Rob Hailstone Blog
20 January 2014
I am pleased to be contributing a regular property/legal column to Estate Agent Today. I have been involved in the property industry since I started work as a 16 year old office boy in a Bristol law firm in 1974. After studying and training I worked as a residential conveyancer until 2005.
In 2005 I had an interesting foray into the HIP industry. My intention was to try to create the ‘exchange ready’ (as exchange ready as was possible) HIP. When HIPs were scraped I formed the Bold Group, a nationwide group that consists of over 250 law firms whom I help, advise and update on changes to the legal profession.
Over the years I have had some fantastic working (and social) relationships with many estate agents (and the occasional run in) and my main aim before I leave this mortal coil is, with others, to improve the conveyancing process for all concerned.
As far as my contributions to EAT are concerned, I would like to help, inform and stimulate debate. However, as an ex conveyancer, I do have a feeling that I might be putting my head into the mouth of a lion!
The first issue I am writing about is the closure of 136 legal firms because they could not secure Professional Indemnity Insurance (PII) for 2014. It is not un-common for relatively small firms to be faced with an annual PII premium of circa £100k.
This issue has been rumbling on since the end of October last year and came to a head at the end of December when the Extended Policy Period expired. After receiving reports of law firms asking opposing solicitors for evidence of their insurance before remitting any money in conveyancing transactions, the Solicitors Regulatory Authority (SRA) said it would publish the names of these firms.
Most people calling for firms to be named were concerned about dealing with them inadvertently and in doing so putting their clients or themselves at risk.
So, we now have is a list of 136 firms, some of them will have shut down in an orderly and safe fashion, some of them may have closed for other, less worrying reasons (retirement for example) and some may have failed to close in an orderly and safe fashion. At this late date, some three weeks after the 29th December naming all of the firms seems a little pointless. We simply needed to know, and still need to know, which firms we should be wary of.
This situation has arisen because the Labour Government in 1975 made having PII cover compulsory (it is not compulsory in the US). Some would argue that PII for lawyers should not be compulsory and that clients should be able to make an informed choice as to whether they should instruct a firm with cover (probably a more expensive choice) than a firm without cover. I wonder how estate agents would feel about recommending firms without cover?
The guidance given to these unfortunate firms, by the SRA includes: “Whilst you can continue to use your firm’s notepaper in dealing with outstanding administrative tasks, you will need to adapt the notepaper to make it clear that the firm has closed and to ensure that you (if you are a sole practitioner) or the managers are not held out as practising. When taking telephone calls after the firm has closed, you should ensure where necessary that it is made clear to the caller that the firm has closed.”
You can obtain a copy of the list by visiting the SRA website (http://www.sra.org.uk/sra/news/pii-closed-firms.page) or by emailing me: email@example.com. In the meantime, I will continue to monitor the SRA website to see if they do highlight the firms that still pose a real risk.