Conveyancing Bribes – A New Growth Industry

Posted on December 24, 2008 by | 9 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

View Peter Mericka's profile on LinkedIn

 


Since Scott Goodman of Goodman Group Conveyancing started his “Goodman Group Conveyancing Referral Service” bribery and corruption in the conveyancing and real estate industries of Victoria has shifted to over-drive. The price for a conveyancing referral (or bribe) has now reached $150 per referral, and it seems that no estate agent wants to miss out.Scott Goodman at work - $150 to be referred to this mess?


Scott Goodman, of Goodman Group Conveyancing is having a huge impact on the Victorian conveyancing industry by setting the price paid for real estate agent referrals at an all-time high of $150. I am aware of at least three conveyancing businesses in the Melbourne metropolitan area who have complained that their workload has dropped significantly since Goodman raised the  bribe amount to $150.  (picture: Scott Goodman at work – from the Goodman Group’s FaceBook profile)


I am also aware of estate agents who have ended long-standing relationships with their local conveyancers in order to take advantage of Goodman’s unbeatable offer.


It seems that the Goodman bribe offer is going viral too, with estate agents even discussing and promoting it on Facebook. One agency sales manager is said to have ordered all sales representatives to ensure that referrals are directed to Goodman, with the bribe payments being directed not to the individual referring agents, but to the agency itself. (Real estate agencies need another income stream when times are hard.)


I emailed the committee of the Australian Institute of Conveyancers (Victorian Division) (AICVIC) and put it to them that their failure to condemn referral payment bribes has largely contributed to the Goodman phenomenon, but as expected they had nothing to offer to the debate – they’re very coy about this bribery stuff.


Anyway, it’s almost Christmas so let’s put a positive spin on it. Perhaps Goodman Group’s strategy will help to get the economy moving again, with estate agents supplementing their meagre commissions with referral fees and spending big on local produce as well as imported luxuries. We may see a complete change in the conveyancing industry, with mega-firms competing aggressively for referrals in order to maintain the massive volumes needed to keep them going. (The collateral damage done as the smaller conveyancing businesses are choked out of existence is an unfortunate but natural part of this process. But then again, they entered the industry via the referral payment door in the first place, didn’t they.)


Competition is the name of the game, or so the conveyancers and industry advisers have been telling us. The Goodman Group Conveyancing Referral Service could be seen as a natural development of the competition conveyancers have been arguing for all these years.


As for the benefits for consumers…give me some more time – I can’t think of any at the moment.


I have titled this posting “Conveyancing Bribes – A New Growth Industry”. I make the observation that some growths need urgent surgical intervention!


UPDATE: See “Goodman Group Bribe Payments


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9 Comments

  • http:// says:

    Don’t you ever tire of complaining about corruption and bribes and estate agents and conveyancers? Get over it or get out of it.

  • Hi GetOverIt,

    Yes I do, and I can see that you are tired of it too.

    Actually, I think everyone is tired of it.

    Those who know the industry now seem regard corruption the way they do European wasps at a barbeque: a pest that’s here to stay, so learn to live with it. What a shame.

    Nonetheless, I’m still here with my can of Mortein and this blog.

  • http:// says:

    Otherwise, seasons greetings to all our Bloggees.

  • David Taylor says:

    I am a Google Adwords Professional in Australia focusing on the Real Estate industry and just wanted to say what a great real estate blog you have.

  • http:// says:

    Peter,

    is this a question of secret commissions or do Scott Goodman or the agents avoid this illegality by actually disclosing the money that will change hands to the Vendor/Purchaser?

    If it is disclosed, then there’s really not much you or any other competing conveyancer can do about it, is there?

    If you think there is, please do let me know because as a conveyancer, I certainly have noticed a downturn of 30% or more in file numbers.

    Regards,
    Paul

  • Hi Paul,

    I’m sure that Goodman genuinely believes that by telling his clients that he is paying bribes he avoids liability in relation to secret commissions.

    But let’s look at the wider implications of bribe payments. First, let us define “bribe”. The Oxford Dictionary defines the term as follows: “Money etc. offered to procure (often illegal or dishonest) action or decision in favour of giver.”

    Thus a bribe may or may not be illegal. If it becomes a secret commission, then it is certainly illegal.

    If a conveyancer tells a client, “By the way, I pay money to third parties in return for referrals”, does this eliminate the requirement for the estate agent to inform the client that he is referring the client to the conveyancer in return for cash? I don’t think so. My view is that the estate agent cannot rely on the conveyancer’s disclosure in this way.

    But let’s explore a little further. Do conveyancers who pay bribes receive tax invoices from their estate agent buddies? Do they withhold GST if no invoice is issued? Do the estate agents declare the bribes for tax purposes? Do the conveyancers claim bribe money in their tax returns?

    And finally, even if the payment of bribes avoids all of the criminal implications usually associated with such conduct, can it be said that the use of bribes is an acceptable way to do business?

    To work effectively, a bribe must be kept secret. After all, who is going to accept a referral if the estate agent says, “I would like you to use this conveyancer because he pays me $150 for sending clients to him.” The client is likely to tell the estate agent that the conveyancer should be paying the $150 to the client by way of a discount if he wants the client’s business.

    A further reason for keeping the bribe secret is that an agent must always account to the principal (i.e. the client) for any profit made as the result of the agency. This leads to the suggestion that an agent who keeps a bribe may be guilty of a theft from his own client.

  • http:// says:

    That’s great, I never thought about Conveyancing Bribes – A New Growth Industry like that before.

  • http:// says:

    I am sure that in many industries these days there are subversive and dishonest practices taking place.  I am one of the honest conveyancers trying to compete with some of the types who will stoop to the position of fleas on rats to undercut and discredit people such as myself in order to win at all costs.  Some conveyancers are well-recognised as trouble makers and people should be warned to steer clear of them.

  • Hi John,

    I had to edit your post for defamation reasons.

    The problem is that the use of bribes goes way back to when conveyancers first began to compete with lawyers for the favours of real estate agents, and it is so entrenched that no-one is prepare to do anything about it.

    AICVIC won’t do anything positive to stop it, and I suspect it’s because they don’t want to be branded as hypocrites.

    Goodman has simply taken the practice to new heights by brazenly promoting it, and paying more per bribe than anyone else is prepared to pay.

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