Sep rep: on to the rules

Predictions that the Society might have a PR struggle on its hands if the profession voted in favour of “sep rep” at this year’s AGM were not slow in coming to pass. Barely had the news reached the outside world when Paul Smee, Director General of the Council of Mortgage Lenders, responded: “It is disappointing that a measure which is so blatantly against consumer interests and will impose added costs and added scope for confusion and delay has been voted through, with not even the pretence of wider consultation.”

The Society hit back, Vice President Bruce Beveridge pointing out that the “no consultation” charge was “simply untrue”, as the working party which recommended reform sought the views not only of the CML but individual lenders, Consumer Focus, Which?, the Office of Fair Trading, and Registers of Scotland – taking in everyone with statutory responsibilities regarding consumers, convener Ross MacKay told the meeting.

It did not escape the Society’s attention that back in 2010 the CML’s then Director General, Michael Cogan, had said it was time to give “serious consideration” to sep rep, as we were now in a changed world – the premise underlying the approach of the working party. “It is therefore unfortunate that the CML has chosen to issue such a misinformed statement,” Beveridge commented.

In a letter received by the Society only shortly before the meeting but relayed to those present by Ross MacKay, the CML chief had offered meetings to resolve issues arising from the CML Handbook. There was some support from the floor for deferring a decision pending such talks, including from Bruce Ritchie, recently retired Director of Professional Practice at the Society, but the prevailing view was that it was time to push ahead with change, as the “not perfect but preferable” option, as Michael Sheridan of SLAS put it.

Other supporters argued that it was unrealistic to expect solicitors to pull out mid-transaction even if they thought a conflict of interest had arisen; and that the profession had benefited from a sep rep rule in commercial transactions through a lack of claims on the Guarantee Fund.

Graham Matthews, the dissenting member of the working party, maintained that there would be a huge cost to clients which “would put them at odds with solicitors from day one”. The move was designed to protect our businesses from lenders’ panels and wouldn’t wash with the public; there would be chaos due to the delay from the extra stage in transactions.

Further arguments included whether the Society had properly complied with human rights and equality impact assessments arguments; but the stage has still to be gone through of preparing actual rules to present to September’s special general meeting.

The show of hands vote for the principle of change was 58-27, with three abstentions. Around 400 proxy forms had been lodged, most in favour of supporters of the motion, but there was no call for a further poll.

The final say on any new rules will rest with the Lord President, who is entitled to listen to representations from consumer and other interests in deciding whether to approve the rules.

Support for the Society’s position has since come from an unexpected quarter: a report in the (England & Wales) Law Society Gazette which opened with the CML reaction to the vote, attracted a large number of online comments from solicitors south of the border, almost unanimously in favour of the move. Several called on their own Society to follow suit, countering its position that non-solicitor providers might then take over the work. Find a fuller report, with weblink, at www.journalonline.co.uk/News/1012401.aspx

Get lean and fit: Lafferty

Lots of law firms are involved in change; what we need is enthusiasm for change, for business, for success, for competition, for development and achievement, President Austin Lafferty told the AGM.

In a relatively brief address, Lafferty said law was no longer the safe career it had been for many years. The downturn had forced all practices to reassess their options – including his own, which was now “smaller but leaner”.

He had learned from visiting the USA that there is “an innate expectation” that law firms there will have proper business plans and invested effort. The picture in Scotland, however, is more of a patchwork.

Despite challenges, he added, we have a strong, collegiate profession. “We hold the high ground.” And despite the potential of online marketing, by far the biggest source of business is still recommendations from clients.

Solicitors need to be confident and savvy on their own as well as their clients’ behalf: Lafferty takes advice from a client who has built a successful glazing business. But “size isn’t everything”: he would rather have a profession that is “moderate in size and perfectly formed”.

Thanking chief executive Lorna Jack, her team and Council members, the President concluded by describing his term of office as “fulfilling, frantic and fun”.

Non-contentious business

Little else at the AGM detained members for long. The treasurer’s report and Guarantee Fund report both went through without comment from the floor, despite the latter referring to a £62,000 deficit for the year and an exceptional six new judicial factories – a trend likely to continue.

Convener Alistair Morris added that fewer claims now related to mortgage fraud, and noted that the Scottish Legal Complaints Commission had now accepted that there is no evidence that the Fund is being operated in a biased way.

Similarly, the Audit Committee report, a new item in the form of a report from the chair of the In-house Lawyers Group, and technical changes to the constitution and to the practice rules, were approved without debate.

A Scottish Law Agents Society motion on achieving a level playing field in ABS was also carried without dissent, Austin Lafferty affirming that Council’s policy position was in line with the motion, though it did not achieve what Michael Sheridan said was its declared intent of finding out what had been said in discussions with the Scottish Government, or by the Regulatory Committee, on ensuring the same level of regulation for ABSs as for solicitors.

Help is at hand

After the meeting concluded, a panel discussion took place on the future of the profession. With panelists representing large and small firms, legal aid lawyers, the in-house sector and young lawyers, most appeared optimistic on balance, despite the acknowledged difficulties facing the legal aid sector in particular.

Space does not permit a full account, but mention should be made of Vice President Bruce Beveridge’s comment that there is a need to overcome the reticence of many members to seek help even from the Society’s confidential advice service. “External interest in your business can be extremely helpful in running it more efficiently,” he added.