When is a bogus legal firm not a bogus legal firm?

We operate in a world in which we are constantly exposed to criminal activity undertaken by sophisticated crime syndicates, normally based outside the country.   There are several different types of crime and the type of scam is constantly evolving.  There is a need for both professionals and consumers to be on guard and to be educated to spot the true scam attempts and to know what to do when one is identified. 

A scam is a type of fraud that criminals use to trick both professionals and the consumer  into giving up money and personal details. Sometimes criminals will use the names of law firms, solicitors or other individuals regulated by us to make their scam seem genuine, either with or without their knowledge.

Scams can take the form of unsolicited emails, text messages, telephone calls or direct mail. Emails sent can also contain viruses some of which are designed to allow the criminal to gain access to your computer with a view to obtaining personal details of clients, bank details and other confidential information. Alternatively the criminal take control only agreeing to release the captured data in return for a ransom payment. 

One type of email is an email sent from an address which is not specific to the purported sending individual or firm but which purports to be from a member of a legitimate legal firm.  Its this particular email which seems prevalent and which is now proving to be a daily occurrence.  All one needs to do is to look at the Solicitor Regulation Authority Scam Alert Register to see how many of these are happening each week.  

My question is that should this type of email, which is not by any means a sophisticated scam, be viewed as one which is reportable and allowed by some independent third party holders of this data, to suggest or imply that the ‘victim’ business may have in some way brought about the scam or is associated with it. 

I say this is not a sophisticated 'scam' because to create an email address and to then add a simple signature strip to pretend the email has come from a particular legal practice does not involve very much ingenuity. It takes no longer than a a couple of minutes and to be able to send this out to other lawyers involves nothing other than a perusal of Find a Solicitor website.  As I say not rocket science. 

I have first hand knowledge of this since my business was reported to the SRA and has also as a result of the incident, had a “notice’ added alongside our name on a data base held by a well known commercial solicitor checking service. 

The email had an attachment  and was sent to a number of legal firms and was sent not from a clone of our business email address but rather from a personal email address.  This was very clear and all that the email had which related to our business was the name of our business in a typed signature strip.   The email was clearly a fake and unless the professional person receiving it has lived on a different planet  for the past year or so, it should have been abundantly clear that the email was ‘spam’ at the very least, and should be deleted. 

Our only connection to the email was the use of our name within the body of the email. 

Notwithstanding this we were required to report it the SRA and as mentioned anyone searching our name on the SRA website and the third party database will see that we are associated with what should have been labelled 'spam' rather than 'scam'. 

Not happy with this, we lodged a complaint with the SRA and wrote to the third party verifier.  Despite these efforts we still have the 'scam' associated with our business and this has meant that from time to time we are required to defend ourselves when other businesses  contact us enquiring about what happened and making sure we were in no way involved in the 'scam'. 

My question is that should all types of spam be regarded as reportable, or is it reasonable to expect most lawyers, using both common sense and a degree of intelligence, to differentiate between a poor and pitiful effort to 'scam', as was the case here, and the more serious type of scam.   Is there not a fear that by reporting everything that might look to be a scam ( whether it is or not ) the real and more damaging scam will become less visible to detect?

The argument advanced from the third party verifier is that ‘sadly not everyone spots the obvious and people are conned by emails purporting to be from legitimate firms when they are not’.

It also claims that the credibility of those businesses who appear to have been held ‘guilty’ for no reason other than association has not been affected by this type of scam.  Its also argued that if someone purports to be you then you have a moral if not professional duty to warn your clients and other firms to ensure that they are not misled by criminals.

Fair points.  However, the email in question was not directed at the consumer, it was an email which was being sent purportedly on behalf of our business from an email address which did not even feature our business name within it.   The ‘red flag’ points within the email were clear and obvious. If the email address was a clone of our email address then yes we would have had a moral and professional duty to warn, but this was not the case. 

Surely after all of the publicity and professional guidance issued over the past year or two,  has the time not come for the SRA and commercial scam data base holders and publishers to be more discerning in the reporting and labelling of scam attempts.   On this note, the third party company has refused to remove the notice registered against our name or to put an explanatory note against it. 

By having this blot on our copy book through no fault of our own we do face the prospect of suffering damage to our reputation due to risk of other businesses dealing with us taking the view that we have been the subject of a genuine ‘bogus solicitor' attack when clearly we have not.  I raised this with the third party data collector and publisher and was told this was nonsense.  I have not take this any further but it would be interesting to take an opinion on whether the publisher of data which is capable of giving a misleading image of a business can be held accountable for any loss arising. 

Hopefully those reading this will not consider that I am looking to undermine the fight against fraud.  On the contrary  I am saying that unless we can when receiving data be able to filter and correctly categorise the incidents there is a real danger that the profession will start to switch off to the threat due to the the overwhelming number of reports and warnings issued. 

David Pett   

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at davidp@mjpconveyancing.com

Japanese Knotweed - A Case for Revising the Property Information Form

By Ben Pett - Trainee Solicitor

In recent years the subject of Japanese Knotweed has received a relatively significant amount of media attention. Far removed from the common garden weed, its rapid rate of growth has helped earn it the label as ‘the UK’s most aggressive, destructive and invasive plant’ (Environment Agency).

Failure to control it can land you with a fine and an ASBO, while in March 2014 an individual’s ‘paranoia’ surrounding the presence of the plant on his property, was widely reported as a motivating factor behind both the tragic murder of his wife and his eventual suicide.

The plant has certainly acquired quite the reputation for itself, but just how much of it is media hyperbole?

While it is estimated that only 1% of UK properties have been affected, the impact of it on a Conveyancing transaction can be extremely detrimental to sellers, purchasers and lenders alike.

Property Information Form: Third Edition

When the Property Information Form (TA6) was revised in 2013, it was drafted to include a question about the plant. Now, as sellers and their conveyancers will know, at question 7.8 it states the following:

“Japanese knotweed is an invasive plant that can cause damage to property.  It can take several years to eradicate.”

It then asks sellers: “Is the property affected by Japanese knotweed?”

The choice of answers a seller can select are ‘yes’, ‘no’ and ‘not known’. It is at this point, the actual worth of raising this specific question can be debated.

‘No’

For the vast majority of sellers, the selected response will be ‘no’. But, there is a very marked different between a categoric ‘no’ based on a certain level of understanding, and merely stating ‘no’ because it has not yet been encountered by the vendor.

Any representation about a property can of course have legal repercussions if the information is intentionally misguiding. If representing a seller there is very little you can do if this is the case, but

what can be done to ensure that clients are not making firm assertions without sufficient knowledge?

To avoid such uncertainty it could be advised that seller should add a caveat along the lines of: ‘as far as I am aware’ to a response of ‘no’. This stems from how the plant can be hard to spot in its early stages. After all, most property owners are not horticultural experts.

‘Not known’

This response can serve to trigger alarm bells when reviewed by the purchaser’s solicitors. A request, via an enquiry, is likely to be made for further information and perhaps a specialist survey .

Indeed, this emphasises the issue with the current structuring of the question on the form currently. The ‘not known’ answer is arguably the most honest for the majority of sellers, but in reality it serves only to prompt the buyer’s solicitors to probe for further information.

From a sales perspective, it may be advisable to seek clarification from the client when reviewing the Protocol Documents if this response is selected. Again, a caveat along the lines of ‘buyer should rely on their own survey’ is to be recommended.

If this is the case, however, it is difficult to see just how the form has helped clarify matters at all from the perspective of clients or solicitors at the onset of a transaction. 

‘Yes’

From a conveyancing perspective this is clearly the most straightforward response. If representing the vendor, it is imperative to ensure the client has taken action. A specialist contractor will be required to treat the affected areas, with the form requesting a copy of the management plan detailing the record of works carried out.

Sellers should provide this to the purchaser’s solicitors, who in turn should enquire to see if it can be transferred to their client and whether or not it is backed by insurance.

Of course, if representing a purchaser the lender cannot be ignored. The presence of Knotweed does not automatically prevent a mortgage from being obtained, with a case by case basis approach often adopted. Evidence of treatment is once again key, as is ensuring remediation works have an insurance backed guarantee.

The presence of the plant at neighbouring properties has also deterred certain lenders, but note this is not something the seller is required to disclose on the Property Information Form. This again limits the value of the form in this particular area, with once again buyers directed towards ‘their own searches’.

A case for change?

By including Japanese Knotweed in the TA6, its potentially devastating impact is at least being acknowledged. As things stand, it is perhaps not addressing the issue from the right angle.

A simple amendment to create a choice of ‘yes’ or ‘not as far as I’m aware’ would reduce ambiguity. Property owners who are aware of it affecting their property would benefit from transparency, which is a clear strong point of the form. But those who are not aware, would not have to make assertions about the presence of a plant that they perhaps are not qualified to make.

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877067 or via email at david@mjpconveyancing.com

Open Letter to the President of the Law Society - Conveyancing Fees

Open Letter to the President of the Law Society - Chancery Lane, London

Dear Sir,

I am a practitioner who manages a practice which provides residential conveyancing services to clients nationwide.  

I have over the past 5 years worked hard to introduce efficiencies as well as measures to combat the increasing risks which continue to arise.  Much of the work has centred around the development of an ‘in house’ risk and case management system.  I along with my co-directors have invested a large amount of time and money to ensure we have a business which can compete with larger conveyancing practices and which more importantly can offer our clients a safe and efficient service.  It has not been easy and apart from an understanding Bank we have had no help or support whatsoever  from the Law Society or any other body.  

Instead we have had to adjust and  show complete flexibility to accommodate the ever increasing flow of regulatory and compliance hurdles thrown our way.   As conveyancers we are required to fund not only our own overheads but also the cost of money laundering checks and the long list of statutory and  other compliance requirements.  Indeed we have had to employ one person who spends all of her time watching out for changes and making sure these are applied within our practices. Tracking as we do the number of hours we spend on each type of transaction it is clear that the hourly rate we receive from providing a good and reliable service is barely above that paid to our office cleaner! 

It never gets any easier, and indeed  if there is at the end of the day any profit left  within a conveyancing transaction it is almost lost in discharging these obligations and taking out PII insurance.  The  financial pressure this imposes is highlighted in a an article which appears on your Small Firms Division website written by Mark Carver : ‘Conveyancing - is the reward worth the risk?’

In this article  Mr Caver makes the following salient observations:

‘In real terms, solicitors are earning less now than they did 10 years ago from conveyancing, with average fees increasing by 36.5 per cent – significantly less than standard inflation for the same period (40.63 per cent). This is in stark contrast to estate agents, who have clearly benefited from the increase in property prices as their earnings are linked to the sale price, and to a lesser extent, surveyors, whose fees have increased above the level of inflation’

‘Not only are solicitors getting paid less for conveyancing than in 2004, but the potential risk is significantly higher, driven primarily by an increase in property prices’

‘Even firms fortunate enough not to experience a conveyancing claim should be aware that approximately £100 of an average conveyancing fee will contribute towards professional indemnity insurance premium for the transaction’.

These are findings which do not come as a surprise but are still nonetheless alarming and must on any interpretation be viewed as a stern warning.   Unless something is done, and done soon, to address the imbalance between fee income and the increasing risk,  high street conveyancers like ourselves will, despite our efforts, be condemned to history. 

Its shocking that through inactivity and unnecessary distraction in projects like Veyo the Law Society has allowed this situation to continue  unaddressed for so long.   The time has now come for action to be taken to reverse this trend and to make sure that conveyancing is not seen as a worthless and inferior profession.  

So some questions for you to answer please.

How much has the Law Society invested in Veyo?

Was any thought given at the time Veyo was conceived about spending the money on forming a strategy to  see how the difference in value attached to the fees of a professional conveyancer and those of estate agent and other  property professionals could be addressed? 

Why is that as a profession  our indemnity insurance is one of the highest when compared to other professionals?

Do you consider  the Law Society has discharged its duty to its members by failing to protect its members who undertake conveyancing  from suffering a severe erosion in the level of their fees at a time when the burden of compliance and other risk management has increased substantially?

Finally, what do you intend to do to make sure action is taken to address this concern?

Yours, 

Additional Enquiries - A Room 101 Opportunity

Do conveyancers  agree that the type of reply shown below should be sent in a concerted effort to bring an early end the growing practice adopted by many conveyancers out there who take great delight in raising copious and unnecessary additional enquiries?:

'Dear Sirs 

Thank you for your long list of additional enquiries. 

We do understand the principle of caveat emptor and the need for due diligence. However the Protocol as you know has made it very clear that solicitors should resist the urge of raising unnecessary enquires.  

Paragraph 32 of the Law Society Conveyancing Protocol states as you know that the buyer's solicitor should: 

'Resist raising any additional enquiries, including those about the state and condition of the building, that have answers which are capable of being ascertained by the buyer's own enquiries, survey or personal inspection. Such enquiries should not usually be raised. Indiscriminate use of 'standard' additional enquiries may constitute a breach of this Protocol. If such enquiries are submitted, the seller's solicitor is under no obligation to deal with them. Nor does the seller's solicitor need to obtain the seller's answers to any enquiries seeking opinion rather than fact'

Noting than many of the enquiries you have raised fall within the category mentioned above could we please ask you to review the enquiries raised and send back to us only those which could be objectively considered as necessary. 

Please keep in mind that we are keen to assist and do not wish to do anything which could delay the progression of the transaction. Indeed it because of this that our request for a smaller but more relevant list of additional enquiries is produced. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Is there a need to order a plan search in all purchase transactions? Orientfield Holdings Ltd v Bird & Bird LLP [2015] EWHC 1963 (Ch) (26 June 2015)

The decision in  Orientfield Holdings Ltd v Bird & Bird LLP [2015] EWHC 1963 (Ch) (26 June 2015) should serve as a warning to all conveyancers of the serious financial consequences that can flow from mistakes made when carrying our due diligence on the purchase of a property.   

In Orientfield the buyer’s claim against the conveyances acting on its behalf was for damages arising out of an alleged breach of contract and/or negligence relating to the purchase of a property in London. Contracts had been exchanged, a deposit paid by the buyers of £2.575 million and completion fixed for the 4th April 2011.

The  buyer sought damages contending  that its former conveyancers were in breach of duty as they had not informed the buyer of the impending development of a school, which the conveyancers had been aware of from a planning search carried out by them.

The trial took place during June 2015. The conveyancers argued that the buyer had bought the property solely as an investment in central London whereas the buyer said it was bought as a residence in retirement for the owner of the its Company.

The conveyancing transaction included a Property Information Form completed and signed by the Sellers. In the question headed Notices and Proposals they had marked ‘no’ in respect of any notices or letters received which would affect the property and in answer to whether the sellers were aware of any proposals for development nearby, they had written that the buyers should make their own enquiries, which the conveyancers had queried with the sellers solicitors as being an unsatisfactory answer.

In email correspondence the sellers solicitors told the conveyancers to carry out a Plan search which they did and which revealed all the planning proposals for the area including the school. The conveyancers sent their report on title of 9th November 2010 to the buyer without revealing the results of the Plan search and confirming to the buyer  the local authority search result “which does not reveal anything adverse”.

After receiving the report on title the buyer gave instructions to the conveyancers to proceed to exchange of contracts with the deposit of £2.575 million paid.

The buyer’s friend in this Country discovered through talking to neighbours, the proposal to redevelop the school.

The buyer then contacted the conveyancers via emails who sent her a copy of the Plan search result with a comment that as they had not seen the search result, they may wish to take independent legal advice.

Email correspondence followed between the Claimant and conveyancers asking for the purchase to be rescinded on the basis that the sellers had not disclosed the school development. The conveyancers did not follow up on this or advise the Claimant to obtain a valuation of the property before rescission. The conveyancers appointed Counsel to advise on whether the sale should be rescinded. Counsels advice identified three reasons why rescission would prove difficult and also risky, one being that there was no evidence the notice of development had been sent to the property.

A property litigation lawyer was subsequently engaged by the buyer and notice of rescission was served on the basis that  “the answer to question 3.1 in the PIF was untrue because (i) the Plants had received notice of application for both outline planning permission in 2008 and detailed planning permission in 2010, (ii) the Plants had commissioned Knight Frank to submit a detailed objection on their behalf at outline application stage and (iii) with others, had objected via Boisot Waters Cohen at detailed planning stage”.

Negotiations took place and the proceedings were settled before trial on the basis of a 50/50 split of the deposit. 

The buyer then brought proceedings against the conveyancers for breach of contract or duty and their failure to let the Claimants know about the Plans search results and the Defendants failure to investigate the results in an effort to recover the other half of the deposit and unrecovered costs.  The conveyancers denied breach of duty using and argued that even if there was a breach there was no causal link between the alleged failure to advise and the consequential loss. Essentially arguing that the buyers would have still proceeded with the purchase in any event. 

His Honour Judge Pelling on considering Breach of Duty found in his judgment that the conveyancer  “was in breach of his duty by failing to include in the ROT a summary of the effect of the Plan search report, the further investigations that could be undertaken with the LPA without undue difficulty, cost or delay, and to invite instructions in the light of that summary. By doing so, he would have given Ms Chow the opportunity to decide whether she wished to proceed, withdraw or obtain further information before deciding”.

In considering Causation, His Honour Judge Pelling ruled that the final point to prove this issue was the email to conveyancers acting on the property purchase where the Claimant had said

“I am sure I would not have entered into the purchase agreement if I had known that there was going to be a school for 1250 pupils and 250 staffs in the same block as my property.”

He continued that even though the buyer had become aware of the conveyancers failure to reveal the results of the Plan search and had taken other legal advice, he did not believe that the email was anything other than it was “reflective of her honest belief at that time”, which she had expressed long before the start of the proceedings. He was satisfied that the Claimants had “established the causal link necessary to maintain its claim in damages for breach of duty against the defendants”.

The decision is to be appealed. 

Lessons to learn

There are a number of unanswered questions arising from the above which makes it difficult to carry out a complete and fully informed evaluation of the decision and its practical consequences. 

To begin with its unclear why the buyer agreed to compromise on the financial consequences of rescission when it seems the seller had not acted in good faith when failing to disclose the fact that notice of the development has been received by the seller but the seller had failed to disclose this in the Property Information Form. It seems to be that there had been a deliberate concealment which should have provided a more than sufficient basis to justify a clean and complete rescission of the contract.  Perhaps the buyer was not too concerned about not making a full recovery given the fall back of a claim against the conveyancers.  

It would have been interesting to know whether there would have been a different outcome to  the rescission discussions had the conveyancer not sought a plan search and had proceeded to report to the buyer solely on the basis of the Protocol documents. 

The decision clearly reinforces a message which seems to have become lost in the age of the Protocol that when acting for a buyer greater energy and scrutiny needs to be given to the replies to the answers given by a seller in the Property Information Form and related communication.  Its unclear why the conveyancers did not press the sellers solicitors for an answer to question 3.1 of the property information form  and not accept what is fast becoming a standard reply of ‘rely on your own searches’.  The seller should be required to answer 3.1 with a ‘yes’ or a ‘no’.  A search will not reveal whether  a  seller has received a planning notice.  Only the seller would know and this is why the question is raised in the Form. 

This was  the first error made by the conveyancers and one which is reflective of a more growing and widespread practice.  

It is clear a failure to disclose a search report having received one is not advisable especially when it should have been obvious having read through it that it contained information highly relevant to the transaction. The unanswered question is whether this decision would have been the same had the report been sent to the buyer but without comment and advice on its content.  Looking at the judgment it would on the face of it appear that the mere disclosure of the report would not have been sufficient, though this is far from clear, particularly when there must be a reasonable expectation that a client having received the report would have read through it. 

The other unclear aspect is whether there is in fact an obligation on a conveyancer to always commission a plan search or at the very least advise that one should be obtained.  My view is that the latter should at the very least form part and parcel of the practice of a comment conveyancer. By advising the client of the insufficiency of the local authority search when it comes to pending planning applications the client should be advised in clear terms that a plan search should be sought or at the very least the client should make their own enquiries with the local authority. 

At the end of the day the conveyancers in this case really do not have any excuse for the failures and I doubt any appeal will be based  on the breach of duty issue.  I suspect what has happened here is that the report has come in and was overlooked.  In a bust conveyancing practice this can happen.  The more avoidable error was the  failure to push the sellers solicitors on providing further information on the reply provided to question 3.1 of the Property Information Form.  The readiness to accept an unacceptable reply to that question was the beginning of a very bad day for those conveyancers. 

MJP Conveyancers are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@mjpconveyancing.com

We need to do more to protect our clients money

The recent report of a significant loss suffered by a client following the interception of an email by a gang of fraudsters has sparked a debate about the suitability or otherwise of communicating with a client via email especially as regards the exchange of financial information. 

Mr and Mrs  Lupton sold a fla for £340,000. Two days before the set completion date of February 27, Mr Lupton’s solicitor, Perry Hay & Co in Richmond, Surrey, emailed him requesting his bank account details for the sale proceeds to be paid into.

Mr Luton replies and unfortunately for all concerned the email was intercepted by fraudsters.

Posing as Mr Lupton, the fraudsters emailed Perry Hay & Co again instructing them to disregard the previous details and send the money to a different account instead.

The sale completed and following the discovery of the fraud the account was frozen and £271,000 was returned to the Luptons but the balance of £62,000 had already  been withdrawn by the fraudsters. 

Speaking to the Daily Telegraph, Robert Loughlin, executive director at the SRA, said: “We are very concerned about this continuing activity. The fraudsters are highly sophisticated in their approach. All firms should ensure that their own, internal systems for guarding against scams are up-to-date and that staff know how to implement them.”

Unfortunately the SRA dis not seize the opportunity to provide guidance.    There is an element of common sense involved  but this is easy to say in the cold light of the day but less simple to implement faced with the intensity and pressures of a busy day of completions. 

So what can be done to reduce the risk of falling victim to fraud?

Some commentators speak about the need of encrypted email but I question whether this is a practical solution and more to the point one that is really necessary. 

The first and most important step is to make sure there is a very clear and coherent policy prepared on how to deal with the transfer of client funds and to make sure every single member of your business knows the policy and knows it by heart. 

The policy should make sure that any bank details supplied to you by a client should always be verified by calling the client and taking the client through some security questions.  That is questions to which only the client would know the answers.  You should avoid questions such as date of birth, file references and any other information which a determined fraudster may have gleaned. 

I also recommend that you should always ask the client to send through a copy of the bank statement relating to the account into which the money is to be paid.   This can then also be used to verify the bank details.   I know a bank statement can be replicated but if you have asked the client to forward this to when speaking with the client over the phone the chance of a fake statement being sent through is remote. 

I also suggest that significant sums of money should only be retuned to clients after it has been authorised by a director or partner of the firm.  This will add a second layer of security since the director or partner can then check that the policy has been followed. 

We operate in an uncertain world full of people who operate tirelessly to defraud others - we must be more vigilant and careful with  our clients money. 

Interestingly, following the crime, Perry Hay & Co said it did not believe it was at fault and that the Luptons would have to suffer the loss.  I am not sure about that! 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Veyo - A Trojan Horse?

The Veyo PR train continues to gain momentum with the bold announcement the week of attracting ‘orders’ in its yet to be released on line case management system from ’47 %’ of the conveyancing fraternity. 

Talking in the Law Society publication - Law Society Gazette - Stefanie van den Haak, commercial director of Veyo, said: ’The number of enquiries since the pricing was announced has been phenomenal but we are not complacent. We know we are offering something that is unique and we need to continue to promote our USPs. We are keen that conveyancers see for themselves that there is nothing comparable in the market.’

Going on record, and claiming such a significant number of potential customers is a bold step, and one which will either herald the onset of a conveyancing revolution or the start of a slippery slope for those investors behind the product, which includes of course the Law Society.   Ten million of pounds is a large sum of money to gamble, and on top of this also lies the professional reputation o a body which has been representing  and governing the interests of solicitors since 1875. 

So where does the truth lie?  Are conveyancers flocking to offer support for the product or is it the consequence of a well managed and orchestrated PR machine?  There is no doubt that Veyo has succeeded in the promotion of its brand as well as making Veyo a hot topic for discussion.   Hats off to Miss Vanden Haak and her team.  Even though much of the discussion has focused on negative features of the product, the fact is that any publicity whether it be good or bad must be a welcome outcome for Veyo.   

So in answer to the question, I very much doubt that half of the conveyancing businesses in the Country have ‘signed up’ or even at the very least registered an interest with Veyo.  I suggest the  claim is nothing other than ‘sales talk’ designed to appeal to our inherent sheep  gene.   If there is any truth in the figure it must represent a measure of the level of curiosity that  clearly  exists. Its out there in abundance. Curiosity however is one thing, from an investors point view hard cash is all that counts.  

One must also question the perimeters of the basis on which the claim is made.  The Land Registry has over 7000 firms registered with conveyancing interest.  So does this mean Veyo has received firm orders from over 3000 businesses?  I say ‘orders’ because this is how it was stated in the press release. Sounds fanciful, but clearly would if true, represent an epic achievement on the part of Veyo’s sales team.  

One should also ask how many completions do these 47% of conveyancing businesses produce each year, and what percentage of the overall completions number for all firms does this represent.  Keep in mind that the top 200 conveyancing business have around a 36% to 40% share of the market. 

I can understand why there is a need  for the statement to be made when the commercial success of Veyo hinges precariously on the products purported unique selling point.  Indeed Miss Vanden Haak makes specific reference to the importance of this in her statement.   So what is the USP?  Difficult to tell at this stage but it seems to centre around a ‘chain matrix’ and a ‘deal room’.   These features may explain why Veyo needs to convince us all that it already has accumulated critical mass since without this the product losses its USP.  It is as simple as that.  What is the point of singing up and parting with you hard earned cash if all you  are left with is an incomplete picture of a transactional chain?   The Land Registry spent  millions of pounds on a similar project which it then had to abandon in 2009 because of lack of interest. I am not sure why Veyo believes the market will take a different view now, especially when it will involve having to hand over money for the privilege. 

Only time will tell if the statement is true or not.  One thing is for sure that even with 47% of conveyancers as users this still means there are 53% who are currently not interested and unless these firms can be won over the platform and its USP will become meaningless.   

Just a thought.  If you were an investor in Veyo I am sure you would be thinking of Plan B to cover the prospect of the product nose diving.   It seems obvious to me that one plan B must be for Veyo to enter the market as a business offering a conveyancing service of its own. It already has the profile and brand awareness as well as, if you believe the hype, cut throat technology.  A trojan horse in the making.   The only thing that would prevent this from happening is its commercial tie with the Law Society.  Now that would be a story! 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

How many conveyancers give the correct advice on building insurance ?

Do you advise your client on insurance or do you make it clear that you are not an expert on insurance matters and that the client is better talking to an insurance expert?  If you do advise I suspect  you make think differently when  you read through what follows.

In line with current conveyancing practice if you are instructed by the client to check an insurance policy and you agree to do so there is an obligation on you to check the following issues:

1. Is the amount of cover adequate?
2. Is the sum index linked?
3. Are the risks insured adequate?  Cross referencing perhaps to the result of your environmental search result. 
4. Have all particular features  of the property such as a thatched roof been disclosed and are they adequately insured?
5. Is the property attached to an adjoining property, if so does the insurance extend to damage to a neighbouring property where practicable? 
6. Does the policy comply with the buyers lender requirements?

Most leasehold properties are cowered by insurance put into effect by the Freehold owner.  The policy still  needs however to be checked in the same way.  Additionally there may need to be extra cover put into effect to cover damage caused by an uninsured risk.  The client may remain liable under the lease including the covenants to repair and pay rent.  Some policies do not extend to flats where a resident is claiming social security benefits. 

Though the need to check where a lender is not involved is something which I would not offer to do ( I am not an expert in this field ) I would always make sure that where the client is borrowing  the client is made aware of the lender requirements for insurance.  It would be negligent not to do so. 

A lender’s particular requirements, set out in part 2 of the CML handbook, will stipulate:

-whether the buildings insurance policy must be in the joint names of the lender and the owners of the property, or whether it is sufficient for the lender’s interest to just be noted on the policy the maximum excess which is acceptable to the lender

-whether the lender requires written confirmation from the insurance company that they will notify the lender if the policy is not renewed, or is cancelled; and

-whether the lender requires a copy of the buildings insurance policy, and the last premium receipt, to be sent to them

It is also necessary to make the client aware of the need to take care and not to make a misrepresentation to the insurer. 

So next time you come to consider insurance as part of the exchange process do keep in mind the above and make a clear decision on whether to take on responsibility for advising or whether to make it clear to the client that the time has come for the client to take advice from an insurance specialist.   This is something which you may wish to address and make clear in the terms of your retainer. 

MJP Conveyancing  are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Referral Fees - Good or Bad?

There is nothing more entertaining than watching two conveyancing lawyers engaged in an argument over the use of referral fees within the property market.   There are always plenty of sparks and it is clear that feelings around this subject run high.  

So what are referral fees?

They take several different forms.  The most common is the introduction fee.  This involves  for example a solicitor paying an estate  agent for referring a client looking for conveyancing services to that solicitor.  The fee can be anything up to £300.  Another common one is the  marketing fee.  This where a  a solicitor pays an intermediary for a ‘lead’, that is a name and contact number, to enable that solicitor to contact the potential client direct.  Its not just estate agents who refer work on for payment.  Insurance brokers also do it and can receive substantial payments for referring clients to panels of solicitors run by  third parties who also take a payment. 

Referral fees have already been outlawed in the area of litigation but still remain lawful in the property industry. 

So what are the perceived  benefits?

To begin with those referring will argue that by having control over the choice of solicitor albeit for payment, the referrer can keep control of quality and ensure the client receives the best service.  There is some credibility to this argument as agents and brokers are in making the referral putting their reputation at risk if the conveyancer fails to deliver.   The problem arises however when you bring conflict into the equation and question the motive behind the referral.  Is it as it should be to ensure the best possible outcome for the client or is it more sinister than that?  Is it because the introducer is out to maximize his return on acquiring that client?  In other words the introducer may be focused solely on the money.  In this case there is a real danger the client will be directed in the direction of the highest bidder. 

The other fundamental flaw in all of these arrangements is that the client if left to pay for the referral.  The client may not be aware of this even though there is a professional duty on the part of the lawyer to disclose the existence of the referral fee.  So this is how it flows.  The agent for example may direct a client to a conveyancer and tell the client the conveyancer is good and will only charge say £450.   The agent is more likely than not to keep from the client that out of that £450 the agent will receive a ‘kick back’ of say £150.  So in the end the client is paying £150 more than if she or he had gone the the conveyancer direct.   

The conveyancer may argue that if the client had come direct the fee would have still been  £450 because without the arrangement the conveyancer would have to spend more on advertising to generate new work.   It is unlikely therefore that profitability of a forward thinking conveyancing business would improve if referral fees were banned.  Instead these businesses would have to pay a high price for more general marketing initiatives. The only difference and one that means a lot to many practitioners is the latter situation would leave the lawyer to practice without ties and with integrity and professional independence fully intact. 

The difficulty many practitioners encounter is the inability to compete for clients on a level playing field.  Brokers and agents have access to the client at the very outset of a client’s desire to sell and or buy.   The conveyancer does not get a look in!    The opportunity presented by conveyancers to offer to the public direct Home Information Packs when they were obligatory, helped but as we know the present government in its wisdom did way with these.  It is clear that if lawyers could get to the potential client first the client would have a far greater opportunity to avoid pressure from agents and brokers alike and perhaps be left to make a more informed choice.  

Sadly I can not see any future government having the courage to bring in reform would provide this opportunity and for this reason right or wrong referral fees are likely to be here  for many years to come. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Veyo's Fundamental Flaws

The Law Society’s joint venture with Maestek UK has become a hot topic of conversation within the Legal Community and has in the main courted a great deal of  negative press from property practitioners.  The product to be delivered by Veyo is described on Veyo’s website as a ‘revolutionary home conveyancing portal’ offering to save practitioners ‘time and money’.  Speaking at a recent conveyancing conference Veyo’s Chief Executive, Elliott Vigar, announced that the launch of the product is still on schedule for spring of next year.

In this article I look to examine and discuss those areas of Veyo’s business model in which there is I believe some fundamental, and perhaps fatal, errors.

I must begin however with a disclaimer as well as a declaration of self-interest. I am not an expert in legal technology; though I must disclose that in 2011 I designed and built a risk and case management system (Quick Conveyance) with the help of one full time programmer.  The system was built on a ‘shoestring’ but has proved largely successful and has helped my business process around 30,000 transactions since it was launched.  The cost of building the developing the system (which boasts the majority of the features of Veyo) has been no more than the salary of a full time programmer.  Contrast this with the news that Veyo has and continues to consume millions of pounds of investment, not only in relation to build but also in marketing and promotion.

The first feature of the business model to consider, and an aspect which is pretty fundamental to any new business venture, is the question of identity.   Is Veyo a communication and compliance hub for the benefit of those who subscribe to the Law Society’s national Conveyancing Protocol, or is it a case management system for those undertaking conveyancing. Or is it both?  For any product to achieve successful traction in the market for which it is designed and promoted, it must be capable of being clearly understood by the target market.   Unfortunately from what has been disclosed and presented to date the message is far from clear.   At the recent Society of Licensed Conveyancer’s Conference held in Derby those representing Veyo (Des Hudson, former Law Society Chairman and Mr Vigar) were clearly confused.   In response to questions from practitioners it was clear that they themselves do not know whether they are entering the highly competitive market of legal case management systems, or whether they have a system which is designed to supplement existing case management systems.  From reading the literature and despite a clear statement from Veyo to the contrary, it seems obvious to everybody other than Veyo that they are offering nothing unique or different.  Veyo is a case management system which is no different from most of the other case management products out there and which are far better established.

So what would have I done differently?   To begin with I would have consulted with both the practitioners and the legal technology industry at an early stage and looked to see what I could have done to supplement rather than compete with existing offerings.  Why re-invent the wheel?  Veyo swears blindly that it has consulted and carried out extensive focus group exercises.   I am no business guru, but even a candidate from the BBC show the Apprentice could see that there is very little evidence that if this did take place, little if any reliance has been given to the feedback.    The case management market is saturated with similar products and products with lengthy and successful track records.  Why do we need another case management system?   For a practitioner who has already invested a significant sum of money in a case management system there is little incentive to switch or spend money on integrating with Veyo. It simply does not make any commercial sense.

Keep in mind that Veyo claims its system will speed up the conveyancing process and help to save cost.   This strap line simply does not inspire confidence.   It is reported that Veyo will need to charge a license fee and also a transaction fee.  It is not clear how much these fees will be, but based say on a license fee of £2000 per user and a transaction fee of £15, a business which handles 2400 transactions each year and has 20 fee earners would be looking to pay Veyo £76,000 per annum.  If the business already operated a case management system then it would be looking to pay this on top of its existing commitment without any apparent additional benefit.   This hardly demonstrates a saving.

The lack of identity caused by flawed business development investigation was avoidable.   The Law Society could have looked to introduce for example a system which acted as communication hub to bridge existing case management systems and offer a ‘negotiation room’ and or a ‘chain matrix’.   An idea that would not have competed against existing and established systems but which brought something new and innovative to the table.  One question which springs to mind is why the Law Society not look to reviving the Land Registry’s failed at a chain matrix. The idea of the system was to reduce the uncertainties of house buying by allowing all parties in a chain to see what stage of the process had been reached by everyone else. It was to be the centrepiece and public face of a scheme to computerise the entire conveyancing process. However, the scheme was postponed at the end of 2007 after a pilot showed little interest from conveyancers or their clients.  I am sure that with full and proper consultation with conveyancers and the legal technology industry there could have been some merit in looking to resurrect this project particularly if there was some appetite evident from private investors.

The other significant failing has been the lack of engagement with the target market.  Veyo is either naive or extremely arrogant in its approach to the presentation and marketing of its product.  This is not a current issue but goes back in time to when the product was first devised.    Veyo claims it held focus groups and consulted with grass root conveyancers but has up until now failed to disclose details of that consultation.   The legal sector is a difficult market place at the best of times.  Those selling to lawyers find it difficult to engage interest and to earn sufficient trust to then sell.   Veyo seems to be oblivious to these factors and seems to believe that conveyancers will come forward in sufficient numbers and sign up.  I suspect this is a highly optimistic view and indeed the recent announcement by Myhomemove might suggest that conveyancers have already turned their back on Veyo.  Myhomemove, the UK’s largest provider of mover conveyancing services, recently selected Lexis Visual files 2014 as the firm’s next generation workflow and case management system.

To succeed in the legal sector there needs to be a sense of belonging and unfortunately this has been lacking in the approach adopted by the Law Society in the development of Veyo.  I am sure if there had been effective and extensive consultation with conveyancers in its development conveyancers would have been warmer and more receptive to Veyo’s introduction.

It may not be too late to save Veyo providing those behind it begin to listen to the feedback and perhaps look to redesign the product.   It needs a unique selling feature and to demonstrate that for the money it will demand that it is actually adding to and improving the conveyancing experience for the conveyancer and client.

Veyo - Raising more questions than it is answering : http://bit.ly/1p5U1t3 

By David Pett Director of MJP Conveyancing