Wednesday 1 February 2012

Flood risk alert for future home owners and coveyancers

Buying a property that may be within the range of a flood plain has become even riskier due to the news that around 200,000 homes at risk from flooding could face problems getting insurance from next year.

Properties that have a 75% chance of flooding in any one year are those most at risk. Boston and Skegness in Lincolnshire is the constituency with the most homes at significant risk of  flooding with 7,550 properties under threat, followed by the Vale of Clwyd (7,339 homes), Folkestone and Hythe (7,196), and Windsor (7,125). Some properties in Great Yarmouth also fall into this category.

The reason for this is that an existing deal with the Government expires in 2013 and time is running out for ongoing talks about a new safety net arrangement.

The Association of British Insurers’ director-general Otto Thoresen said: "Insurers want to make sure that every home has access to affordable insurance, should the worst happen, and we're concerned that those people most at risk will lose out unless the Government considers a safety net.

"We are frustrated with the progress of our talks with the Government on this issue and want it to look urgently at a model that would allow flood cover to remain widely available and competitively priced. No country in the world has an entirely free market providing universal affordable flood insurance, and action is needed now to avoid 200,000 high-risk homes struggling to afford cover."

The possible non - availability of insurance may make it more difficult for people to find a mortgage for properties in the affected area and may lead to current home owners in those areas feeling trapped. 

Those acting for prospective owners of such property need to keep a close eye on this development and to warn clients of the what is happening and how this could affect the future value of the property.    Looking more closely at environmental reports and assessing the risk of flooding will clearly be needed as will the requirement to report the risk if indentified to the lender.

Unless Government acts quickly to extend the current arrangement we could see a large number of transactions failing over the next 12 months. 

By David Pett Solicitor and Partner

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

Thursday 26 January 2012

Conveyancing process needs urgent reform

What can be done to make moving home faster and less expensive?  

This is a burning question and one that has yet to be addressed by Government despite the fact we currently face a major housing crisis and a situation where first time buyers are finding it increasing difficult and expensive to find a home.  The problem facing the first time buyer is likely to increase shortly with the withdrawal of the stamp duty concession and the forthcoming changes to how mortgages will operate in the future.

A brave Labour Government sought changes, the first since 1925, with the introduction of the doomed home information pack, but this was shot down in a blaze of glory by the Coalition Government when it came to power in May 2010.  Unfortunately in the rush to score political points no one seemed to care that by removing this attempt of reform it left the door open once again for the return of the problems associated with aborted transactions, increased costs and delay.

In fact, we are still left with an antiquated process and one that cries out for immediate reform.  The question is whether the current Government has the courage and inclination to do anything about it. 

So where do the problems lie?

Disclosure

As the law currently stands it is for the buyer to do most of the running around and to ask the seller questions because the duty to discover any problems with the property rests with the buyer.  There is no duty on the seller to volunteer adverse information about the property unless asked.  This means we have this bizarre process of having to ask the seller a series of questions hoping that all of the right questions are raised.   This is often a long and protracted process and one that could be avoided if the seller was required to bear all about the property to be sold.  This could be through thee completion of forms/questionnaires, documents that could be completed when the property is first placed on the market.  

Why not get the estate agent to ask the seller to complete the form and to make this available to prospective buyers.  At least the buyer could then decide on whether a survey would be needed.  All of this would take place before the lawyer is instructed and would save so much time.

Some may argue this is a ‘HIP”.  No it is not.  There is no added expense for the seller or the buyer. The seller simply completes a form knowing due to a change in the law that the duty to disclose rests with him or her and this forms part of the marketing process.   It would save time, it would save money as the transaction could proceed that much quicker and it would mean both seller and buyer standing far more chance of completing the transaction than they do at present.


Searches

Before the days of the HIP there were often delays in procuring searches.   Due to the shake up of Councils caused by the introduction of the HIP, most Councils have streamlined and improved service levels.   On top of this, personal search companies following the collapse of the HIP have faced a drop in demand for searches and this has led to increased competition and a vast improvement in the time it takes to deliver search results.

Search related delay is therefore uncommon.

However it is a bizarre situation that each time a property is sold a buyer is required when purchasing with a mortgage to order new searches.   This is often costly.  Often the cost of the search package is more than the fee charged by the solicitor!

In a time when the majority of the land in this Country is registered at the Land Registry would it not make sense for information on water and sewage and environmental issues to be noted on the Land Registry Title Document so that future buyers could see that at the outset and decide whether to ask the suppliers of the information whether there has been any change to the data since it was first supplied?   The cost of checking would be far cheaper than having to order a new search each time the property is transacted.

The same could apply to planning and building regulation data requiring this also to be noted on the Register the first time a property is sold and the data is disclosed.  How many times have property lawyers had to run around after planning and building regulation documents. 

On this subject if lenders could make it clear that they are not interested in planning and building documents which relate to matters of over 15 years in age this would also save time and money.  Some simple changes to the law to make it clear that no liability can arise on planning and building regulation breaches after a set period of time would put an end to this ridiculous and unnecessary paper chase.

Title defects

There will always be the occasional problem with title that needs to be addressed through insurance.  Why is it not possible that when the effect is found and insurance is taken out that there is not a requirement on the purchaser to register the insurance details at the Land Registry?  This would in terms of future due diligence save time and money and also avoid a future purchaser who may not have had the original policy passed to him or her, having to take out and pay for a fresh policy.  


Mortgages

Obtaining a mortgage offer once the mortgage is approved is no longer a reason for delay.  Most buyers receive their mortgage offer very early in the process.  The reason for this is that the lenders are issuing far less offers than they were before and therefore the paperwork of those mortgages they take on is coming through much faster.

Client Delay

Clients who sell have quiet a bit of paperwork to complete and it always amazes me that responsibility of over seeing this rests with the lawyer.  I am not sure why the selling agent could not ask the seller to complete these when the agent is engaged. It would save a lot of time and would quicken the process.


Solicitor delay

I always tell my clients that I can only be as fast as the slowest solicitor in the chain.   It is frustrating when you do as much as you can to progress a transaction only to find the solicitor acting for the other party is not responding or taking too much time to respond.

What can be done to improve this?  Very little though in a climate where lender panel membership is of importance to the survival of most conveyancers perhaps lenders will in the future take a closer look at the activity and performance of panel members and be more inclined to remove members where there is evidence of   repeated ineptness.

Conclusion

I accept a change in the law to reverse the maxim of ‘buyer beware’ would involve a radical switch, however by doing this the whole process would be far more transparent, quicker and cheaper.    It would lead to the front loading of information on a sale and if the requirement to register search data at the Land Registry along with title defect insurance was also introduced this would mean a prospective buyer would have to hand before an offer is made all the information he or she would need in making an offer and thereafter engaging a solicitor.

The cost of obtaining the title information, a cost which is already met by the seller may increase due to the extra data recorded and supplied, but this would easily be off set by the saving on not having to order full searches and reduced conveyancing fees due to a more streamlined service.

What are the chances of this happening?  Remote I would say as there is too much vested interest in the process as it presently operates and you also have a Government that says on the one hand it wishes to reduce bureaucracy and save costs, whereas on the other hand it has clearly stated it is not keen on introducing regulation that could hamper an already ailing property market.   It seems to have little appetite to interfere with the process. 

So it looks as if we may be facing another 100 years of operating a slow, costly and totally unfit for purpose  home moving process.   

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

Wednesday 18 January 2012

Can HSBC restrict freedom of choice of solicitor?


The HSBC’s decision to make it less attractive for its mortgage customers to instruct their own solicitor has caused much anxiety within conveyancing practices , with many firms facing the loss of potential work from existing and potential clients.

The question is whether anything can be done to prevent this from happening.  Can a customer of HSBC insist on using his or her own solicitor without having to face a financial penalty?

Why freedom of choice is important?

One of the main concerns is conflict.   Solicitors have in the past acted for both buyer and lender and though the principles laid down in the recently introduced customer focused regulations ( Core Duties) would suggest ( if strictly applied ) that such a conflict should not be allowed to occur, it seems the Law Society has taken the view that its ‘business as normal’.    A decision which we as Conveyancers are of course happy to accept.

However when as in the present case HSBC has entered into a contract with one firm of solicitors and is providing its customers with a financial incentive to use those solicitors the dynamics of the relationship change and the scope for conflict is heightened.  How can the panel firm guarantee that it will not put the interests of HSBC before those of its clients? Surely it will not wish to lose what must be quite a lucrative contract with HSBC and therefore the commercial interests must clearly become influential.

What does the law say?

"It has always been the fundamental right of every citizen to be represented by solicitors of his or her choice" (Maltez v.Lewis (1999)). 

HSBC may argue that the client has a choice and is not so restricted. This may on the surface be correct, however when as is the case the client has received an offer of mortgage and is not looking to lose this, particularly in the present climate, and knows that if they decide to instruct their local solicitor they may be paying more, surely this all adds up to a rather tight and unreasonable constraint?

The Core Duties 3 & 4 of the Solicitors Practice Code 2007 say a solicitor's agreement with a third party's restriction on client choice could compromise the solicitor's independence and/or amount to a breach of Core Duty 4 where such a restriction may not be in the best interests of a client. As mentioned above one must question whether the solicitors acting under a high value commercial arrangement with the Bank is able, despite its best efforts, to provide unfettered advice to its clients.  Surely the very fact it is paid by the Bank and not the client makes this very different from the situation with other lenders where the client pays the fees.  The existence of a commercial arrangement between the bank and the solicitors must clearly compromise the solicitors in their dealing with the client.

Parallels with the insurance market

This issue is one which is often encountered in the insurance field when providers of legal indemnity insurance seek to limit the choice of solicitor, when a claim arises, to a member of the insurer’s panel of solicitors.  A conflict in these circumstances often occurs if the provider of the indemnity insurance also happens to be the insurer of the defendant against whom the claim is to be brought.  In this case the position is clear - the insurer must provide the freedom for the policyholder to choose its own lawyer.

Interestingly The Financial Ombudsman Service has confirmed the above points and also recommended that it is appropriate to use the policyholder's own solicitor in any cases where there is a suggestion of a conflict of interest, or in large and complex matters.   In this case if therefore an insurer insists on a panel lawyer, the policyholder may be able to refer the matter to the Financial Ombudsman Service.

It will be interesting to see whether clients with the help of their choice of solicitor look to what has happened in the insurance industry and begin to challenge through the Ombudsman Service the financial disincentives imposed by HSBC on freedom of choice.

Conclusion

HSBC must be taken to task on this policy decision.   The scope for conflict is wider and different from the relationship between other lenders and their panel of solicitors who are sanctioned to act on their behalf but with whom there is no commercial arrangement under which money is paid to the solicitor direct.
Solicitors affected by this decision may consider making a complaint relying on Core Duties 3 and 4. 

Clients affected may decide to refer the latter to the Ombudsman for investigation though in practice and with the fear of losing a mortgage offer this may not happen.

Alternatively clients could vote with their feet and choose mortgage products where there is no such constraint.    For those solicitors affected and who bank with HSBC may I be bold enough to suggest that it might be a time for a change!


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

Tuesday 17 January 2012

More news of housing doom and gloom

Rightmove, the property portal, reports that since the beginning of the year new homes for sale has slumped to its lowest point in more than a decade.  Only 34,433 properties have come on to the market equating to around half of pre-credit crunch levels.

This comes at a time when emerged borrowing costs have fallen to a 14-year low with the average mortgage payments for new borrowers standing at 27 per cent of disposable earnings. Good news for those with existing mortgages but still no hope for those people trapped in rental properties without the money for the deposit.

Those who do have the cash to put down on a deposit have their own problems given the shortage of new homes. This has in turn created in certain areas a high demand for property and perhaps explains why property prices have remained more or less unchanged.

It has also led to those looking to buy to be more selective in their hunt for a suitable property and one that fits their budgetary constraints.  

The situation is likely to get worse when the stamp duty holiday for first-time buyers ends this spring.

So why is there a shortage?  We seem to building less new homes than before and this combined with the economic uncertainty and owners worried about  replacing their existing mortgage, there appears little hope for any immediate change.

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

Sunday 15 January 2012

New Survey shows withdrawal of HIPs has led to a return of problems with aborted property transactions

Home Information Packs were introduced by the Labour Government in response to a high volume of feedback from the public about concern over property transactions falling through and consequential losses.
The Coalition Government decided in May 2010 to abolish Home Information packs claiming that this would instantly lead to an increase in property activity and put more money back in the hands of the homeowners.  
The likes of Kirstie Allsopp, Grant Shapps and Eric Pickles lead what became a very personal and high profile campaign to bring Home Information Packs to an end, and were often photographed unwrapping ‘red tape’ wrapped around houses.
Twenty months on the question is what has this decision achieved – are homeowners any better off and has it led to any change in the very situation that led to the introduction of HIPs?
Recent research suggests it has not. A new survey has shown that over 500,000 house sales fell through at the end of 2011, a jump of 33% from the beginning of the year.
The study also showed that property deals in the second half of 2011 were less likely to succeed than they were to collapse.
This led to homeowners incurring unrecoverable costs, running into thousands in most cases and averaging well over £5,000.
So rather than saving money as we were all told it would, this data shows that what most conveyancers knew, that without the financial commitment shown by those selling in purchasing a HIP, together with buyers not knowing anything about the legal aspects of the property before instructing a solicitor, transactions remain at a higher risk of collapsing than they did at the time Home Information Packs were in place. 
The absence of the HIP or a suitable replacement for it ,has also slowed down the sale and purchase process, which in turn has increased scope for sellers and buyers to change their mind and pull out.
HIPs may not have been the ideal answer but at least the reform was one step in the right direction and had at its time of demise begun to make an impact on resolving the problem for which it was designed.
It’s a shame that senseless political football got in the way. Equally it’s a travesty that the main proponents of its withdrawal have just left homeowners far worse off than they have ever been without not even a hint of finding a different solution to what is proving to be a major problem. Grant, Kirstie and Eric we need answers please. 
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

Friday 13 January 2012

Beat the 24th March Deadline for Stamp Duty

The time to act is now if you are thinking of buying a new home as the concession on Stamp Duty for first time buyers ends on 24th March. 

Until that date first time buyers do not have to pay Stamp Duty on property purchased for £250,000 and under.

Instruct us now to make sure you exchange and complete before this deadline and save up to £2500 – our prices start at £240 Plus VAT.  We offer a fast and professional service and are open Monday to Thursday 9 am to 8 pm, Friday 9 am to 5 pm, Saturday 10 am to 1 pm.

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

Wednesday 11 January 2012

Building Regulations and moving home

Do I have supply evidence of Building Regulation Approval in respect of works carried out to my property when I look to sell my property?

If you have the approval then of course supply it – it will help to ensure your sale moves quickly.

If you have carried out works and approval was required and sought and you no longer have a certificate then call the issuing council and ask for a duplicate.

If you have carried out work, and the work required building regulation approval, but this was not sought then you need to consider with your solicitor when the work was carried out and what to do in response to your buyer’s request for sight of the approval.

The following may help.

Check that work carried out actually required building regulation approval as not all work attracts the requirement.

If the building work was carried out before November 1985 it would not require building regulation approval. There is no need therefore to supply it or offer indemnity insurance.

If work was carried out after November 1985 you can apply to the council for a regularisation certificate. A fee will be payable.  Remember however that once you apply the option of offering indemnity insurance for the defect will be removed.

Depending on when the work was carried out you may also be asked for a completion certificate.

The Building Regulations 2000 provide for the issue, by local authorities, of completion certificates where work has been carried out and completed under the building regulations, and the local authority are satisfied, after taking all reasonable steps, that the relevant requirements of the building regulations have been complied with.

If the work was carried out within the last two years (time limits vary but in the main proceedings must be brought within 2 years of the completion of the offending works) before the sale you will most certainly be asked for the approval, completion certificate or a regularisation certificate if these are not available.  This is because the time for taking enforcement action exists during this period.

However by reason of a decision in the case Cottingham v Attey Bower & Jones it seems an enforcing council may be able to enforce a breach outside this time limit. Due to this when selling solicitors for the buyers normally seek confirmation of compliance of building regulations since the property was built.

The problem is that most council offices don’t keep records of building regulations more than four or five years back. They will often conduct searches of their archived records for £150 or so but what if they don’t turn up an approval? The chance to get an indemnity policy for lack of building regulations has passed so your only option is to pay for the council to come out and inspect the works and issue a regularisation certificate.

Is it always necessary to offer indemnity or a regularisation certificate? 

It is most unlikely that a council will be concerned about a wall being knocked through some 20 years ago particularly given budgetary constraints.  It would only take action if it considered the works were dangerous.  The fact is if they were dangerous this would be revealed in the buyer’s survey.  So if not revealed as dangerous I question whether the risk of injunction proceedings is as high as some buyer’s solicitors would have us believe.

The use of indemnity policy by the seller to address this defect if you are the buyer is one which should be avoided as the policy offered will not provide protection if the work was carried out and structural alterations arise by reason of it.  For this reason a full survey should always be commissioned.
If commissioned and you are the buyer then providing all is well the need for chasing the seller for building regulation approval on works carried out in the deep past must be questionable.

A lack of building regulations indemnity policy could be useful in the case of recent works where a survey reveals no defects and the buyer is in a hurry.
Remember any window or door installation since the 1st April 2002 (contract for work was entered into after this date) requires a certificate issued by the Local Authority Building Control of FENSA.  

As for certain building work involving electrical work or electrical work to existing installations all such work requires Building Regulation Consent if carried out after 1st January 2005.

A Building Regulation Compliance Certificate is also required for the installation of central heating systems after 1st April 2005. Since the 1st April 2009 the scheme changed from CORGI to Gas Safety Register.

Before accepting advice to take our indemnity insurance please read this article by the same author : Overuse of Indemnity Insurance  


.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

Saturday 7 January 2012

Breast Implant Rupture



Around 40,000 women in the UK have had breast implants produced by Poly Implant Prostheses (PIP).  

The announcement from the French authorities calling for the implants to be removed has caused an international health scare.  The French authorities believe there is an increased chance of the implants rupturing and leading to complications.

On the 23rd December 2011 the French authorities advised all its citizens who have had PIP implant to have them removed and the French Government would pay for the full cost of the procedure. 

ABOUT PIP BREAST IMPLANTS

The supplier of the implant, Poly Implant Prostheses is based in the south of France, and had been using to secure financial saving, industrial grade silicone, normally used for filling mattresses and computer parts, instead of medical grade silicone. 

The cheap implants rupture rate runs at 5%, although it is estimated that this could rise to as high as 10%. This is much higher than other implant rupture figures.

The company went into administration in 2010 and the use of its products has since been banned.  

THE SITUATION IN THE UK

In the UK it was announced yesterday that those who have had the implants through the NHS would be permitted to return and to the NHS for removal.  The Government has called on private providers to do likewise.


HOW DO YOU KNOW IF THE IMPLANT HAS RUPTURED


Often you may notice deflation of the implant by a change in the shape or size of the breast. This can happen slowly over a few days, but can often happen very suddenly.

In many cases a rupture may not be noticed without the need of an MRI scan, as many silicone based implants will not leak in the same way as saline based implants, due mainly to the gel inside the implant.


WHAT SHOULD YOU DO?

If you have had these implants you should consult with your GP immediately.

HOW CAN OUR TEAM OF EXPERTS HELP?


The MJP Clinical Negligence Team has many years' experience of successfully winning harmful product claims.

Our expert advice has helped us our team to be mentioned in The Legal 500.

Our lawyers have successfully recovered compensation for victims of other pharmaceutical products and medical devices.

For a FREE private consultation call Sara Westwood on 01603877000 or email sarawestwood@m-j-p.co.uk

Wednesday 28 December 2011

New approach to the offer of mortgages


Changes put forward by the Financial Services Authority will introduce some of most significant changes to the mortgage market this country has seen in recent times.

The FSA new rules for banks  to follow on approving mortgages are designed to make sure customers are not able to borrow more than they can afford. They include a ban on self-certification mortgages, new rules for those seeking to remortgage, stricter rules on interest-only mortgages, improved affordability checks, and a change in the rules on how advice is given by mortgage brokers.

These changes have come about prevent another boom in mortgage lending and in house prices. This is what happened in the middle of the last decade and why some right wing commentators say we are now facing one of the worst financial disasters ever witnessed.

So how does the affordability test, as proposed, work?

A lender will consider how much you spend on essential household expenditure such as heating and council tax plus basic living costs and other debt commitments. If these changes are implemented a lender will no longer have to consider how much you spend on discretionary spending such as on leisure activities and holidays as it will expect a borrower to change spending habits if the borrower wishes to succeed with the loan application.

Lenders will also apply a “stress test” on your finances so as to assess your ability to afford your mortgage repayments if interest rates rise in the future.

What about interest only loans?

Borrowers will only receive an interest-only mortgage if it can be proved there is a robust strategy to repay the capital, such as from the sale of a second home or have an Isa (Individual Savings Account) or from regular bonuses.

Replacing existing mortgages will also prove difficult under these new rules though the FSA have introduced “transitional arrangements” to help existing creditworthy borrowers that might not be able to move home or refinance as a result. Lenders will be allowed to waive the new affordability rules for existing borrowers if the borrower has met repayments for at least the last 12 months and have not fallen into arrears. Existing borrowers who need to borrow more will however be subject to the new affordability rules.

These new rules are unlikely to change the current attitude of borrowers and in the short term are likely to keep property prices stagnant.  Whether this will assist first time buyers remains to be seen, though our view is that they will only serve to make it more difficult for those looking to get onto the property ladder and force more people into looking to the rental market.   These rules could very well begin to turn our property market into those markets commonly found on the continent where home ownership is not a priority and indeed a goal of those looking for a home.

The rules will create a more stable housing market but one which will be seeing a reduced number of transactions and one where only those who have financial stability and a track record of proving it will be able to become home owners.  Whether this is good for the country as a whole and will lead to a more stable and balanced society will remain to be seen.

As conveyancers, there will be fewer transactions around and as those borrowing will face higher lender fees and perhaps spend more money to prove their track record and credit worthiness, there may be a temptation to make economies elsewhere, and perhaps look to find the conveyancer advertising the lowest price.

At MJP we understand this, and this is why we offer a competitive price for our moving service, but with the commitment to ensure we also provide a personalised service and one in which we take pride.   We are able to offer a quality service at a discounted price because we operate a unique case management system and have quality checks built into every stage of our process.  All out clients can access the system and receive regular updates straight to their phones.

Each client is also assigned his or her very own case handler who will oversee the transaction throughout its course.


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

"David Pett and his team have been excellent - regular updates and speedy responses to queries. Something that has been problematic with other solicitors in the past" 

Louise Stone - December 2011




Wednesday 21 December 2011

Merry Christmas


We would like to take the opportunity to wish all of the followers of our Blog a very merry Christmas and a happy New Year and to invite you all to take some time out to read our Christmas Newsletter which you can find HERE

All the best from the team at MJP Solicitors in Norwich - have a good one!

Thursday 8 December 2011

Letter to the Justice Secretary

Dear Mr Clarke,

I wanted to write to you and express my dismay at your comments in the press this week:-

What we have marching towards us is an army of lawyers advancing behind a line of women and children saying, of course, they're not concerned about the income of the profession, they're only concern is these vulnerable clients who would be adversely affected if they're not paid at the rate they currently are".

I was deeply offended by what you said.

I am one of your “lawyers advancing…………..” and am against your proposals for removal of legal aid for clinical negligence claimants and even more so against the idea of taking up to 25% of a Claimants damages for a success fee. I have never been in this game for money.  I have always carried out this job so that I can help accident victims. That is my first priority and always has been. I have a real passion for helping accident victims.

Only this morning I spent 2 hours with an 18 year old and her mother talking about her child abuse possible claim which will be “free time” for which I will recover nothing. This is not unusual  as it happens most weeks, providing free advice to potential clients. I help at the CAB too. Last week I was in the High Court with John Foy QC settling a £9m plus RTA claim for a young lady who was knocked down by a car in 1996. Liability was only resolved in the Court of Appeal and the Defendants only came up with an offer acceptable (approximately £500,000 more than their previous offer) 2 days before trial (we were listed for 7 days about which see below). This was one of the last legal aid cases for personal injury, possibly in the country I would imagine.  We needed to provide the Claimant with enough by way of income from her lump sum (and Periodical Payments Order) for her care regime for the rest of her life. How could I ever have taken away any of  her damages for a success fee? How could my practice (or indeed any other) run that case (with a legal bill of over £1m) now?


Whilst talking about this case you may be interested to know 2 other points of interest. Firstly the discount rate currently set at 2.5% is going to mean that it will be a real struggle to bring in sufficient funds to pay for all her outgoings let alone taking some of her damages for losses. If it were not for her loving parents putting their lives on hold to care for her then she would really struggle. All because of someone else’s negligence and you want to deny people like her access to justice, Justice Secretary!

Finally the same case had leading counsel for both sides (plus a junior) and 4 leading experts in their field yet the court would not provide a fixture for the hearing, notwithstanding a joint application from the parties to do so. Hence we had experts (and counsel/clients/witnesses) all waiting on the whim of a court listing, which had still not come through 2 days before. I would estimate that this will have cost at least an extra £20,000, payable by the Defendant, onto the costs which would not have been incurred if the experts could have been given a fixture and booked other work in when they knew they would not be required.

I am not alone in these sentiments.

On my wall is a commitment to accident victims which tells them I will put their interests first and I do, with pride.
I thought you should know that there are in fact a great many people with similar sentiments to me. I would hazard to guess the wider public, if properly informed would actually be horrified at your plans.

If you would like to respond or discuss matters with me then please feel free to.

Yours sincerely,
Simon Bransby F Inst L Ex

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

Tuesday 6 December 2011

Are Banks lending to the legal sector?

I have attended many conferences over the past month or so and have had to listen to one bank representative after another making claims of how wonderful they are when it comes to helping the legal profession.   Often presenting with a smile and twinkle in their eye I have had to sit and listen to how lending to the legal sector is up on the previous year and how they have extended overdrafts and provided loans for practices to develop.

Listening and drifting off to another world it is easy to get lost in the fluffy words and  believe how lucky we are to have banks who despite the deepening recession and meltdown in Europe, are still there to help when help is needed.

Unfortunately the reality bears no relationship to this fairyland rhetoric. Yes, banks are lending to the sector, and perhaps lending is up, but the fact is that a solicitor business is viewed no different from any other business, and unless you meet the credit criteria fixed by some faceless person stuck somewhere is a skyscraper in London, you will not be helped.  It’s as simple as that.

The truth is that banks will only lend when the exposure to bad debt is minimized with security and capital reserve requirements.  Ask yourself how many practices fit this criterion.  Moreover, the very reason for turning to the bank in the first place is that there is nothing in reserve and short term assistance is required. 

In fact banks look at solicitor practices differently, and in a way which  when compared with other businesses makes it even more difficult to satisfy the faceless men who make these decisions.  Most firms are profitable, but face cash flow problems. Apart from those who own the premises they occupy, there is normally no other assets of value in the business other than work in progress.  The problem is that banks when looking at the balance sheet refuse to attach any weight to it, even though the Inland Revenue is quick to value and tax it!  I am not sure why this is so when its no different to stock in a stock room.

So what can be done?  Very little I am afraid to say as the banks hold all of the cards and will clearly dictate the fate of many of those legal practices who are struggling to keep their heads above water.  All I can say is to forget loyalty and shop around.  Although most banks are the same, there are some that are worse than others.  The days of receiving a more favorable hearing if you have been with a bank for some time are long gone.  Loyalty is only a one way street for many of these banks.

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

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