Licensed Conveyancer Corruption Must Be Stopped!

Posted on November 24, 2008 by | 13 Comments

Peter Mericka B.A., LL.B OPINION
by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

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An Appeal To The Australian Institute Of Conveyancers (Victorian Division) (AICVIC)


The Australian Institute of Conveyancers (Victorian Division) Inc. (AICVIC) regards itself as the peak body representing licensed conveyancers in the state of Victoria, and it appears to have some influence over the way in which Victoria’s licensed conveyancers conduct themselves. I now make this plea to the new Committee of AICVIC: “Please, in the interests of all conveyancers, and consumers, take some responsibility for preventing the spread of corruption in the industry.”Bribery in the conveyancing industry


The Oxford Dictionary defines corruption as “influenced by bribery…moral deterioration; use of corrupt practices (bribery etc.)“. My use of the terms “corrupt”, “corruption” and “client trafficking” refers to a practice whereby consumers seeking conveyancing services are directed to a conveyancer (which term includes unlicensed conveyancers, licensed conveyancers and lawyer conveyancers) by a third party on the basis of some benefit received or enjoyed by the third party. Usually, the third party is a real estate agent.


History of conveyancer corruption


Corruption in the conveyancing industry of Victoria has a very long history, and has become regarded in the industry as something of a standard operating procedure.


When conveyancers first sought to appropriate market share in the conveyancing industry, they did so by claiming that lawyers enjoyed a monopoly in the provision of conveyancing services, that non-lawyers are quite capable of conducting conveyancing transactions, and that allowing non-lawyers to offer conveyancing services would cause the cost of conveyancing to fall as the result of “competition” between lawyer conveyancers and non-lawyer conveyancers.


Nowadays, competition in the conveyancing industry has shifted from competition on the basis of conveyancing costs, to competition on the basis of “referral fees” paid to client traffickers.


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13 Comments

  • http:// says:

    Hi Peter,

    I’ve always wondered – are lawyers required to abide by a code of conduct that prohibits ‘kickbacks’ or referral fees?

  • Hi Austin,

    Of course. The legal term used to describe “kick-backs” is secret commissions, and a Google search on this term will return a wealth of information.

    The interesting thing about secret commissions is that attempts to render the commission “legal” through disclosure are doomed to fai

    lure.

    For example, if an estate agent were to say to you, “I’m referring you to Goodman Group Conveyancing because they give me $150 for each referral”, would you thank the estate agent and hurry off to Goodman Group Conveyancing?

    There was no need to include a reference to “commissions” in the Conveyancers Act 2006, because anyone involved in the industry should know that the giving or receiving of a secret commission is a serious criminal offence. Unfortunately, the Conveyancers Act 2006 has had the effect of promoting “kick-backs” on the basis that they are OK, so long as the convenaycer makes a disclosure to the client.

    Nothing is said about telling the client that the estate agent is being paid for a referral. Thus, a simple statement such as, “The conveyancer hereby discloses that commissions may be paid to third parties” would probably satisfy both the consumer and the legislation, without the consumer having any idea that he or she is being bought and sold.

  • http:// says:

    Keep watching this space for a Blog posting soon about a stupid/desperate Queensland solicitor’s disregard for the statute law and professional rules in the course of his dealings with real estate agents.

  • http:// says:

    Peter you didnt answer austins question are lawyers required to abide by the same code, if so how is it that richard wood in your article didnt.

  • Hi David,

    Did you read the first sentence of my response to Austin?  I’ll repeat it: “Of course.”

    As to how or why Richard Wood didn’t, well you’ll have to ask Richard Wood.  I asked him a number of questions, but he refused to answer.

    But Richard Wood didn’t get away with it – after all, he features on this blog, doesn’t he.  (See http://reic.com.au/search/SearchResults.aspx?q=richard+wood for the whole saga.)

  • http:// says:

    sorry peter

    “of course” doesnt answer it

    where or what is the code or rules that make solicitors abide by same code?

  • Hi David,

    Tim O’Dwyer has written a follow-up posting about a lawyer’s attempt to dip his snout into the estate agent referral trough “Conveyancing Corruption – Lawyers Too!” – to be posted in a few days’ time, and in that posting Tim sets out the very clear legislation prohibiting lawyers from engaging in such corrupt activity.

    David, the issue is not just one of legislation requiring conveyancers and lawyers to disclose to clients that they are part of a trafficking enterprise.

    It is common knowledge that consumers are not properly informed, and that there a ways of working around the intent of the legislation, so that corruption flourishes despite the leglislation.

    What is required is a total ban on referrals of any kind between estate agents and those whose role it is to provide legal representation for consumers.

    Second best would be a requirement for FULL disclosure, so that a client is told that a payment is being made in relation to the referral, the amount of the payment, to whom the payment is being made, and why the payment is being made.

    Full and proper disclusure would have the same effect as a ban, as no consumer would engage a legal representative who has to rely on “buying” clients.

  • http:// says:

    will you be posting replies from aivic about this or will you moderate them so they cannot have a say.

  • Hi AICVIC Member,

    Comments are only moderated if they are abusive and anonymous.

    I have emailed every member of the AICVIC Committee, and I have provided each of them with a link to this posting. Unfortunately, not one of them has replied to my email, and none of them appear to have anything to say on the issue.

    Perhaps you could encourage them to act, or you could identify yourself and “cross the floor” and express your own views.

  • http:// says:

    Hi Peter,

    With respect, is it accurate to call it ‘corruption’ if, at the end of the day, the choice of which conveyancer/solicitor to use is still in the consumers hands?

    Corruption kind of implies a ‘forced’ element to the activity, i.e. a corrupt police officer forces you to pay a fine they just made up on the spot; a corrupt politician takes a bribe to bring down some piece of legislation, etc.

    You and Tim obviously have a better legal understanding than I do, so I don’t mean to presume anything – it just seems odd to stamp this activity as blanket ‘corruption’ when the consumer can still go with what suits them.

    Regards,
    Austin

  • Hi Austin,

    You’ve hit the nail right on the head, albeit from a different angle. The very nature of corruption is that it actually removes the element of free choice, through the use of deception.

    When a politician awards a contract to a company on the basis of bribes the community assumes that a choice has been made freely, openly and in the best interests of the community – thus the community is deceived.

    When a consumer is referred to a conveyancer who has paid $150 to the referring estate agent, the consumer is likely to have been deceived by the estate agent. This is because the estate agent allows the consumer to believe that the estate agent is acting in the consumer’s interests, when in fact the estate agent is acting in his own interests first, the conveyancer’s interests second, and the consumer’s interests are not considered.

  • http:// says:

    can you say that you have not ever paid an estate agent for a referral or is it too hard for you to admit that you have.

  • Hi AICVIC Member,

    I do hope that you have discussed this with your committee members, as requiring me to confirm my integrity may prompt a request for members of AICVIC to do likewise.

    I can confirm that I have only ever received two referrals from real estate agents. In both cases the estate agents referred their own sons to me (but they have never referred any other clients).

    According to one of the sons, his father had referred him to me because he knew that other estate agents could not take advantage of my clients.

    I can confirm that I have never paid for, or even sought, referrals from estate agents, nor do I have any relationships with estate agents that would prevent me from taking legal action against them on behalf of a client.

    Now, AICVIC member, please identify yourself and confirm in writing your status in terms of client trafficking.

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