Report of Law Society Council Member January 2009
By Michael Garson
The last year has been an extremely difficult one for the profession. The downturn has affected all types and sizes of firms.
My main concerns over the year, as your Council Member, have been to ensure that firms engaged in conveyancing and legal aid are protected and supported by the Law Society. As a partner in a small firm, I am acutely aware of the particular problems facing private client and legal aid firms, especially those with a focus on supporting their local communities. I am concerned too that regulation of the profession is fair and proportionate and easily understood by the regulated community.
The new Legal Services Board is now established and is funded by the profession. It is determined to introduce Alternative Business Structures (ABSs) as soon as possible. I remain unconvinced that the many problems yet to be tackled can be satisfactorily resolved within the timetable proposed by the LSB. Latest consultations suggest that there are plans to smooth the introduction of the new models by allowing an as yet undefined, but looser, form of regulation. This is not acceptable to most of the profession and is being resisted.
Solicitors must have a level playing field on which to compete. The Legal Services Act provides that ABS’s should not exist at the cost of access to justice and I have promoted action at the Law Society to ensure this “promise” is kept.
My work with the Middlesex Law Society in this its 50th anniversary year has been to help establish a secure foothold for the next 50 years. As many of you know the future standing of the profession, locally and nationally, are important to me and I have put time over the last 4 years working to improve the position.
The number of constituents seeking my help this year has risen and the majority of their concerns have been connected to disproportionate regulation, difficulties in obtaining Professional Indemnity Insurance (PII) and the difficulties of merging or retiring from the profession.
The usual raft of complaints issues with the LCS will hopefully change for the better with the introduction of a much more common sense approach from the new Office of Legal Complaints. I hope to arrange for a visit from the new complaints team to meet local practitioners in March this year.
As a Council Member I am currently a member of a number of Law Society bodies. This includes the Legal Affairs and Policy Board and the Rules and Ethics Committee. I sit on the E-Conveyancing Task Force and actively contribute to the ongoing development of the Homebuying Reform Project. I remain a member of the Property Section, having chaired it for four years,
Over the last year I have attended and contributed to working groups formed to look at indemnity insurance, ABS’s and Land Registry modernisation and anti fraud measures. I have also worked on the joint standard contract for the Bar and other Practice Notes dealing with a variety of regulation and mortgage fraud matters.
There have been major consultations this year as well as the publication of the Review by Lord Hunt with whom I have met on a number of times to get practitioner perspectives across to him. Many of you agree that his 88 recommendations are timely and do much to express the views of the majority of the profession. The OFT report on home buying will shortly be published following a number of meetings we have been involved in alongside the consultation process.
This will be an important further catalyst to the project for reform of Conveyancing that I have initiated and strongly support. At present, some 9000 firms are engaged in conveyancing work and private practice has a 96% market share. We have resisted threats to solicitors’ market share from others in the past but the new challenges will be much more threatening to all aspects of private practice and legal aid services.
Family, probate and litigation work will all be affected unless a level playing field and a clear-cut profile for the profession and professional standards is maintained in the pubic domain.
Conveyancing:
Confidence in the professions’ ability to handle the work is at a low ebb as the Council of Mortgage Lenders and the Land Registry claim there are as any as 500 firms who now pose a serious threat to the public. We cannot be sure that this number is correct but it is certainly the case that there are some firms who are harming the reputation of all solicitors firms. The recent collapse of Wostenholmes’, a bulk conveyancing firm in Manchester area, will damage our reputation further. Both Chancery Lane and the SRA have issued information for clients of this practice and it is to the credit of the Manchester Law Society that they are working with Chancery Lane to protect and help affected clients. Unfortunately the scale of failures is such that the effects will be experienced far and wide. It is perhaps an example also of how large scale enterprises can pose expensive challenges for regulators.
This is a particularly dangerous time for such a high profile default to happen, as ‘trusted’ brands may enter the market free from any bad history. Whilst some firms have seen a rise in PI premiums, others have been unable to obtain insurance at all and some have been removed from lenders panels. Even constituents who are good practitioners have experienced these problems. They have suffered from the SRA’s inability to properly and actively regulate and the lenders and insurers failure to accurately risk assess.
I have been working on the project for a new conveyancing scheme which I hope will enhance the reputation of solicitors and safeguard market share. I have received technical support although there is some resistance at Chancery Lane to the risks associated with such a venture. I have spent a great deal of time to ensure that some genuine reform is achieved and hope a platform for progress over the next year has now been laid.
Legal Aid:
The government and the Legal Services Commission have again blighted and destabilised legal aid firms in 2009.
They have sought to introduce a number of proposals such as Best Value Tendering but with no cohesive strategy for maintaining the supplier base and delivering services to those in most need.
Failures to allocate ‘new matter starts’ and late payments by the Commission have caused even greater difficulty for practitioners. Those who do not practice in this area may not have seen the National Audit Office report which showed that legal aid solicitors earn, on average, less than the national average and less than public service sewage operatives.
I am pleased that the LAPB has been instrumental in fighting the plans for BVT and was ultimately successful in ‘persuading’ the government to withdraw their proposals. Legal action is currently under way for judicial review of the government policy of refusing to pay the full legal costs of successful defendants. This is just one more way in which the rule of law and the rights of the individual are being undermined. Such issues are being explored by LAPB for the Manifesto that will shortly be published and which I see as a useful building block in re-establishing the status of the profession.
I have supported the successful opposition to the proposed CLAC for Ealing and supported cases defending bad recoupment claims made by the LSC. Overall I remain concerned that there are few votes for politicians in supporting legal aid and therefore, as a profession, we must stand behind legal aid practitioners and support them in the coming year.
Professional Indemnity:
I have long been an advocate for the abolition of the single renewal date and I am pleased to report that I have helped to persuade the Council to share this view. Research was commissioned which confirmed that the profession was disadvantaged by this artificial rule and Council is now seeking to persuade the SRA to change it.
A number of constituents sought my advice on obtaining PII and I am pleased that I was able to assist. I am firmly of the view that, if my work on changes to conveyancing practice is fully adopted, obtaining PII will be much easier in the future for small firms engaged in conveyancing.
Career Progression and Succession:
I remain concerned about the difficulties of sole practitioners to exit the profession in an orderly manner. Larger firms are affected by the problems of recruitment of younger partners. Over the course of my career, insurance and successor practice rule changes have led to small firms no longer being a marketable entity that can properly fund paying off loans and overdrafts and leading to a comfortable retirement. Instead goodwill has become a liability and burden which cannot even be given away. The SRA are currently consulting on changes to the successor practice rules which is truly welcome but at the same time another consultation proposes the abolition of the Assigned Risk Pool this year which is, I believe, unworkable and a potential risk to the profession.
I will devote more time this year to campaigning on this area.
Alternative Business Structures:
I remain concerned at the effect of ABSs both in terms of affecting the ability of small firms to deliver services to their clients and of the risks to the public if ABSs are introduced without proper thought being given to the risks they pose.>
I have long been an opponent of unfair competition from under-regulated ABSs introduced without proper safeguards but, in the past, have found very little support for this view at Chancery Lane. I was therefore both surprised and gratified when a motion I put forward to Council in November, and which met initially with some opposition, was accepted with a 100% vote in support. It is proposed that The Law Society will now be in a position to put forward researched recommendations to ensure that small firms are able to compete fairly with ABSs and that regulation is not relaxed for these entities. I will do my best to ensure that Council adopts these proposals in the coming year.
Middlesex Law Society:
As a committee member of Middlesex Law Society, my main area of work this year, has been to help build services for the Society by developing courses in conjunction with Thames Valley and Middlesex Universities. New courses and seminars are planned to extend the universities’ post qualification education and support role. Further information on these courses will soon be published but, in the meantime, I am happy to answer any questions you may have on these plans.
Apart from the intrinsic value in promoting these courses, it is hoped that, as a result, local firms will benefit from local trainees being available to the market who will have more practical skills and that employment of local trainees will help local practices develop and expand effectively.
I have worked on the re-launch of the web site and improving services available through it so as to actively engage with more solicitors and trainees across as wide an area as possible. I will continue to offer lectures and updates on conveyancing as well as workshops on new areas in regulation such as fraud and money laundering.
Work during the course of the Hunt consultation involved investigation of the large number of disciplinary cases in our area and the monitoring and other steps taken by the SRA. This has driven work carried out by my Rules & Ethics committee to urge upon the SRA changes to the investigation and rules for regulatory decisions to enhance clarity and transparency. Further reform of the timetables for disciplinary actions is planned. Training work is also planned locally to assist and support practitioners who lack experience and confidence in handling these issues.
Future Plans:
Looking back at 2009 I can see that there have been achievements although there remains a great deal to be done.
I intend to stand for election to the Regulatory Affairs Board this year as I consider that, with a new SRA board in place and the Hunt Review recommendations to be implemented, this is where I can make the greatest contribution to reform of the PI system as well as enforcement and the new ABS licensing rules.
I also intend to continue to support my constituents and our local law Society over the coming year and am confident that the new courses planned at the local universities will bring benefits to the profession - new and old members alike.
I look forward to continuing to work with you all in the coming year and wish you all a successful 2010.
Michael Garson
michael.garson@perpro.org
020 8977 6633
Kagan Moss, Teddington
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