Obscure Law Society Vote with (maybe) Big Consequences

Conferences of the Scottish Law Society may stir the blood of some lawyers but frankly not always most of the legal profession.  A forthcoming debate at the Annual Conference on a “practice rule” typically has not generated much heat – but any decision taken could have considerable effects for lawyers and the house buying public. Most people buying a house will have a mortgage – and the buyer grants a “standard security” over the property allowing the lender to repossess it should the buyer default on the mortgage payments.  For many years now the buyers’ solicitor has also acted for the lender in creating that security document. Now a vote is to be held on whether to stop this practice and ensure that in any loan transaction the lender and buyers have separate lawyers.  A Law Society working party has recommended this change and a vote will be held at the AGM on 22nd March. The main reason for considering this change has been an increasing worry about potential conflicts of interests between lenders and buyers – and the difficulty this presents for one solicitor trying to do the work for both.  A difficulty which has resulted in recent years in an increase in claims by lenders against solicitors where borrowers have defaulted.  In fact there is a view that lenders have been openly trying to find fault with solicitors security work even it played no part in the borrowers’ default.  So a feeling has grown that it might just be better for lenders and borrowers to have their own solicitor. If the change goes through there will be changes to the purchase process which buyers will feel.   “I suspect with two lawyers involved the chances are that costs may go up and the process will take a little longer” commented Graham Irvine, Head of Conveyancing at Caesar and Howie.  “Although I think competition will keep any fee rises to buyers pretty modest” he added.  “It is possible the work being done for the lenders will probably be concentrated in the hands of just a few law firms – with High Street firms probably seeing a drop in their conveyancing income since they will no longer be representing the lender’s interests too.  Solicitors will have to adapt very quickly to the changes if they are voted through later this month.”