With a little help from the crunch
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The slogan for a recent Law Society advertising campaign was 'Help - I need somebody, but not just anybody'. The campaign was unleashed upon the world to promote solicitors in these difficult times.
Rumours the society considered 'I Wanna Hold Your Hand' or 'Love Me Do' are, it seems, without foundation.
But do you want to know a secret? I can probably only get away with saying this because I'm a solicitor but there are quite a few lawyers who, when dealing with lenders, allowed the words 'Please Please Me' to fall on deaf ears.
We are spending huge amounts of time at the moment making claims on behalf of lenders arising from the frankly shocking conveyancing practices of some solicitors.
And the galling thing is that we've seen it all before. Those of us who were around in the late 1980s and early 1990s recognise the situation. In fact I'm tempted to say that the Law Society has not spent enough time and money educating solicitors, never mind clients.
The round of claims in the mid-1990s arising from the downturn which preceded it did for the Solicitors Indemnity Fund - it simply collapsed under the weight of lender claims.
Under the SIF system solicitors had the first £1m per claim covered. After that, they could top up your cover on the open market.
But top-up cover was quite cheap as it only kicked in to cover the top slice of claims over £1m and thankfully there were relatively few of these.
I was a partner in a big firm at the time and our top-up cover between £1m and £60m per claim was quite a bit cheaper than our contribution to the fund for the first £1m.
The collapse of SIF led to solicitors having to go to the insurance market to obtain cover and now we are in a situation whereby this open market regime is being severely tested, given the increase in claims.
Claims concerning conveyancing have always accounted for the lion's share of those against solicitors but numbers have increased dramatically of late.
Under the SIF regime and in the relatively benign claims environment afterwards, getting cover was not a big deal. One heard of relatively few law firms having to close as a result of being unable to get professional indemnity insurance.
Of course, what that meant was that some companies were allowed to carry on in practice that many of us would rather have seen disappear from the legal landscape.
All that has now changed. A couple of weeks ago the Law Society Gazette's headline proclaimed "Firms shut down ahead of PII renewal".
The article quoted one firm that had seen a rise in its premiums of 550%. A number of companies have pointed to the increase in lender claims as pushing up premiums.
My own premium - and I think this is what's known as being hoist with one's own petard - has gone up by 30% and I don't even do conveyancing. But is it possible that all this chaos could have a positive outcome? All companies make mistakes and I see no justification in firms being priced out of business purely on the basis of inevitable errors. It will give me no pleasure to see honest and decent companies going under as a result of recent problems in the market.
But there are some firms whose disappearance nobody will mourn. And perhaps those of us who are left will find it easier to earn the respect of potential clients because the profession will be held in higher esteem, so faintly embarrassing advertising campaigns will no longer be required.
Apparently, the Law Society's campaign has cost solicitors £300,000 and I have a suggestion for the organisation - I've always preferred the Rolling Stones to the Beatles so don't you think this sort of money would be better spent ensuring lenders get some satisfaction in their dealings with solicitors?
Philip Tebbatt is principal of niche financial services law firm Slater Rhodes and can be contacted at philip.tebbatt@slater-rhodes.com
Source:
Lending Strategy
