Estate agents are warned that many more law firms than was previously thought are in deep trouble, including those specialising in conveyancing.
This could seriously affect some completions, and indeed is already doing so in the case of clients of at least two firms, Reeve Fisher & Sands, and Hempsted Property & Probate Lawyers, which have ceased trading within the last few days.
The Council for Licensed Conveyancers intervened in the first firm, which has three offices in Essex, on Tuesday. We know of one buyer currently unable to complete because the funds were lodged with the firm, but judging by concerns voiced on Twitter, there could be more.
The CLC intervened in Hempsted Property & Probate Lawyers, of Newmarket, Suffolk, on Monday.
In both cases, the CLC says it is “working to ensure that outstanding conveyancing transactions can proceed with minimal inconvenience”.
The reasons for the two interventions – effectively, where a body acts to close down a firm – are not known.
Separately, the Solicitors Regulation Authority has discovered what it says is a “substantial” number of firms that have failed to declare their insurance position, in addition to the 141 that have officially notified the body that they will need to be wound up by the end of this year. It has not named any of the firms that are in trouble, despite calls to do so.
Unlike the 141, these other solicitors have not provided the SRA with concrete evidence of having secured a new Professional Indemnity insurance policy since the renewal date of September 30.
The SRA has contacted these firms to ascertain their position and will be considering possible enforcement action. Firms without PI should be, in the SRA’s parlance, closing through “orderly wind-downs”, and should not be doing any new business.
The firms were discovered through a number of data-matching exercises carried out by the SRA.
Mike Haley, SRA director of supervision, said: “We have identified a number of firms that have not found a new insurer and failed to notify us of their position. Given this failure, those firms are considered to be at risk of failing to obtain new insurance or wind down in an orderly fashion by December 29.
“As we warned in November, failing to notify us is a breach of the SRA Indemnity Insurance Rules 2012 and enforcement action will be considered.”
Rob Hailstone, of conveyancing organisation The Bold Group, called for a list of legal firms likely to be wound up to be published.
He said: “I have asked the SRA to provide me with a list, but they haven’t.
“The SRA and others have been aware for some time that 141 firms had not able to secure new PI since the end of September. Those firms entered the Extended Policy Period (EPP). The EPP was introduced for the first time this year. The period lasts for 90 days and once firms have entered the last 60 of these (the cessation period), they cannot take on any new instructions and must also look at closing down at the end of the period.
“I think a list should be provided, if not naming the original 141, certainly naming the ‘additional firms’ who may not be winding down in an orderly fashion.
“This is not in order to make life any more difficult for the firms in trouble, but to try and limit any further damage occurring to innocent parties, be they clients, other conveyancers and solicitors, or estate agents.
“Unless a list is published soon, there is very little guidance one can give to agents that they can pass on to their clients at this moment.”
Guidance on orderly wind-downs is available here:
https://www.sra.org.uk/closingdown
Anyone with concerns over Reeve Fisher & Sands, and Hempsted Property & Probate Lawyers, can email clc@clc-uk.org or call 01245 349599.
Rob Hailstone has said he will also try to help agents with any questions. Email him at rh@boldgroup.co.uk
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Comments
Reality check.
1) pleased to hear it.
2) I'm sure also
3) good
4) nice!
5) can't agree with you here. I shouldn't think the people in the law firms affected would either.
6) and so you should be, handling client funds and all.
7) maybe and yes, estate agency is a profession
8) great. Did you support his call for the list of law firms likely to be wound up be published?
9) don't feed me straight lines.....
Q. What's the difference between a hooker and a solicitor?
A. A hooker will stop screwing you when you're dead
10. You might have a point here but I won't know until enquiries are made.
Well it's back to the knitting for me tomorrow. Glad we're all friends again.
CelmsfordCharlie
1. The world does not owe me a living. I make my own way thanks.
2. I am sure that the majority of my clients would confirm that I provide a great service.
3. I charge a fair price.
4. I am profitable.
5. The profession is not in crisis but is going through a much needed period of change.
6. We are far more heavily regulated than estate agents.
7. Daily dishonesty is a bit strong but occurs no more often than in your profession (is estate agency a profession?).
8. I have been in touch with Rob.
9. Your “tongue in cheek” comment made it sound like you were picking up a hooker not employing a conveyancer.
10. I am sure the lenders would love it (not) when you say you don’t have the expertise in your office but will get it in if needed. You really have no idea how difficult this particular issue is, even for large, well run, established firms.
You stick to your knitting and I will stick to mine but let’s make an effort to understand the difficulties we both face on a daily basis and try to get on!
Reality check of 15.44 yesterday, with respect I believe it is you who should get real.
The fact that you studied for 4 or more years is commendable but it does not mean the world owes you a living. It's whether those years of study result in being better able to give the clients a great service at a fair price while running a practice that is profitable that matters.
The sad fact is that your profession is a profession in crisis. That's because you as a group did not self regulate and root out the dishonest and unprincipled amongst you. Now you are paying the price through horrendous PI premiums. Just a quick look at the SRA's or SDT's website shows an almost daily occurrence of dishonesty or worse.
Now you sound like an honest chap and I'm sure you are. So will you now break ranks and support Rob Hailstone's call that the list of law firms likely to be wound up be published?
My £35k + 3 years PQE comment was made tongue in cheek. Its now beginning to look like recruiting a young, keen solicitor who has not yet been tainted by the culture of self importance common in his senior colleagues might be the way forward. Our own solicitor could work within my brand as an ABS, be subject to our very stringent financial controls and I can make sure he gives top quality service to my customers. Any expertise on the more obscure points of property law can be bought in if needed. And don't bet on us not being able to get on the lenders panels. When they see what we have, they just might like it.
Comments like this, “lets get our own conveyancer. Should be able to pick one up with 3 years PQE for £35k” show the vast divide between agents and solicitors/conveyancers and how little each appreciate the difficulties of the others job.
Most conveyancers will have studied for four or five years, or more, and if you want a really good conveyancer, who can deal competently with freehold, leasehold, registered and unregistered land they will need more than three years PQE. My first employer told me it would take me twelve years of practical work to really understand the job and to be able to deal with the hundreds of issues that can arise. He was not wrong. In fact, after 20 years in the business I am still dealing with new issues on a regular basis.
If you want a conveyancer who is experienced, professional, hard working, able to deal with a large number of files and shrugs of stress you should perhaps not try to “pick one up” for only £35k.
Another issue you will face will be getting that person on the panels of all major lenders. Climbing Everest with roller skates on might be easier.
As far as compensation is concerned I have taken the following words from the SRA's website. Note that the compensation fund is a discretionary fund.
"If you believe that a firm regulated by us owes you money, you may be able to claim money to cover your loss from our Compensation Fund.
If we have closed the firm, we appointed intervention agents, who will return clients' money and papers if possible.
It is possible we will hold your money and files if the agent has been unable to identify who they belong to. If you think the firm has not accounted to you for money you have given it, or if you are seeking your papers, please contact us.
If you think a firm has not accounted to you for money, you may make a claim from the Compensation Fund. This is a discretionary fund, and we will make a decision about whether we think you are entitled to a grant from it. Help and guidance is provided below. If you need more help, you can contact us."
God - just imagine. A buyer with £500k in limbo, on ward chain screwed, Christmas ruined for many.
THEN they discover the agent who recommended the firm is getting £150 for the intro.......
There will be tears.
@chelmsfordcharlie - only if they are regulated bhy the Law society. Many aren't - they are members of the CLC who said payments are discretionary. Now, they may intend to pay out and this may be just a caveat - but imagine how you would feel in you have money in an account of a conveyancer who wont answer the phone.
Correct MCS.
To everyone - That's your client who's just about to transfer £500k to the solicitor you recommended. You know, the solicitor who's probably won't be there after Christmas!
Ok the money will be made up from the Law Society's fund, but after how much damage to the completion if it takes place at all?
In my opinion agents who recommend specific solicitor/s or conveyancer/s are treading on dangerous ground and always have. If they receive any form of payment even more so.
I hadn’t actually intended to start a campaign with my comments but I can see that feelings are beginning to run high, especially where there has been direct involvement and individuals have already suffered from the fall out.
As I understand it, firms that do not have their PII sorted by the end of this month will need to wind down in an orderly fashion by December 29th. So there is not much time to take action and we can only hope that the wind downs will be orderly.
There appear to be two issues, firstly, the 141 firms (that number may have dropped) and, secondly, the “substantial number of firms that appear to have failed to declare their insurance position.” The second situation seems to pose a higher degree of risk to innocent third parties given that those firms “are considered unlikely to wind down in an orderly fashion.”
I don’t want to start a witch hunt and sympathise with those firms (and their staff) who are struggling, especially at this time of year, however the situation should not be allowed to escalate. I will, therefore, make contact with the SRA again and see what further action is being taken in order to ensure that any unnecessary suffering is kept to a minimum.
If anyone has any news or information that may assist please email me at rh@boldgroup.co.uk. Any responses or information provided will be dealt with in strict confidence.
Billericay Agent your comments of yesterday re SDLT have touched on something that is bigger than most of us think. Solicitors messing around with SDLT is the target of an offensive by the SRA and HMRC to clean up conveyancing.
There is at least one property solicitor right here in River City still churning through the jobs while his prosecution by the SRA for matters involving SDLT is due to be heard early in the New Year. Trouble storing up every day, yet still the SRA allows them to continue!
Maybe the answer is a local 3 or 4 of us club together and get our own conveyancer. Should be able to pick one up with 3 years PQE for £35k. Got the office, just need the insurance!
In terms of those who had commissioned reeve, fisher & sands for conveyancing, are their cases simply passed onto a new firm? What happens to any money owed (in terms of searches etc) ? Are reeve fisher and sands able to hold the existing paperwork or are the required to hand this to the new conveyances?
We have a few sales with Reeves Fisher & Sands - great customers who now hate us as we recommended them. One is very traumatic.
If someone knew there was an issue then it should have been made public.
SRA - please learn from this. Prevention is better than cure.
This week has been very sad for us - Friday 13th has lived up to it's reputation.
And people say agents are bad.
Thanks for the support of on here from some big names. We will email you with details so we can offer our voice
Connells have just moved up in my estimation. Seriously - well done and respect - from a competitor
SRA are a disgrace - Rob go for it and get Roger and Eric on side.
We used to recommend one of these firms AND received a referral fee. We are now feeling very worried - not for us but for all those who accepted our recommendation,
In fairness, we did so in good faith and always received great service - right up until the day they shut,
We are taking lots of sh*t as a result - they could have least have had the decency to answer to bloody phones rather than run away and leave us to take the flak.
If there are loads more 'lawyer' in this position - there must be a lot of very worried agents.
SRA - MAN UP
I wouldn't want to upset one of EW's friends. :) Bad move!
That said, he and Roger Wilson are right. The SRA have a duty to warn of something they can reasonably foresee,
Its a very good point that if these 141 firms cant get PI, then there must be a reason. Track record, cases on notice, financial predicament?
In the legal press this issue is omnipresent - its needs to be addressed before it boils over.
Sod CMP & tenant fees - this is on another level
Eric is spot on as usual. This is appalling.
Well done to EAT for the heads up - I urge everyone with a Twitter account / FB or linkedIn to share this story and get the SRA to name names.
Well said Roger. I absolutely agree.
Its great that someone of your standing makes this point. (Is that worth a beer?)
One of my closest friends has been profoundly affected by this issue and was depending upon completion monies which had been lodged with one of the firms named. Christmas will not be as planned and it has caused her a great deal of stress. It was an exec sale which has compounded the issues.
CLC has been helpful, but has implied that compensation is 'discretionary' - in which case, and if accurate, begs the question what is the point in their existence?
I profoundly agree with Rob that failure by the SRA to name those on notice is tantamount to negligence. Consumers should know whether they are protected by PI and if not , how they are protected.
If a firm can't obtain PI then one has to ask 'why not?'
There are good agents who as Roger says may be recommending these firms in good faith whilst the SRA know that they shouldn't.
There are also alleged suggestions on social media that for a considerable period SDLT was not paid to HMRC by at least one of these failed conveyancing firms. If true, then this smacks of a failure in some element of regulation.
Silence is not an option. This needs to be dealt with now and I will do all I can to ensure 'victims' are treated properly.
EW
They MUST name them. If the SRA are asked to do so and decline, the SRA themselves should be held accountable in Court for the loss and damage to our business and reputation if any deals get screwed up by uninsured 'lawyers'.
Look at the mess caused in the spring when Alexander Lawyers went down. There was supposed to be an orderly transfer of files over to some back street crew in Wanstead. Transfer it was, orderly it wasn't. Result unhappy customers everywhere, bad feelings, bad press.
We should be told so we can look after our business and customers.
Many thanks EAT for highlighting these recent collapses.
I support Rob's campaign for these firms without insurance to be named, to protect Consumers, and inform Estate Agents who can, in turn, inform Consumers who are about to nominate these firms as their lawyers on a transaction.
SDLT not being passed on is an extremely serious matter,.
I really feel for all those affected - especially at this time of year, however there are many good lawyers out there in Essex who will step in and help out,
I absolute agree with Rob that a list of this firms MUST be published.
Quite a few deals going through Reeves Fisher and Sands.....thankfully the clc seemed to have been assigned new solicitors to our cases...and quickly as well which is re assuring.
Have heard all sorts of rumours locally about this but wont list them as they are just rumours.
This is astounding - I am shocked at the scale of it
So much for regulation.....
With regards to Reeve Fisher Sands, I have had two previous clients of theirs allege they have had letters stating stamp duty money on previous transactions has not been passed to the HMRC. The plot thickens.
This is extremely serious. It's a far more pressing issue than tenants fees which have hogged the headlines.
Think how many transactions and how much money is involved. Shelter bang on about tenants losing a few quid - we are talking 6 figure sums here.
Well done to EAT for this article. I think firms must be named and shamed.