The Partnership Newsletter - October 2012

"Remember, remember, the 5th November ..."

Gunpowder, treason and "phut". We were promised a revolution with expensive solicitors being run out of town and everyone having access to cheap legal services. However, in reality, the radical change in the law allowing non-lawyers to buy law firms has been nothing more than a damp squib, resulting in embarrassing adverts of spring onions in suits and Saga offering the over-55's last-minute Wills as they board their Mediterranean cruises. With a year gone and less than 35 companies currently licensed, there is either no appetite or simply no demand. The promise of Lidl Legal Services seems further away than its ever been - not exactly a "bang" - more of a whimper.

Investors facing challenges from lenders

We have seen the improvement in the buy-to-let market being challenged by recent changes in processes from mortgage lenders. In the past, either a lawyer was able to act for a lender, or they weren't. However, in recent months, lenders have been creating "sub-panels" for clients choosing certain types of mortgages. In some cases, lenders are only offering specially reduced interest rates on the condition that the client uses a specific lawyer, irrespective of whether their solicitor is on their panel. Given that on occasions, the lender's own staff are not clear about the policy this change has introduced even more unwelcome delays into the conveyancing process.

EPCs now available through property address

One of the most frustrating aspects of retrieving Energy Performance Certificates (EPCs) is that the unique reference code was required before they could be downloaded. However, after only five years, it has now become possible for vendors and agents to retrieve reports based on the property address. Somewhat surprisingly, this change was not announced, but just appeared on the central government database a few weeks ago. The reports are available from the Landmark database immediately. More positive responses from agents

Our new Conveyancing Discussions continue to go from strength to strength with these free 1 hour sessions currently being run 4-5 times a week at agents' offices. Feedback has been very positive from negotiators and managers, with improved levels of confidence and understanding helping negotiators progress deals more effectively. The free pens and handbooks have been particular popular - our website has more information about the sessions.

The Partnership Newsletter - September 2012

You're an embarrassment to the Quality Street name
The toffee penny is, in our opinion, possibly one of the least popular sweets invented, and illustrates how the word "Quality" can be abused. Even though the manufacturers write the word on the tin, this dullard's very existence calls the brand into question. Indeed, we've recent experience of exactly the same problem with the word being used by legal providers. Whether its the Law Society's Conveyancing Quality Scheme (CQS) or the Quality Solicitors franchise, neither provides sanctions where their members abuse the brand. This means that unfortunately, unlike the toffee penny which can be given to the dog, as our blog indicates, for now, we're going to have to put up with those companies that don't follow the rules and insist on being rude, inefficient and frankly, no-one's favourite.

Lenders - There's more trouble ahead
HSBC's decision to force their clients to use their choice of lawyer was the first time the impact of separate lender representation was felt widely. Given the negative feedback to this approach which lead to HSBC's humiliating climbdown, many agents and clients hoped we'd seen the end of this practice. Unfortunately, we are seeing increasing numbers of lenders forcing specific types of clients to use their selected lawyer. In recent weeks, clients getting buy-to-let mortgages and one applying for an offset mortgage, were all forced to use the bank's lawyers. This is definitely a growing trend, and clients and agents should be aware where such representation is required, as it will slow transactions and cause unexpected frustration for buyers and sellers alike.

HSBC - not exactly a level playing field
HSBC have backtracked on their decision to allow only a handful of lawyers to represent them, and from the beginning of September, have now allowed a slightly larger handful of firms who have joined the Law Society's CQS to represent them. However, citing "technical difficulties", the bank is not allowing licensed conveyancers onto the panel. Which is curious, as they already have several such companies on their existing panel. And licensed conveyancers can also represent them for First Direct mortgages. Which at least demonstrates a consistent lack of inconsistency.

Partnership New Conveyancing Discussions are proving a Hit
Following successful trials with a number of London estate agents, our new, free Conveyancing Discussion is now being launched. Accompanied by a unique handbook and materials, this informal 45 minute session reviews recent changes to the conveyancing process, how agents can help resolve problems and actually get to see the documents involved in the process. To learn more about this new service, send an email for more information and we'll send you a free sample of the handbook.

Quality - possibly the most abused word in service

Traditional law firms are frightened.    Their world is going to end - like Virgin's trains, their gravy versions are hitting the buffers and they'll soon be down the pawnshops with their dictation machines.

This was because until last year, solicitors were like the post office, and had one of the few monopolies left, managing to escape the hand of Margaret Thatcher's (and subsequent Conservative governments) reforms.  Following the breaking of this monopoly where only lawyers could own law firms, they were told that firms such as Lidl and Poundland were going to offer legal services.  To stave off disaster, some came up with cunning plans, the like of which Baldrick would be proud, focussing on the word "Quality".

One enterprising chap came up with the idea of black and purple letterhead and included the word "Quality Solicitors" on it.  They convinced a bunch of solicitors to buy this letterhead and even WHSmith thought would be a good idea to put some of this letterhead in their shops so people would buy legal services along with the newspapers and notepads. 

Not wishing to be left behind, the Law Society then came up with a similarly cunning plan called the Conveyancing Quality Scheme whereby solicitors filled in some forms, paid them a fee and they could put a logo on their letterhead as well.  Firms that signed up to the scheme apparently had to adhere to the principles of treating other firms with respect, following the Law Society's new rules on running conveyancing cases and generally acting in a helpful manner.

Sadly, recent experience with firms that belong to these Letterhead Schemes have been some way away from what we would call quality.  Beligerent, rude, bullying and extraordinarily inefficient would be more appropriate.  Sadly, we don't think that these attributes make such an attractive tagline as simply, Quality.

However, the fundemental problem with these Letterhead Schemes is that there are no sanctions against the firms that breach the rules.  Once a firm has got its letterhead printed, then there is nothing that can be done, other than for clients and estate agents who have to suffer working with them, highlight their shortcomings and do their utmost to ensure that future business does not go to them.

We would urge any client considering using a Quality Letterhead scheme firm to check their references before assuming that because they can spell the word Quality and have put in on their envelopes, doesn't necessarily mean that they understand what it actually involves.

Here we go again ...

and this time it's Barclays that's determined to cause more hassle and time-wasting for clients looking to buy properties.

For years, when it came to buying properties, solicitors have had to represent both their clients' interests and the lender. What must have seemed a good idea at the time, has rapidly descended into frustration and conflict with clients often frustrated that their requirements may not match the needs of their lender.

However, in recent months, the landscape has changed and banks, determined to exercise even more control over the property market, have decided they are going to dictate to clients which lawyers they can use to represent them.

HSBC broke ranks in January, by selecting about 40 companies across the country that could act for them. The result has been slowed transactions, frustrated clients and even more frustrated solicitors who are attempting to get deals through. The upshot of this, is that when estate agents hear clients mention that fateful four letter word, they prepare themselves (and their clients) for a protracted and painful process.

However, despite the bad press that HSBC have been receiving, it seems that Barclays (who are themselves no stranger to making controversial decisions) have decided to follow a similar route. They have taken the decision on Monday (although not officially yet) that they will dictate which law firms can represent them independently.

However, they make HSBC's choice of 40 lawyers look remarkably generous, compared to the number that they are alledgedly allowing to represent them. Namely, ONE. Yes - only one firm will be handling all Woolwich mortgage cases where the lender is not being represented by the client's solicitor.

Given the delays and backlogs caused by HSBC's actions when they had 40 law firms, we think that possibly, Barclays might be a little optimistic when it comes to processing their cases through a single firm.

And the final kicker - Barclays have decided that this new procedure will apply to ALL existing cases.

Need we say more?

The Partnership Newsletter - March 2012

"You were only supposed to blow the doors off"

No doubt there are a few people at HSBC who are feeling like Michael Caine in the Italian Job when he saw the unexpected consequences of his actions. We're not exactly sure whether those that decided to stop buyers choosing their own solicitors have either bought a house recently or understood that agents will do their best to stop clients using lenders or lawyers that can't get deals through quickly. Given the glacial speed these transactions are taking to go through, we wonder in our blog whether HSBC might be on the cliff-edge of public opinion with this idea.

Solar panels - Pain today and Pain Tomorrow

When the coalition government chose to cut the subsidies (and the jobs that went with them) paid to home owners to put solar panels on their roofs, many were not aware that not only had they bought something that didn't give them the returns they were after, but they also may have legal problems in the future. Some home owners are finding the lease agreements they signed to enable them to afford these panels is preventing them from remortgaging their properties and could in turn cause problems when they come to sell. There is an increase in litigation expected from frustrated sellers whose buyers cannot obtain mortgages on their potential purchases because of these restrictive leases.

Changes in EPC rules coming in April 6th

Having spent years in opposition criticising the previous government's attempts to change the house buying and selling process, it seems the coalition are learning that property legislation is challenging. The changes to the Energy Performance Certificates (EPC) rules that have just been announced include the extraordinary requirement to include a full page of the EPC with all property particulars. We have produced a summary sheet of changes that are due to come into effect after Easter.

Stamp Duty Land Tax avoidance Schemes - not so attractive anymore
Finally, we were intrigued to receive a telephone call on budget day from a company offering SDLT avoidance schemes for our clients. The salesman told us they were avoiding solicitors because "the Law Society had cracked down on them and were fining them for getting involved". We found that strange because according to this same salesman, there is no comeback whatseover for our clients and it's risk free. Naturally, like the Law Society, we beg to differ.

Is HSBC the new Boerclays?

With the news that another one of our clients has decided to "drink the HSBC Kool-Aid" (as in the Jonestown Massacre in 1978) we are starting to wonder whether HSBC will suffer the same fate as Barclays did in the mid 90's when they were vilified for their investment in South Africa.

When HSBC decided to create a legal panel of a small number of low-cost providers of conveyancing services, this caused much gnashing of solicitor's teeth. Naturally, this gnashing sound is being heard by estate agents who are now suggesting that if clients use HSBC for their mortgage, then they will be forced to use a law firm that the bank dictates.

Indeed, in a recent scenario, HSBC persuaded one of our clients that we had mislead them over our suggestion that using separate representation would cost more and that by using their solicitor it would be cheaper.

Given that HSBC has created this doubt in our client's mind, our previously ambivalent position towards them has changed. We now suggest to agents and clients that if you're looking for a lender and want to choose your own representation, then HSBC should be avoided.

It took Barclays years to overcome the prejudice that they suffered - we wonder whether HSBC will heed this warning from history and consider the damage that this decision may have on their business.

The Partnership Newsletter - January 2012

You can trust me - I'm a lawyer. Honest, Guv.

Some of the promises we're seeing being made by companies selling legal services would make Arthur Daley blush. Last week, a firm promising "no-sale no-fee" forgot to mention that the client has to buy insurance to ensure that they don't pay anything if the sale aborts - this insurance costs about £100. Obviously, "no fee" is only relevant when used in conjunction with the word "legal". Another favourite trick we've seen is disguising fee-earning work as a disbursement, such as completing Stamp Duty Land Tax forms. Another client was quoted £600 for the work, and ended up paying £1600 (for unexpected items). However, we adam-and-eve that agents are steering clients away from the cut-and-shunt merchants which can only be good wooden pews. (Click here for a translator to help you communicate with such firms)

Lenders help to slow the housing market
With lenders determined to eliminate mortgage fraud, some are reducing the number of firms they will allow to represent them. HSBC have taken a radical approach and reduced the number to about 40. The lender has told our clients that if they want to use their own solicitors that are not on their panel, that this will slow down the buying process, and could cost them more. Other lenders have indicated that they will follow this lead by reducing the number of firms that will represent them. It is unclear how this reduction in choice, increase in fees and the introduction of further delays will benefit the housing market.

Buyers impacted by searches
There are some new challenges for people looking to buy properties in London, primarily from several local authorities that are now taking over 6 weeks to return searches, and the new issues that are raised by the building of the HS2 trainline. To head off potential problems, over the past 6 months, we have been carrying out searches specifically to check whether the line will affect the property in question. Over the past few years, buyers looking for a London property had to contend with concerns over the CrossRail project, but now, it's delays in searches and the impact of the new rail line that they need to consider as well when looking at purchase decisions and timescales.

The Partnership introduces unique online assistance
As part of the development that is well underway with our revamped website, we are providing new online services, including a unique guide for first-time-buyers to help explain the conveyancing process more effectively. We will also be offering an online-chat service where clients can talk to us online at any time, in addition to our Skype offering, due in early Spring.

The Partnership raises concern about lenders abusing their position

For Immediate Release
Guildford, Surrey – 22nd January 2012 – The Partnership has evidence that banks and building societies are misleading their mortgage clients over legal representation and costs, with the result that one of their clients has instructed the financial ombudsman to take direct action.

Traditionally, solicitors represented both the buyer and the mortgage lender in the purchase of a property. However, lenders, concerned about the increasing levels of mortgage fraud, have recently started to dictate who may represent them, by setting up panels of “authorised” firms.

This change has lead to warnings that consumer choice was being restricted, but The Partnership now has specific evidence where clients are being penalised due to their selection of mortgage provider. These include a bank misleading a client over costs, another forcing a client to use an expensive London solicitor, and a nationalised lender refusing to disclose their charges.

Peter Ambrose, Director of The Partnership, is extremely concerned; “We do not mind lenders dictating who may represent them - indeed, we would prefer that ALL lenders used their own chosen law firms to represent themselves as it removes a potential conflict of interest that we currently face.

However, our evidence shows that lenders are abusing their position, to the detriment of their clients. After approving a mortgage, a bank tried to allocate a conveyancer directly to one of our clients for a cost of £600. When our client explained that he already had a solicitor, he was told this fee would apply anyway. As the correct figure was £160, it suggests that the bank was quoting the full conveyancing fee in what appears to be an attempt to encourage our client to use their chosen provider.

We had been acting for a lender with their authority, but two days before exchange, they withdrew this authority and told our client to either use another law firm for the entire transaction, or to use one of their chosen firms to represent them for a fee of nearly £1000. Given the time pressure, our client had no choice but to use the firm that was representing the lender, resulting in a doubling of their fees.”

Given the much publicised pressure on banks to act fairly, we are disappointed that some do not appear to be acting in the best interests of their clients. It is particularly galling when a client must revert to the financial ombudsman because a nationalised firm refuses to disclose the fees that their chosen law firm will be charging. This abuse of power must be stopped, and we are delighted that the ombudsman has acted quickly but are very concerned about the approach some lenders are taking.”


Notes to Editors
The Partnership is a new breed of law firm, employing London-trained solicitors, specialising in fast and efficient transactions. For more information go to www.thepartnershiplimited.com. A PDF version of this press release is available.

Media enquiries

Peter Ambrose, The Partnership – 01483 579978 or email info@thepartnershiplimited.com

Brave new world or just the emperor's new clothes?

Over the past week we've discovered that the brave new world promised by the breaking of the monopoly on legal services is not so brave or new after all, with firms offering traditional services but just with new brochures.

On October 6th 2011, the Legal Services Act enabled non-lawyers to own law firms. This change promised innovative new offerings from modern firms and it is widely expected that residential conveyancing would be the first service to experience this change.

However, it appears that rather than innovation, its more a lack of imagination that has come to the fore, with several new offerings merely re-packaging existing services under a new name.

In the first instance, a major agency chain is promising a new fast conveyancing service as part of their selling process. The brochures are covered with pictures of happy smiling house buyers, delighted with their 24 hour access to case information and friendly solicitors getting their deals done in days. The disappointing reality merely just another name for a tired old legal panel, paying local solicitors a fraction of the fee to carry out the work. Nothing new beyond the name here (and of course the disatisfaction from the same lawyers).

Another firm is offering an interesting model with low costs and high introductory fees to agents. Again, promising 24 hour access to dedicated staff; this time it's just another name for a high-volume conveyancing factory, known to have high fall-through rates and slow turnaround times.

Its extremely disappointing to see this lack of commitment at first hand - it seems that innovation has yet to come to the legal services market and what we see are merely false starts on the road to innovation.

Here's an idea for companies looking to offer legal services. Instead of pimping out non-lawyers and offering generic support email addresses as a communication substitute why not take the plunge and actually employ staff and invest in systems to provide the service directly.

Or is that a step too far in this brave new world?