Clearly many of the searches now common place within the conveyancing transaction are charged out to the client without quibble or question.
Which of these searches though can you say, for a nominal fee, potentially offers to protect your client’s hard earned cash and lender funds?
Since its inception back in 2012, different firms have taken different views as to whether the AES product ought to be treated as a disbursement.
Passionate about protecting client money and ensuring that clarity is available for the client, Lawyer Checker wanted to ensure we could offer clarity to users so contacted both the SRA and CLC to determine the rules for charging as a disbursement. They have offered the following guidance:
SRA advice on disbursement
“Our view is that the solicitor would have to bear in mind that the use of such a service should be in the client’s interest, not be contrary to law and amount to a justifiable expense. (Involving a consideration of the level of charge and the extent to which the service gives greater protection than the usual investigations carried out by solicitors)
The instructed solicitor would have to explain clearly the advantages (and limitations) of the service and the protections it offers. He or she would also need to be satisfied that there is no easier method available, such as contacting directly either the SRA or the recipient firm’s head office to make checks regarding the history of the practice. The client clearly should have the choice as to whether or not to use and pay for this form of investigation.”
CLC advice on disbursements
“Disbursements are defined on the CLC’s glossary of terms as payments made to a third party on behalf of a client. Examples of disbursements are ‘stamp duty land tax; Land Registry fees; Local Authority and any other applicable search fees’
The use of certain risk management products might also be characterised as disbursements. It is a matter for each practice to consider whether any payment made by the practice to a third party should be charged to the client on the basis that the cost has been incurred for the benefit of that client. If it wishes to charge a client for a disbursement, in accordance with the CLC’s Code and guidance for Estimates and Terms of Engagement, a practice must give proper notice to the client that the disbursement will be incurred. It would be good practice for the practice to obtain the client’s specific informed consent for that disbursement to be incurred.”
Lawyer Checker’s AES search can help law firms stay true to this advice and provide a service that clients will undoubtedly have no problem paying for.
LC TOP TEN REASONS WHY CLIENTS WILL WANT YOU TO PROTECT THEIR MONEY
- Does the purchaser’s conveyancer have a recent record of trading with the exact account number? It is in your client’s interest to know this – it is their money after all.
- Collectively the programmes on BBC Radio 4; Moneybox and You and Yours in particular have created awareness amongst the general public on the matter of bogus law firms.
- There are savvy consumers out there looking to protect their money. We have had numerous enquiries from members of the public asking if they can buy the product as they are concerned.
- LC does not breach data protection law. We have had this confirmed by the Information Commissioner’s Office. In addition, contact with the SRA, City of London Police and many others have shown no indication that anything offered by the service is ‘contrary to law’.
- An AES search is a small price to pay at just £10 plus VAT – by explaining to your client that for this nominal fee they can give themselves a better chance of managing, mitigating and identifying any potential risks and stop their funds from being sent inadvertently to a criminal.
- The LC database is unique. There is no other which contains the level of detail on accounts held in conveyancing transactions.
- Any search which did not check the account details will only offer minimal protection whilst criminals find increasingly clever ways to clone conveyancers.
- The good news? They may be cloning conveyancers but they CANNOT clone bank details.
- Checking the account number and sort code before sending on funds is therefore a vital part of 21st century conveyancing.
- Clients understand what the search does and in our experience they would prefer to pay for it.
Look out for next week’s spotlight.