The Conveyancer’s Tale: Stand Together or Fall Apart
 

This issue reports on the Conference concerning the future of the profession, that we held in February. My speech at that Conference appeared in this space in the April issue. There are many new and exciting – some might say glamorous – areas of practice. But there must always be a place for legal service and representation of ordinary people on matters of importance to them. Buying or selling a home is one of the more important events for many people – as it provides the nest for one’s family, personal space and sanctuary, and a key site for self-expression. Essential to the continued provision of these legal services is the possibility and practicality of making a decent living in this field. One of our core concerns over the past few years has been the impact of the abolition of scale fees – coupled with a weak property market – on our members who specialise in conveyancing. Change cannot be avoided, but it can be mitigated, and the profession would tackle change better through some degree of solidarity in place of cut-throat desperation.

At the end of April, my Vice-Presidents, Malathi Das and Yap Teong Liang, as well as the chair of our Conveyancing Practice Committee, Gan Hiang Chye, the chair of our Small Firms Committee, Mark Goh, and Chua Lik Teng, our Director of Practice Standards, and myself, met with representatives of the Association of Banks of Singapore (‘ABS’). This was the latest round in our long-running efforts to try to make the conveyancing services sector more stable – one in which the interests of clients are met by the receipt of good quality advice, given in the best interests of the clients, and lawyers are able to make a decent living.

With effect from 1 February 2003, the conveyancing scales were abolished. In order to provide guidance to law firms and the general public about what reasonable fees should be following abolition of the scale, the Law Society promulgated guidelines on 25 February 2003. These guidelines, as they had to be, were voluntary and non-binding. They were sent to ABS. In spite of this, fees dropped precipitously. Real estate agents used their greater proximity to clients to push down legal fees, while banks used their economic power – vastly greater than that of lawyers – to do the same, through the tool of the ‘legal subsidy’.  Many law firms exited retail conveyancing. While some firms tried to find new efficiencies so as to survive, others just cut prices and hoped for the best. The position was exacerbated by recession.

Council was concerned. The savage blood-letting did not just threaten rice bowls, it also meant that very few young lawyers could foresee a stable future in conveyancing. In addition, the pressure to cut fees, and agree to represent multiple parties so as to save costs for the client, suggested that risk management might suffer. The Society wrote again to ABS in March 2003, this time to put the banks on notice of the Society’s professional rules concerning referral of legal work. Led by Gan Hiang Chye, the Conveyancing Practice Committee completed a report titled ‘A case for separate representation’, which I submitted to Justice VK Rajah in November 2004. The report expressed the Society’s concern that one effect of the banks’ practice of giving legal subsidies and encouraging their customers to use a single (preferred) law firm was to make law firms wear multiple hats, and therefore run the risk of not giving full attention to one of the multiple clients. It strongly recommended that separate representation should become a practice requirement. The reason why the report went to Justice VK Rajah was because he headed a committee looking into conflict of interest issues for legal practice.

We are still waiting for a decision. In the meantime, Council has continued to hear concerns from the profession: concerns that some law firms might be paying commissions for cases referred to them by real estate agents. Concerns that some bank officers give unduly strong recommendations to their customers to appoint specific law firms under the legal fee subsidy arrangements. Concerns that some banks now require law firms to have professional indemnity coverage of an unnecessarily high amount before agreeing to the firm being appointed to act for the banks on a reciprocal basis even in a relatively low value transaction. Concerns about lack of transparency concerning the criteria law firms have to satisfy to do work on a reciprocal basis (ie to be on Bank ‘B’ Lists). Concerns that fees continue to be pressed downward, and so lawyers run risks in their management of files.

We decided to repeat our concerns to the banks. Hence the meeting at the end of April.

Naturally, the banks’ representatives had a lot to say about market forces, and how all they were doing was protecting consumer choice, by informing their customers about the rates charged by different lawyers. But they accepted that there must be fair play, and that bank officers should not attempt to sway customers in their choice of law firm. They also agreed that insurance cover should bear a relation to transaction value. We also argued that ultimately it was not in the banks’ own interest to keep pressing fees down. In the short-term it may result in corners being cut – and a negligence suit is small comfort to a bank in these circumstances. In the long-term, the flow of young conveyancers will completely dry up. These arguments appeared to strike a chord, and ABS assured us they would take this further with their members. 

However, pressing the banks is only one part of the solution. I have spoken repeatedly about another part – educating consumers about the true value of legal services – building the perception of value so that clients understand the value that the lawyer provides throughout the conveyancing process. But there is also a third part – solidarity among lawyers and law firms. This solidarity has two aspects. The first is about how lawyers should not allow their fees to be beaten down below economic levels. The second is about observance of professional rules. It has been very hard for Council – we have no choice but to act on complaints that professional rules have been flouted, yet we have an acute understanding of the dire economic straits in which some lawyers have found themselves.

Will increased activity in the property market blow some wind back into conveyancing? I can only hope so. But solidarity would do more to underpin a secure future than the ups and downs of the 
economic cycle.

Philip Jeyaretnam, SC

President

The Law Society of Singapore