For many people buying or selling a property for the first time, choosing a solicitor to do the conveyancing is just one more stressful decision.
How much simpler it must seem to rely on the estate agent to find a solicitors' firm, particularly when the agent promises it will be the cheapest and most reliable in your area.
Research conducted by the Law Society in 1994 showed that 22% of conveyancing clients chose their solicitor on the basis of a recommendation from a bank, building society or estate agent.
However, the age profile suggested that first-time buyers were heavily represented amongst this group.
And anecdotal evidence from solicitors suggests the practice is much more widespread.This is the stranglehold solicitors complain about bitterly and it is compounded by their reliance on referrals from estate agents.In his speech to the solicitors annual conference in Birmingham, Law Society President Martin Mears said: 'If anyone tells me that absurdly low conveyancing fees are the result of free competition, my reply is that that is fiction.
The reality is that it is estate agents who in their own interest dictate the level of high street conveyancing fees.'The evidence of one solicitor in Northumberland suggests the fees some estate agents are now dictating have fallen very low indeed -- £135 plus VAT.
The firm is then faced with the choice of carrying out conveyancing at a price set by the estate agent, which it knows is uneconomic, or having its lifeblood in terms of clients suddenly cut off.Some estate agents are cleverly exploiting their power to recommend clients by levying what amounts to a recommendation fee.
One solicitors' firm was asked for £100 per month to get its name on a 'recommendation list' provided to clients by a local estate agent.It was clear that in addition to the monthly retainer the solicitors were expected to provide more 'support' for the agent's other products, via its lettings, mortgage and survey departments.Other solicitors talk of being denied clients after refusing to pay estate agents a fee for each referral, for example of £25.
Paying people for introducing clients is unprofessional conduct as far as solicitors are concerned.
S.2.3 of the introduction and referral code states that a solicitor cannot pay an 'introducer' for clients, whether the 'introducer' is an estate agent or anyone else.Some solicitors have found a subtle way of getting round the practice rule problems involved in paying estate agents.
Payments to agents are chanelled through marketing consultants, who sometimes actively tout for business on behalf of their solicitor clients.One south London conveyancer said a marketing firm had offered an agent as much as £100 in return for a transaction with an agreed fee of £395.He said: 'It's not the estate agents I blame, it's the lawyers who are breaking the professional rules.
The market has become so competitive people are simply not caring.
The fee structure has become ridiculous.
'People are so desperate for work they are prepared to charge an absurdly small amount just to get work on their desks.'Equally questionable is the pressure put on solicitors to channel work back to their estate agent paymasters, particularly advice relating to financial services.Most worrying for the client is the sugges tion that in the drive to maintain their rate of commissions in a depressed property market, estate agents are trying to bully solicitors into completing purchases against the client's interests.One solicitor recalls how a chain of estate agents summoned him to an impromptu breakfast meeting.
'I was publicly put on trial in front of an area director and the managers of some local branches.
Two transactions were highlighted, both for buyers wishing to purchase what we considered defective titles, one involving a very short lease, the other restrictive covenants which made the property unmortgageable.'I was asked why I had blocked the two transactions.
The area director said in future all leasehold transactions would be taken away from my firm and transferred to another firm of solicitors.'None of the solicitors were prepared to speak to the Gazette on a named basis about bad experiences at the hands of estate agents, for the simple reason that they did not want to lose desperately needed business.
Vice-President of the Law Society Robert Sayer commented: 'Conveyancing fees in this country are already the lowest in Europe, not just because of competition among solicitors but because of concerted pressure from estate agents.
If this were in interests of the public it might be understandable but too often estate agents are recommending firms which are not the most competent or efficient in their area.
Without criticising all estate agents there is a distinct number who appear to abuse their ability to recommend clients to firms.'Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents, said he did not believe the payment of recommendation fees was widespread, but any estate agents who did demand recommendation fees from solicitors might be in breach of the Estate Agents Act.'We do not condone estate agents who accept payments from solicitors in return for clients.
It reflects badly on both solicitors and estate agents, and their freedom to give clients the best advice.'Mr Dunsmore-Hardy said estate agents should continue to be able to take work away from solicitors where they are slow, unhelpful or unwilling to discuss clients' problems.
But he said the question of a solicitor advising a client not to purchase a short lease or a marginally defective title was a much harder one.'With leases there are circumstances where it's a case of "take it or leave it".
Some degree of risk might be acceptable to the client, and may actually turn out to be in the client's interest.
The same point can be made regarding title to property.
You can't generalise.
How imperfect is imperfect? There are some cases where solicitors being too pedantic causes sales to fall through.
What does that achieve if the property is simply sold to another client?'He added that undercutting was not a problem confined to solicitors.
'Lower fees do not ensure a competent service.
This is just as true for estate agents as for solicitors.
Is an estate agent who undercuts providing a better service? There is too much evidence that undercutting has lowered professionalism and standard of services.' See Editorial, page 12 and Letters, page 13.
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