Separate representation in conveyancing “should be the norm”, Zurich says

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14 October 2015


Michael Bluthner Speight

Blüthner Speight: sep rep “already routine” for commercial work

Separate representation for lenders and borrowers in conveyancing transactions “should be the norm”, a senior manager at professional indemnity insurer Zurich has said.

“The increased cost of separate representation is minimal in the context of the overall cost of a conveyancing transaction,” Michael Blüthner Speight, risk manager for professional and financial lines, told last week’s National Property Conference.

“It is already routine for commercial conveyancing transactions.

“A considerable level of claims relating to conveyancing stem from the inherent conflict that arises from acting for both borrower and lender.

“It is unfortunate that legal work in this sector of the profession has become commoditised with the associated downward pressure on legal fees. Work is being regularly undertaken in law firms by individuals who are underqualified and at times poorly supervised.”

Speaking at the Law Society-organised event, Mr Blüthner Speight accused lenders of placing “onerous obligations” on solicitors by way of the CML Handbook and enjoying the advantages of “guaranteed insurance cover” when it all went wrong.

“Some level of realism and commerciality needs to be brought to this process. Far from resulting in increased costs for the consumer, separate representation would create a costs structure that is a reflection of the risks inherent in the transaction and the skills required.”

Mr Blüthner Speight, a solicitor, said separate representation would eventually lead to reduced premiums for law firms who undertook less lender work.

“For those who do act for lenders, the premium will still be high, but that could and should be incorporated into negotiations with lenders over the price they pay for services.”

However, Nick Larkins, senior manager for mortgage fraud strategy at Lloyds Banking Group, said the bank did not support separate representation. He said it was more expensive, with the potential for significant delays.

“I think banks would naturally refer their legal work to five or six big outfits which could cope with that volume of work.

“If another of these firms acted for the borrower that would drive the high street out of business. It could not compete on price. For that reason we do not support separate representation.”

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