Solicitors need to be prepared for a rise in consumer complaints as the housing market goes into reverse, warns Deborah Evans


As I write this, banks are changing their policies and closing the doors to new lenders. They are looking at the risk profile of their clients. More risky clients will be turned away or priced out of the market. The Legal Complaints Service typically sees an increase in complaints against solicitors during a property recession, proportionate to the increase in failed transactions. While the downturn in the market is not the fault of solicitors, they need to manage themselves appropriately to minimise complaints.



Solicitors are the human face of conveyancing. In the mind of the consumer they are the key players in the transaction and they are often also the bearers of bad news. This means they can become the ones to blame if it all goes 'pear-shaped'.



Solicitors should consider looking at the risk profile their clients present. A transaction is likely to be more risky if any of the following apply: the buyer seeks a 100% mortgage; the buyer has a high loan-to-income ratio; the seller has no equity or negative equity; the mortgage terms are longer than 25 years; the buyer has a poor credit rating.



Clients will know there is a risk that their mortgage offer will be withdrawn. They will therefore have great desire for a speedy transaction - 'do it quick while I still have a mortgage'. Solicitors need to manage client expectations more than ever and keep clients advised of any delays. The solicitor must be careful not to contribute to any excessive delays, or else the client can rightly point out that if the transaction had moved quicker it would have completed, and that the solicitor's delay caused the transaction to be aborted. The chances of recovering abortive costs decrease rapidly in this scenario.



Sellers too will hit problems. If the sale of the house progresses too slowly, the price will continue to fall and sellers could quickly sink into negative equity. This could prevent the sale from occurring. Again, customers will be distressed and will have high expectations of speed. Estate agents are now starting to look at the financial profile of sellers as well as buyers - can they afford to sell if the market slides further? This will involve looking at the cushion of equity they have in the property - the larger the cushion, the smaller the risk they present.



In the short term, solicitors are likely to see an increase in remortgages. More than a million people will remortgage this year. Homeowners will want to seize the opportunity to remortgage before the products disappear from the market. Remember, if your firm is appointed by the lender - many banks provide free legal advice to customers - you still need to provide a good standard of care to the customer. We have entered into an agreement with the financial ombudsman service to deal with any complaints from these customers via the lender.



Those of you working for lenders may unfortunately also see a rise in complaints from them as they seek to recover losses. Britannia Building Society has set up a special unit to seek compensation from law firms. Other lenders are likely to follow suit, particularly as lenders have uncovered a number of potentially fraudulent transactions in the market downturn.



How do you avoid complaints? Solicitors should be diligent about sharing information on costs - both the costs on completion and abortive costs - and should then proceed at good speed, avoiding unreasonable delay. Solicitors should remain aware of the changing market - in particular, which banks are withdrawing products or changing their terms. Solicitors need to be skilled in managing distressed clients, and can often play a key role in pointing them in the right direction to get the matter back on track. A good solicitor will be an asset to their clients in these difficult times.



Deborah Evans is chief executive of the Legal Complaints Service