AICVIC "Strongly Recommends" Against Corruption?

Posted on December 7, 2008 by | 8 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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If the head of a police force or a government department were to attack entrenched corruption by telling its members that it “strongly recommends” that they refrain from involvement, one would question whether the organisation was serious.It's not enough to just "strongly recommend" against corruption!


In earlier postings I have attacked the Australian Institute of Conveyancers (Victorian Division) (AICVIC) not only for failing to take action to stem the spread of client-trafficking corruption in the real estate conveyancing industry, but also for advising its members in a manner which, in my opinion, is calculated to condone and encourage the problem. See previous postings:

Licensed Conveyancer Corruption Must Be Stopped and

Licensed Conveyancers – A Serious Risk For Consumers


On 24 November, 2008 I emailed every committee member of the Australian Institute of Conveyancers (Victorian Division) as follows:



“I note that the AICVIC website includes a PDF document titled “Startup Kit”, and which advises those interested in commencing a conveyancing business, “When commencing your business and establishing contacts you may consider paying referral fees…”  I believe that this statement suggests to newcomers to the industry that this practice is the norm, that AICVIC condones the practice, and that AICVIC seeks to warn newcomers to take care when paying for referrals.


I request that, as the AICVIC committee, you take a leading role in banning the corrupt and unethical practice of client trafficking.”


On 6 December, 2008 I received the following response from Ms. Jill Ludwell, President of the Australian Institute of Conveyancers and CEO of the Australian Institute of Conveyancers (Victorian Division):



“Your interpretation of what was on our website in 2002 does not reflect the actual position of the AIC but merely preliminary advice to conveyancers.   Although we disagree with your interpretation we are changing our website to better reflect the Institute’s policy…We do however agree with your stance on the payment of referral fees and the AIC strongly recommends against it’s Members offering “kickbacks”, referral fees and commissions (secret or otherwise).”


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8 Comments

  • http:// says:

    i am sure that corrupt members will sit up and take notice when their governing body strongly recommends against members offering bribes and kickbacks…and pigs might fly!

  • http:// says:

    Hi Peter,

    It’s a good line of attack, to highlight the lack of transparency with regards to client trafficking and conveyancers.

    However, ultimately, what you want to be able to do is to say:

    “You can either go with a solicitor or a conveyancer, the difference is a conveyancer is a bit cheaper but a solicitor won’t take kickbacks…”

    … which, I’m guessing, won’t really take much of a mindset unless solicitors can stand behind something and say, “here, this is the distinction between us and conveyancers that inhibits us from the susceptibility of kickbacks”.

    I understand you don’t want to “get rid” of conveyancers, you just want them to sort out this troubling corruption issue. Like I said, if solicitors can show everyone some kind of ‘badge’ then it can stick in peoples minds when it comes to choosing between the two.

    Regards,

    Austin

  • Hi Austin,

    I wish it were as simple as that, but the reality is that lawyers are in on it too, although not to the same extent as conveyancers.

    Conveyancers MUST perpetuate corruption in order to survive.  This is because high volume, cheap conveyancing requires a constant feed on simple conveyancing transactions, which in turn necessitates the cultivation of estate agent referrals, and the maintenance of good relationships by complying with the dictates of estate agents.

    Competing with conveyancers is easy for lawyers.  Competing with conveyancers for the patronage of estate agents is the hard part, as the lawyer must adopt the same corrupt tactics of buying referrals and becoming a “pet” of the estate agent.

    Tim O’Dwyer and I have highlighted the dodgy behaviour of lawyers, as well as conveyancers, in this blog.

    What is needed is standard of conduct which does away entirely with the corrupt practice of client-trafficking through referral payments.  I believe that the only way this can be done is for everyone to adopt the Australian standard – Legal Best Practice LAW 9000.

    Jill Ludwell, president of the Australian Institute of Conveyancers and CEO of the Australian Institute of Conveyancers (Victorian Division) has rightly called on conveyancers to open incorporated law firms (ILPs) to compete with lawyers in Queensland.  If all non-lawyer conveyancers and lawyers conveyancers were to do this, and become accredited to Legal Best Practice LAW 9000 the problem of corruption would disappear.

  • http:// says:

    Hi Peter,

    With respect, if what you say is true – that conveyancers have to perpetuate corruption in order to survive – then why on earth would they collectively submit to such a code of conduct if it meant the death of conveyancing?

    Regards,

    Austin

  • Hi Austin,

    Precisely! Paying estate agents for referrals is a crime – these payments are “secret commissions”.  Entering into a business relationship with a party with whom your client is in an adversarial relationship is unethical and highly improper.

    Austin, the code already exists, but they ignore it.

    I am the voice in the wilderness telling lawyers, conveyancers and regulators that this corruption must stop.  It’s not a matter of whether or not they choose to “collectively submit to such a code of conduct”.  They ignore the code because they need the referrals, and that’s why the corruption is perpetuated.

    Legal Best Practice LAW 9000 is simply a formal process by which a law firm ensures compliance with the standards of consumer service, including the avoidance and elimination of conflicts of interest.

  • Austin, it should also be noted that AICVIC appear to be attempting to have their cake and eat it too.

    They have acquiesced to my demand that they remove from their website reference to the use of “referral payments” to set up a conveyancing business, and yet they do no more than “strongly recommend” that the members not commit crimes associated with client trafficking.

    The fact that not one of the committee members of AICVIC is prepared to deny involvement in the payment of referral fees to estate agents suggests to me that either they don’t want members to feel guilty about client trafficking, or that they don’t want to appear guilty of it themselves.

  • http:// says:

    re your second comment to austin. how can you draw that suggestion?  maybe either they are happy for ms ludwell to respond or they dont want to bother responding to you. its a long bow to imply the guilt you suggest.  

  • Hi David,

    Yes, I’m sure you’re right.  My assuption is that not a single AICVIC committee member would be tainted by the unethical, dishonest and disgustingly anti-consumer conduct known as client trafficking.  I find it utterly unimaginable that any committee member would have to grovel to estate agents by paying referral fees, offering gifts, or returning favours.  And I am sure that each and every one of them is deeply disgusted with those conveyancers who have dragged the industry into disrepute by indulging in such a wicked and cynical trade.

    But gee, it would nice to hear them say so.

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