and their specialities),
• A consumer friendly banner headline such as "Scottish Law Agents Society" (unlikely, perhaps) or Scottishsolicitors.com.
• Cutting edge electronic technology as a minimum standard in every office
• An easily understood and universally applied method of charging
• A recorded and possibly partly funded system of ex gratia service provision (Solicitors already provide a significant amount of ex gratia service)
• A widely available and uniform code of practice for public dissemination
• A free and speedy complaints referral service (which might render SLCC redundant)
• A central reception for clients’ anonymised comments on service provision
• The provision of standard .guides to assist public understanding of legal services
• A recognisable and distinctive signage and, like some of the major banks, a dress code for support personnel

Methods of merger might be examined whereby practices maintain their separate legal identities but concede at least a degree of autonomy in order to increase access to modern technology and to present a recognisable public persona. 

Central services might include IT maintenance, institutional, informative advertising and case management provision.

Competition between solicitors has to be maintained and even fostered but that competition may be restricted so far as possible to the provision of legal services and not to the provision of ancillary services such as communications systems, IT facilities, estate agency provision and the like.

This would appear to be what, very roughly, qualitysolicitors.com have previously sought to provide in England and Wales and now, along with others,  seek to provide in Scotland.

If the profession has a will for a project like this to move forward then each solicitor who is interested is requested to register that interest on the Society's website at www.slas.co.uk  and confirm a willingness, not yet a commitment,  if matters are to go forward,  to contribute a payment of, say,  £100 per principal solicitor and £50 per employed solicitor, towards a fund for the purposes of engaging specialists  to take forward such a project. The value of individual registrations of interest would be greatly enhanced by additional suggestions and comment whether positive or negative.

Current SLAS policy was informed by a resolution at the 2011 SLAS AGM calling for the abolition of the relaxation and the re-instatement of the restriction upon acting on both sides of the conflicting interests of purchaser and lender.

The present group, it has to be said, received the highest accolades from the trainers and also from the shrieval bench for their presentations at court and we have no doubt that the profession is passing into excellent hands. The trainee solicitors from left to right/top to bottom are as follows:- Donna Elsby, Yumann Chung, Edel McGinty, Rhona McLean, Ricky Hope, Elizabeth Rose, Lesley Fairfield, Marc Convery, Shazia Rashid, Stephen Barr, Danielle Hughes, Sally Orr, Catherine Morrow, June Paterson, Mark O'Neil, Scott Forbes, Amanda Richardson, Scott Ford, John Munro, Stewart Duncan and Laurie Houston.

Messrs Slater & Gordon, from down under, are already listed on the Australian stock exchange and are expected to pursue a dual listing on the London stock exchange.  They have previously acquired approximately 20 competitor firms in Australia and will no doubt pursue a similar policy in the UK.  This could be good news for equity partners, particularly those approaching retiral but whose firms are currently burdened with bank debt.  Views are invited, however, as to the likely effect on non equity partners, other legal and non legal staff, clients and the public interest in the independence of the legal profession.

Personal injury litigants who previously had to support the legal profession will now be expected in addition to repay that £54 million to Messrs Slater and Gordon, with interest, and also to fund a suitable rate of dividend to multi national investors.  How unfortunate it would be if the rate of personal injury upon which Messrs. Slater and Gordon have calculated their returns were to reduce to any substantial extent.

Discussions centred also upon the difficulties arising from the conflict of interest rules which allow agents to act for purchaser and lender, now brought into focus by the recent disciplinary finding that any breach of the CML might amount to professional misconduct. Strict implementation of CML is seen as a possible source of discomfort to the purchaser while ‘taking a view’ in certain circumstances might relieve that discomfort and not, of itself, prejudice the interests of the lender. What if the loan falls into difficulty for other reasons, such as a failing market and the ’view’ that has been taken is challenged?

There was animated discussion also around the potential for alternative providers of legal services to come on stream and the issues as to where that might leave the solicitors profession and how solicitors might deal with these changes. A policy document is at an advanced stage of construction and may be found elsewhere on this website as you read this item.

Apart from all that, the abolition of the requirement for corroboration, disclosure of previous convictions, abolition of wigs, double jeopardy, a national police force, the information sharing protocol, ARTL, taxation of accounts and PEAT2 all came up for discussion.

So many interesting things to talk about these days, so little time to talk.

The member for Dumbarton is caught on camera, surreptitiously (?) studying the journal of another Society during our Council meeting. 

Members might see the website as a sort of shop window into which any member of the public who enters the appropriate address into his PC may gaze. However, in order to enter the shop and have access to the full contents, you require to log in to the website. This might be compared to turning a key in the lock to open the door of the shop. The key in this case consists of a user name (usually your e-mail address) and a password each of which you type in to the appropriate box which is brought up when you click the phrase “log in” where it appears on the front page of the website on the top line a little to the right from the centre of the page. All members of the Society who have intimated their e-mail address have had their accounts activated i.e. been supplied with a key. This means that they have received an e-mail telling them what is the password. This means that you should now be aware of what is your username and password and you should now be able to login to the website i.e. enter the shop. However, the e-mail sending your password might have accidentally gone into your spam or junk folder or you might have missed it for some other reason. If, for any reason, you are not aware of your password then you simply login with your e-mail address and use the forgotten password facility. This will result in your receiving a new password (which will work on only one occasion) which will enable you to log in to the website and then to change your password which will then function indefinitely.

At present, there is very little in the members only section of the website (or inside the shop) which does not also appear on the front page of the website (or in the shop window). However, as more and more members login to the website and become able to use the website, more and more of the content will be screened from the public and located only within the members section of the website. It will be very important at that stage that members use their passwords for themselves only and do not allow non members to have access to these passwords.

Members of the society who pay subscriptions to maintain the website are entitled not to have their resources made available to others who have not paid any subscription.

Once you have logged in to the website you will have access to the all material contained in the website and you will also be able to insert your own information and comment on the website. That is another reason why we would not wish non members to have access to these facilities.  Council very much hopes that members will find it quick and easy to add their own information and points of view to the website and that the website will rapidly become an active and constructive discussion forum for our Society.

I would greatly appreciate comment from members either confirming that they have received details and an able to operate the website or, otherwise, letting me know what particular difficulties they have encountered. These communications should be directed by e-mail to secretary@slas.co.uk

There might be an argument against this policy in respect that it artificially restricts the consumer's freedom of choice in the appointment of a solicitor by making the solicitor of his first choice more expensive by virtue of not being on the lender's panel.

More practicaly, however, the exclusion of the High Street solicitor obstructs the public policy of prevention of money laundering because the solicitor's personal knowledge of his client is the best possible defence againt the identity deception which enables money laundering to be effected.  The commoditisation of conveyancing services around a small number of big players seems likely to impersonalise the operation and to promote the opportunity for mortgage fraud. There will. for example, in many cases be no opportunity for face to face meeting between client and solicitor and a clever villain with resources can easily provide all the passports, driving licences and utility statements that his purposes require. However, once that sort of faceless dealing becomes acceptable, it may well become also the norm because of the immediate advantages of speed and economy.  Also, even when there are no villains involved, one has to consider how many problem files achieved that status in conjunction with and possibly because of there having been no or insufficient personal contact with the client for all necessary issues to be addressed.

It seems ironic that, just as we are waking up to the conclusion that the near (hopefully) destruction of the international economy was brought about at least in part by allowing banks to become "too big to fail", a small number of big players in the mortgage market are able to use their domination of that  market to implement a policy which restricts choice in the market place, promotes money laundering and drives down the standards to which customers have become accustomed. The previous placing of loans, regardless of toxicity, to meet targets and fund bonuses may come to be replaced by the throughput of conveyancing business, regardless of clients' and the public interests, again to boost profit margins and bonuses - two huge outlays which the client market has not previously required to fund.

These events turn our minds again to the measures that may be required to prevent the suppliers of mortgage funds from having a virtual power of appointment of solicitors up and down the country.

The one piece of information we are not allowed to share, it would appear, is the Information Sharing Protocol itself which, we are advised, contains its own prohibition against publication.  We therefore produce the link below so that members can access this document themselves and we look forward to receiving further comment.  The link is: Information Sharing Protocol

Following publication of the above item, we received the following from Kevin Lang at the Law Society:-

Further to our telephone conversation, I am writing to express my confusion at the second paragraph of the article you wrote for the SLAS website titled “Professional Confidentiality v Information Sharing Protocol”.

Specifically, I don’t understand how you can state there is a prohibition against the publication of the protocol given you then provide a link to the part of the Law Society website in which the protocol is in fact published.  As you may know, a link to the information sharing protocol was emailed to our 10,500 members through our ebulletin in September.  We also issued a media release in August, which is available on the Society website and which was picked up by the legal as well as general interest press.

Whatever the views about the contents of the protocol, I am struggling to see how anyone could suggest that it was not published or could not be published, given the level of publicity we gave it at the time and the fact that, as your own article admits, it is available in full for all to see on our website.

Many thanks for your time earlier and for considering these points.

Wishing you all the very best for Christmasand the New Year

Kevin Lang

Director of Communications, Marketing &Public Affairs

The Law Society of Scotland

Kevin is, of course, correct in every detail.  Our correspondent was, presumably, simply referring to the statement on the front page of the Information Sharing Protocol which states "no copying allowed, in any form, without prior written permission from the Director General, except as permitted under the Copyright, Design and Patents Act 1988."  It is confusing to be faced with a prohibition of copying a document which is already in the public domain, but it was not of our making.

This picture was taken on or about 19th January, 2009 when a number of members met to celebrate the 125th Anniversary of the foundation of the Scottish Law Agents Society. The meeting took place at the Royal Faculty of Procurators in Glasgow and the following attendances are noted from left to right:-

Christopher Sheridan, Michael Sheridan, Rab Forman, Maggie Scanlan, Carole Sheridan, Ian McLeod, Gilbert Anderson, Pat Fordyce, Ken Swinton, David Rattray, David Maclennan, Ian Ferguson, Mary Pirie, Craig Bennet, Michael Scanlan and Fiona Dalton.

Any names that are missing from that list should be reported to this page immediately.

It is immediately obvious that the group of members at this meeting is very much smaller than the group of members depicted in the photograph shown in front of the group. We are not certain who is depicted in that photograph and whether it is a meeting of Scottish Law Agents Society members or Royal Faculty members or some other assembly and any information would be welcome. While modern systems such as telephones, email and electronic networks make communication much quicker, easier and cheaper, it tends to make physical meetings increasingly redundant and it must be doubtful whether we will ever be able to assemble a picture of today’s Society as heavily populated as the one shown in the old photograph.

This is your own website, financed entirely (and meagerly) by your own society and based entirely upon input provided by members of your society. If you find that there are any shortcomings in the content of this website then please do not complain about this but, rather, create the content that you would wish to see in place and send it into the website either via the feedback facility or otherwise by e-mail to secretary@slas.co.uk.

Our website is only going to be as good as we make it and there is no reason why we should not make this website into a powerhouse of communication exchange and a repository of useful information and materials for the benefit of the whole membership. However, it is unlikely that this will happen of its own volition and it is hoped that members will think at least as much about what they can contribute to the website as to what they can gain from the website.

To take one example, some members have been concerned to discover that an Information Sharing Protocol has been interned between the Law Society and the police authorities and appears to contradict their understanding of the duty of professional confidentiality. A website such as this appears to be the ideal forum for the dissemination of the details of such a protocol and for a nationwide debate as to the advantages, disadvantages and even dangers of such an institution. Details are therefore posted elsewhere on this page.

If you were unaware of this development then perhaps you will take a moment to congratulate the members who have drawn it to your attention and perhaps you will also consider responding to those members by putting your own information and views onto this page.

One of the long-standing traditions of the Scottish Law Agents Society is the participation in foreign exchange which reflects the Scottish legal tradition as a mixed system drawing from all of the major systems and traditions of the western world. The picture shows our visitors from Prague, a few years ago, whom we entertained in response to the Societies previous visit to Prague.

Our visitors attended at various legal institutions but were also driven around the country, most notably around the Whisky Trail in the North East, in a bus rented by SLAS and driven by David MacLennan, several times President of our Society. I recollect also that we had dinner and some informal dancing at Carrbridge where we had arranged bed and breakfast accommodation for the guests and ourselves. Splendid times

A year or so after that visit, we were scheduled to take ourselves off to Rome for a cultural, legal visit. However, as fate would have it, the weekend which we booked turned out also to be the weekend of the funeral of the late, lamented Pope John Paul XXIII. On learning that the city would be home for 2 million Polish visitors that weekend, some of our own members who felt that these circumstances might have prejudiced access to basic facilities, pulled out of the visit. However, those that completed the course had a splendid visit to Rome and, given the screens erected at every open place, had no option but to join in the funeral celebration. The Polish visitors were astonishing in their numbers, their patient acceptance of street accommodation and their lack of diminution of any of the facilities available to other visitors.  Say what you like about Rome, they know how to bury a Pope ( and maintain a Coliseum and a Parthenon and countless other ancient, medieval and more modern buildings and provide endless superb restaurants and all with jolly nice weather most of the time).

For several years thereafter, there has been no talk of foreign exchange because of the hugely damaging stramash within the profession over the advent, or otherwise, of alternative business structures. Now, however, we hope that the worst of all that is behind us and we have tentatively scheduled the first weekend in October 2012 as the time of our next foreign excursion and all we need now are suggestions for places to go to and and a note of those who may be interested in joining such a trip. If you might be interested in coming on this trip or, better still if you have any suggestions or would like to assist in the arrangements, then please contact us by e-mail at secretary@slas.co.uk  

Discussions have continued between The Scottish Law Agents Society (SLAS) and the Law Society of Scotland (LSS) following their Meeting last month when a high powered team representing LSS to including the Vice President Cameron Ritchie and Vice President elect Austin Lafferty plus 3 SLAS Council members Ian Ferguson, Robert Forman and Catriona Walker and Paul Carnan of the Royal Faculty of Procurators in Glasgow (RFPG).

Ian Ferguson, spokesman for SLAS commented after the meeting “We outlined a plan to assist the LSS to make those changes necessary to the existing Constitution to make it comply with the 2010 Act within the very tight timescale before the SGM in May and this plan will be taken for consideration of the Council of the LSS.

SLAS and RFPG then drafted wording of amendments to the existing Constitution to achieve this and submitted this to the LSS for consideration. LSS Council decided on a different wording. SLAS considered this at their Council Meeting yesterday and have written to the LSS today commenting on the 2 matters as follows:-

1. Amendment to Existing Constitution (AEC)

   As you know amendment to the existing constitution was our preferred route that we offered in our joint meeting to the effect of allowing those changes that were necessary for the LSS to act as Regulator and to comply with the 2010 Act. We are pleased to see that approach has been adopted by LSS Council. We note our version of the amendment was not adopted by LSS Council and as you know we have withdrawn our “Motion 3”.

   In general SLAS are happy with your AEC subject to one point which was raised by a Member and which we believe is correct and needs a little amendment.
   The point is re Amendment 11. We suggest that the words “the exclusive” in proposed new article 23(1) of the existing constitution be delete. Reason – it seems inconsistent with section 3B(2A) (b) of the 1980 Act as amended by the 2010 Act. The word “exclusive” means the LSS has no residual powers which is inconsistent with the 2010 Act which requires the LSS Council not to unduly interfere in the regulatory committee’s business. We think this is a sensible amendment.

   However SLAS will not vote against your Motion to amend the old Constitution. We are no longer seeking proxies and have decided not to use any received. We intend to advise our Members that we will not object to the AEC.

2. New Constitution (NC)

   From a cursory inspection of this it would appear to SLAS Council that this new version is a huge improvement on the earlier versions and we are particularly encouraged by your proposals that meet our concerns re disenfranchisement and “sloppy drafting”.

   This change and other changes have been warmly received by SLAS.

   LSS Council have wisely deferred the NC to the September SGM with a debate on it at the May SGM so that there is time for further reflection by LSS Council on 1) the NC and 2) the debate at the SGM and perhaps some time after. SLAS too welcomes this time for further reflection. Apart from individual issues which may arise and require further amendment, there is still the major question as to whether or not we need a new constitution at all.

   We and others have pointed to the danger of unforeseen consequences in rescinding the existing constitution which has been built up over years with accumulated wisdom and amendment. The existing Constitution has not lain unchanged for 60 years as some have suggested but has been adapted and changed when that has become necessary and to the extent it has proved necessary. Tried and tested wording is something that most lawyers normally yearn for. Our instinct is still that amendment is a safer method by which to proceed and the immense difficulties LSS Council have encountered in the drafting and re-drafting of a new Constitution bear this out.

   We are certain the extra time will allow proper breathing space and calm reflection by all.”

   Mr Ferguson commented “The new wording for passing Motions of 50% at 2 successive meetings or 60% at one are a victory for SLAS and for democracy in the LSS. It will benefit SLAS but also for all individuals and representative bodies who may in future wish to change LSS policy.”

   SLAS had earlier criticised the then new draft Constitution on the ground of disenfranchisement of Members. Member Motions were to have required a 2/3rds majority to succeed instead of the existing democratic threshhold of over 50% while Council Motions remain at over 50%. The reality they argued is that it would be impossible for any single member or for any of the voluntary representative bodies to achieve a successful Motion.

   SLAS believe that the Constitution has benefitted from the robust debate on its terms and welcomes the Debate to be held at the SGM.

As the rescission of the existing Constitution will therefore not be an issue at the SGM this month, we will not require to lodge the proxies which were gathered to oppose that rescission.  However, as opposition to rescission is current SLAS policy, we will ask members to send fresh proxies as and when the issue is again raised.

These solicitors are entering the profession during what can only be described as interesting times and we hope that they will each enjoy a happy and successful career and that times may not always be so interesting.

Sarah Smith, Thompsons

Samantha Baird, The PRG Partnership

Louise Flockhart King, Inksters

Laura Ann Teece, Stodarts

Katherine Smith, McCash & Hunter

Karianne Falconer, Pieri Graham

Karen Wallace, Conveyancing Direct

Julie Michel, Elizabeth Welsh Family Law Practice

John Harper, McClure Collins

James Arrol, Aamer Anwar & Co

Heather Mary Murray, McJerron & Stevenson

Hannah Sunderland, Murchison Law

Fiona Rennet, South Forrest

Elaine Smith, Digby Brown

Duncan Peat, TC Young

David Henderson, Digby Brown

Andrew Liam MacKey, Condies Solicitors

 Caroline Milne, Thorley Stephenson SSC

 Charlotte Osbourne, Drummond Miller LLP

Clare Doohan, Drummond Miller LLP

Dalene Joyce Whelan, Irwin Mitchell LLP

Reproduce memo – sanitised version

Memo: 12th July, 2011

MS meeting with BP and her daughter. BP had received a letter from So & So Associates (a will writing company in England). The letter was basically putting the frighteners on the recipients by saying their wills were incorrectly framed (signature and testing clause on separate pages) and there had been cases where the courts had bounced the wills when they had been presented to court for confirmation. They were offering a discounted will writing service. They were also offering free (for one year) will holding service and then asked for bank details and a payment of £25.00 upfront followed by £25.00 per year. BP is elderly and is going to Australia tomorrow and is very worried about the letter. She has only dealt with CP (partner) and we have BP’s will in this office. I telephoned the company and asked how they got our client’s details. I asked how they could hold BP’s will as we had it in our will safe and could assure them it had been correctly framed. I asked if this was a scam they were running to frighten elderly people and to get them to disclose their bank details. They did not have much to say about that. The said BP must have used them in the past and they were just doing a mail shot to every one on their database – (they did not even have her full name or address). I asked them to note on their records that BP was a client of our firm and to desist from sending any further mail shots to her. I told BP to just ignore the letter and not to send any money or her banking details to them. BP’s daughter felt sure it was a scam but her mother just wanted to confirm it was okay to ignore the letter.

SLAS is currently corresponding with the Scottish Government and other bodies with regard to the prospective regulation of will writers (under the Legal Services Act) and as to whether and to what extent these persons will require to know the law and the risk to the public if instructions are undertaken by persons who do not know the law. Members are invited to submit any examples that they come across on practice that would help us to guide and instruct our lawmakers on your behalf and on behalf of the Scottish public.

Secretary

The Legal Services Act 2007 sought to free up the legal services market in England. But the market is powerful. We are seeing new forms of legal service being offered to meet consumer demands for ease of access, fixed or lower prices, and innovative uses of technology. New players are coming into the legal market, including large corporate businesses looking to offer bundled professional services. The nature of the legal profession looks set to change and change quickly.

This poses a real challenge for regulation and, with it, our jurisdiction. In the face of this diversity of provision, the traditional distinction between what is regulated and what is unregulated is becoming difficult to negotiate. Newer providers are, as one might expect, interested primarily in finding structures and business models that work in market terms rather than ones which easily fit the existing regulatory structures.

While these developments may offer a wider range of legal products to customers, there is a danger of both consumer confusion and regulatory inefficiency. Take these examples, demonstrating the new range of legal products available to consumers. They may, or may not provide good quality legal services which may satisfy consumer demands. But, if they do not, how confident can we be that consumers – or indeed we ourselves – know who would be the proper avenue for appropriate redress? Is it the Legal Ombudsman, another Ombudsman scheme, Trading Standards? Or is it no–one?

There are aspects of the Ombudsman’s jurisdiction which remain problematic to us, to consumers and to those providing legal services. These centre on the issues raised above: the gap between consumer expectations of what sort of legal services are protected by access to the Legal Ombudsman and the equally vexed question of the circumstances in which those providing such legal services fall within the ambit of regulation by one or other of the Approved Regulators. Much of this revolves around difficulties in understanding the regulatory status of the entity providing the service.

One of the clearest examples of these issues commonly arising is in will writing. This is not a ‘reserved activity’ – the thing that makes lawyers unique and what they need to be regulated to do. So, although such work is often carried out by lawyers, it is also done by will writing firms who are not regulated and who don’t have to abide by the same standards. This creates a potential confusion about whether or not the service being bought is regulated – and therefore whether the consumer has access to the sorts of redress the Legal Ombudsman can offer.

Such cases reveal a mismatch between consumer expectations of what constitutes a ‘legal service’ - which consumers clearly assume implies access to a proper system of regulation and redress - and the reality of the diverse market providing such services. This confusion is not helped by the habit many unregulated companies have of presenting themselves as though they were traditional law firms, with websites and advertising material branded with the panoply of wigs, gowns and quill pens.

We have seen evidence of similar consumer confusion in relation to claims management companies. Here there is a regulatory regime in place - the Ministry of Justice. Nevertheless, while many of the consumers who use these firms’ services appear to believe that they are being provided with legal services, most of that work is carried out by non-authorised persons. So consumers are unable to get access to the sorts of protection provided by the Legal Ombudsman.

Extracts from the English Legal Services Ombudsman’s Annual Report July 2011
( available at http://www.legalombudsman.org.uk/aboutus/publications.html )

Secretary's note - the first paragraph above seems to echo the sentiment previously expressed within the SLAS debate that ABS is a train crash bearing down upon both the profession and the public which is served by the profession. Members of SLAS and the wider profession may still be able to alleviate some of the worst effects of these developments by supporting the SLAS as the profession's own professional body in its efforts to inlfuence the rules which are now being put in place.  This can be done (a) by subscribing to SLAS and inviting non-member colleagues to join you in doing so, and (b) responding to the SLAS publications and requests for support. First of all, do any members have any contributions to the discussion which reflect the above comments of the English Legal Ombudsman ?  Ignore this issue at your grave peril.

The organisers of this meeting cannot offer to provide solutions to these difficult issues but hope rather to identify what problems lie ahead in the approaching future and to establish a collegiate basis on which to take these considerations forward. We have been informed that Russell Lang of Marsh Limited, who maintain the Master Policy, will attend the meeting and advise the Master Policy position as far as this can be done.

It would be helpful if solicitors intending to join this meeting would give advance notice by email to secretary@slas.co.uk.

Solicitors who are not able to attend this meeting but wish to express a view or provide information are invited to do so by email to the same above address. We would be happy to assist any solicitor who wished to attend the meting via Skype which can be arranged with the secretary at the same email address.