Commercial property lawyers could lose current exemptions to conflict rules

CONSULTATION: draft changes out to profession meet with mixed reception

Commercial property lawyers will have to apply the same conflicts test as other lawyers and will lose exemptions currently given to all conveyancers under proposals to be put to the profession.

Under the current conflict rules, conveyancers - both commercial and residential - benefit from exemptions allowing them to act in circumstances where there might otherwise be a conflict, so long as certain conditions are fulfilled.

These include transactions not at arm's length, where both parties are established clients, or where there is no qualified conveyancer in the area whom the seller or buyer could reasonably consult.

The draft changes - which the Law Society Council last week voted to put out for consultation - would take such exemptions away from non-residential conveyancers, compelling lawyers working on commercial transactions to make individual risk assessments for potential conflicts in all cases.

New Law Society Deputy Vice-President Ed Nally, chairman of the regulation review working party, said it seemed sensible to align conveyancing with other commercial conflict rules, adding that the exemptions were better suited to residential work.

Ian White, the commercial conveyancing representative on the council and a partner with Staffordshire firm Knight & Sons, opposed the move.

He said: 'The proposed amendments would be unworkable because the distinction between residential and commercial conveyancing is an artificial one and confusing because the existing conflict rule is generally well known and understood around the profession, whereas the new provisions are too complex to be put easily into practice.'

He added that the conflict rule would also be unwanted 'because the practitioner increasingly needs clarity and certainty in its ground rules.

In my view the new proposals provide neither.'

Robert Kidby, head of property at City firm Lovells, said his firm occasionally used the exceptions but that the firm was 'pretty tight about conflicts anyway'.

Conflict issues arose particularly over title, he explained, where the cost-saving practice has developed of the seller's solicitors providing a certificate of title which the buyer's and lender's solicitors rely on rather than making investigations of their own.

Jeremy Fleming