News / General

ENDOWMENT COMPLAINTS

By SLAS Spokesperson

ENDOWMENT COMPLAINTS
We produce below the full text of a letter by Jim McCann of the Legal Defence Union which was published recently in the national press in a very slightly abridged version. Obviously the Society would greatly welcome any further material that members may wish to submit in order to counter the adverse and generally ill informed publicity which has recently been generated around this topic. :-

Dear sir,
It is disappointing to see, once again, a paper of the Herald's quality resorting to a selective and anti-lawyer campaign on this issue.
Of course it is distressing for house-buyers to have been receiving, over recent years, a series of letters warning of a shortfall against the figures they had come to count upon. The facts do not, however, support the widespread perception of injustice on this issue, and someone has to say so. It does no favours to the ordinary citizen with such worries, to encourage false hopes, and unjustified attributions of blame upon some unfortunate solicitor who completed quite satisfactorily a conveyancing transaction ten or fifteen years ago.
The Legal Defence Union [a group of senior solicitors specialising in advice to colleagues] has seen hundreds of these endowment complaint files, and there is a straightforward evidential reason for the very low rate of success in establishing mis-selling allegations against solicitors. Is is simply that Lawyers keep better records than other folk, because they have to. It is nothing to do with the Law Society's powers [limited, as your journalists have correctly been saying, to ?1000, then ?5000 from April 2005] - it's because examination of the papers and the other evidence does not justify any award at all.
A surprising majority of solicitors have kept their files from all those years ago. Where the file has been destroyed in accordance with the ten-year rule, solicitors will commonly still be able to provide reliable evidence of the systems applicable at the time, and to show adaptation to the various stages of enhanced compliance through the 1990s.
The client's requirement of a life policy in those days would normally be considered within the composite professional task of missives for house purchase, arranging and draw-down of mortgage, settlement of transaction, registering deeds, and so on. The house will commonly have gone up in value by tens of thousands in the intervening period ? no complaint there.
Life Companies did, of course, historically project surpluses for the client, but such were never guaranteed. Legal files from the period generally show the client receiving the standard documentation for the selected product, explaining that the only guaranteed cover was for death during the term of the policy, and that all other figures were projections based on market factors that could go up or down. ( and often included predictions of some of the deficits that are now being complained of - secretary)
Solicitors generally followed the prudent course of passing that information on to the client and keeping files or other records to prove it. That is how so many have become free of any allegation of mis-selling
Current Law Society procedures, far from favouring solicitors against complainers, require a generous approach to the admission and careful examination of all complaints, including numerous false or exaggerated claims. A great deal of care is taken, over weeks or even months, to check all available paper and other evidence. That scrutiny will involve significant input by lay as well as legally ? trained personnel, with delegated powers from Parliament since 2003 to make a decision in place of the Law Society Council.
It is also wrong to suggest that having failed against their solicitor, no other avenue is open to all these claimants. They are perfectly free to resort to the courts, but will in many cases have taken advice. They will have been told that no court in its right mind is going to hold that the average High street lawyer in the 1980's would reasonably have been expected to foresee such dark events as 9/11, Enron, and the decline of the life assurance and pension industries.
No sensible person believes that all investments, of whatever kind, must go ever upwards and never down. In the heady aftermath of the Big Bang, one might speculate/?
speculate whether such over-optimistic ideas may have been put about by other agencies, who were then new to the advice marketplace, and did not keep adequate records to protect themselves against claims emerging 20 years later. That may explain the perception that other advisers are having to pay out while solicitors don't.
As professional advisers we have to bring this debate back to Planet Reality or we will continue to invite a deluge of essentially bogus claims. It also seems to have been forgotten that under Scots Law any person telling an untruth in pursuit of a civil law advantage has already committed a criminal offence. The Law Society is being bombarded with letters making half a dozen standard allegations, which the claimants seem to be obtaining from other advice sources or websites, and putting them forward apparently without pausing to consider whether most of these allegations are even true.
Lawyers are duty bound to advise clients realistically, even when that advice may be disappointing, or even painful to receive. It would actually help the public if politicians and journalists could learn to do the same.
James A McCann
Chairman
Legal Defence Union

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