Licensed Conveyancers – Client Dumping

Posted on May 30, 2009 by | 24 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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Imagine traveling in a taxi through an unfamiliar part of your city. Suddenly, the taxi driver confesses that he doesn’t travel in that area very often, he is too frightened to continue, and he is going drop you off at the next corner. He tells you that it will be up to you to find another taxi driver at that late hour – you will have you make your own arrangements. The taxi driver then takes payment for having delivered you to this dark and unfamiliar place, and drives off into the night. What would you do?Client dumping is illegal!

An increasing number of consumers who use Licensed Conveyancers are experiencing something similar to this. It was a common occurrence before the new Conveyancers Act 2006 was introduced, and it was expected that the new-found professionalism of the conveyancers’ industry would result in a more professional approach to client welfare. Unfortunately, old habits die hard, and client dumping is as prevalent as ever, if not more so.

Conveyancing client dumped

A few days ago I had a distraught woman telephone me with a typical example of client-dumping. According to the woman, she had engaged a Licensed Conveyancer at the very start of her conveyancing transaction, which involved the off-the-plan purchase of a city apartment.

Everything was fine while the matter involved no more than paper-shuffling processes, but when a few small difficulties arose this changed.

Apparently, the Licensed Conveyancer became quite flustered when questions arose regarding the conduct of the developer. When the conveyancer found that she was having to write to the vendor’s lawyers on behalf of her client, provide legal advice to the client, and assume responsibility for the client’s legal well-being, it all became a bit too much.

The conveyancer explained to the client that she charges a very low fee for “straight-forward” matters, and this matter was becoming anything but “straight-forward”. Moreover, the matter involved legal issues that were beyond the capacity of the conveyancer, and a lawyer’s expertise would be required. And to cap it all off, the time and effort the conveyancer was having to invest in the matter was making it unprofitable for the conveyancer, so that she would be operating at a loss to complete it.

Why was the conveyancer complaining to the client? And what was the significance of all of this for the client?

The conveyancer went on to explain that she could no longer act for the client, and that the client would have to find a qualified lawyer to take the matter to settlement. Effectively, the client had been dumped, and settlement was just a few days away!

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  • http:// says:

    Grreat to see you back on the Blog and grrowling as ferrociously as ever!

  • http:// says:

    it is stupid if a conveyancer can fire there client by just giving them 14 days notice because its to hard for the conveyancer to finish the job they started and what about the clients right to trust the conveyancer to do the job they said they would do and if a doctor says he can take out your appendix and then when he already started the operation decided its to hard and tells you go and get another doctor to finish the operation it is the same thing.

  • Hi Syd,

    My view is that those who dreamt up the Conveyancers Act had too many compromises to make.

    They had to allow for the fact that a Licensed Conveyancer is not a lawyer, and therefore cannot provide legal advice on all aspects – thus it became necessary to allow the Licensed Conveyancer to bail out of a matter if it becomes difficult becuase of legal issues that go beyond basic conveyancing.

    They had to consider the likelihood that Licensed Conveyancers would act beyond the compentece, and so they introduced a requirement for the Licensed Conveyancer to determine in advance whether they would have to capacity to complete the matter. But they failed to realise that most conveyancing problems occur after the matter has commenced.

    Then they had to consider what the Licensed Conveyancer should do if the client goes to a lawyer. Should the Licensed Conveyancer be permitted to hold the client’s file until the bill is paid? They decided that this would not be a good idea, and so there is a requirement for the Licensed Conveyancer to deliver the file to the new lawyer within 14 days of the new lawyer being appointed. However, the failed to realise that most problems occur in the 14 days leading up to settlement, which usually leaves little or no time for the Licensed Conveyancer to be replaced by the lawyer in time for settlement.

    And then there is the conflict of interests issues, particularly where the Licensed Conveyancer has a business relationship (let alone a “referral” relationship) with the lawyer who takes over the matter. Most Licensed Conveyancers will attempt to usher the former clients into the office of their “supervising solicitor”.

    The problems associated with Licensed Conveyancers just go on and on.

  • http:// says:

    Did you ever think about if a conveyancer might be looking after the client by making sure that a solicitor takes over when they discover that the conveyancing is more harder than they realised? I often send clients to a solicitor so they get the help they need and are not disadvantaged. Not all conveyancers are irresponsible like you make out.

  • Hi Professional Conveyancer,

    I agree that it is proper and responsible that you send clients to lawyers when you find that this is necessary.

    A few issues arise from this:

    1. Why would a conveyancing consumer go to you in the first place?

    2. Do you think it is fair that a conveyancing consumer should be inconvenienced in this way?

    3. Do you charge the client anything when you refer them to a solicitor?

  • http:// says:

    How can you say the conveyancers act was dreamt up.. it follows nsw which has an almost identical act since 1995 and south australia that has had conveyancers for 150 years!!!!!

    get into the 21st century peter and leave your biases behind.

  • http:// says:

    when it gets too hard for a lawyer in the suburbs wouldnt they then send it to a bigger firm or a barrister? I dont see the difference. its like when a doctor sends you to a specialist. or a nurse calls in a doctor when its beyond their level of competence. how is it any different to those examples? its clear Peter you dont like conveyancers either before they were licensed or now that they are… maybe you would like the old days of just a lawyers monopoly where the public get fleeced.

  • http:// says:

    Dear Tim
    is it really necessary for you to give gratification to your collegue about posting on this blog… really you dont need to encourage him do you??

    some integrity please!!!!

  • Hi David,

    You raise some very interesting points.

    First, most Licensed Conveyancers like to present themselves as superior to lawyers when it comes to property law, and they would be most offended to hear you equate them to nurses who call doctors when “it’s beyond their competence”.

    But your doctors and nurses analogy fails.  Consumers don’t realise that the Licensed Conveyancer is simply a “nurse” to the lawyer “doctor”, because the likes of Paul Garson of Stonnington Conveyancing cunningly promote themselves as a superior alternative.

    Imagine a theatre nurse telling a patient that she will open them up and do her best to remove their problem appendix, and then call in a qualified surgeon if the appendix bursts.  Of course, the patient would prefer to use the qualified surgeon in the first instance.

    When a lawyer briefs a barrister it is still the lawyer who retains total control and responsibility for the client’s legal welfare – there is no client dumping.

    Your reference to “the old days of just a lawyer’s monopoly” is factually wrong.  There was plenty of competition between lawyers for conveyancing work.  And even if the situation could be described as a “monopoloy”, the introduction of non-lawyer conveyancers did not end it.  The non-lawyer conveyancers simply joined the lawyers in this monopoly.

    Finally, I note that you come back to the absolute foundation of the pro-conveyancer position – CHEAP.  Non-lawyer conveyancers always hold up cheap conveyancing as though it is the Holy Grail of consumer protection.

    The fact that bribery, limited professional indemnity insurance protection and client dumping have been formalised by the new Conveyancers Act is seen as collateral damage in the war to win cheap conveyancing.

    David, cheap conveyancing is indeed cheap conveyancing.

  • http:// says:

    peter your comments are factually wrong where you say… there was no competition between solicitors. the histroy is that when the Law Institute sought a vote on adverstising fees from its members they rejected it. the liv going against its members permitted advertising. how long have you been a lawyer? or have you forgotten that.

    secondly you should read Osborn J judgement in the LIV and Maric case. he likened the conveyancers to a nurse and the solicitor to a doctor. does he have it wrong?

    your analogy to the appendix falls flat… how about a midwife that delivers a child? then calls a doctor when complications arise?

    finally i never used the term cheap thats you..pedaling your narrow views again. I never used the word. I said the public got fleeced when there was a monoply, in fact they used to charge on a scale that was fixed to the value of the property. just like real estate agents… funny how you moved to a fixed fee for real estate service but condemn conveyancers who did the same in the early 70’s that stopped the solicitors fleecing the public and forced them to charge a fixed rate. goose and gander argument I think.

    I suggest you study the history a little more

  • Hi David,

    In view of what you have said, let me ask you this:

    Given that Queensland does not allow non-lawyer conveyancers to operate, and the fees charged by Queensland lawyers for conveyancing services are similar to those charged in Victoria and other states with licensed conveyancers, what reasons would you give in support of Queensland passing legislation to allow licensed conveyancers to operate there?

  • http:// says:

    its simple its because of the greater consumer awareness and the effect of competition in the other states that qld have brought their prices in line and solicitors are more competitive now.  tell Tim that conveyancers will operate in Qld in time. They have to comply with competition policy that was agreed back in 1992 unless they can show cause why its not in the interest of consumers.  It all stems from the feds promising money to the states for compliance.  Victoria was told they were non compliant thats why they held the Allen review.  Like I said do more study before you knee jerk.

  • Hi David,

    It seems that your argument for Licensed Conveyancers in Qld has more to do with the right of non-lawyers to compete with lawyers, than the right of consumers to have a secure and corruption-free conveyancing industry.

    The experience in Victoria is that the introduction of Licensed Conveyancers has been as valuble as the introduction of the cane toad, with corruption sky-high, and professional standards crashing.  Things are bad enought in Queensland without introducing another pest.

    I would commend the President of the Australian Institute of Conveyancers on her observation about conveyancers operating as incorporated legal practices.  See “Property transfers tops complaint list”  The Australian 21 November, 2008 where the following appears:

    “Ms Ludwell has also encouraged non-lawyer conveyancers to break down the solicitors’ monopoly by opening their own incorporated legal practices — a business structure that is permissible so long as there is a solicitor director.”

    The best way for conveyancers to truly compete with lawyers is to also become lawyers, offering the same full service, taking the same responsibilities, providing the same level of safety and security.

    Was Jill Ludwell’s proposal a well-considered one, or was it just a knee-jerk reaction?

  • http:// says:

    This is a bit off topic, but I’m running a campaign to cut the ridiculous numbers of law graduates and trainees coming through who will never work as solictors.

    As anyone familiar with the industry knows, there are no jobs for lawyers and havent been for 20 years.

    The real question, why are we pushing through record numbers of graduates when there is no work for them?  Obviously greedy universities play a big role.

  • Hi David,

    Yes, you have moved off topic. Can I draw you back again and ask your opinion of client dumping by Licensed Conveyancers?

  • http:// says:

    Hi Peter,

    We ran a CPD ( Continuing Professional Development NSW) class with about 30 agents including a solicitor who was there at the time and funny enough, this was actually a topic of discussion.

    Taking into account that vendors and buyers are now becoming more educated by the day. When they start asking critical questions regarding the sales process, some conveyancers have been known to dump their clients and have them referred to a solicitor.

    It is definitely a major problem, hence why these conveyancing firms will need to have a practicing solicitor on site to give legal advice, otherwise, off to uni we go!!!!

  • Hi George,

    I suppose it takes us back to the argument in favour of non-lawyer conveyancers becoming lawyers through the vehicle of the ILP (incorporated legal practice).

    Certainly, in Victoria at least, it would simply reinstate the original situation where the non-lawyer conveyancer was supervised by a lawyer, the only difference being that previously the supervision was fictional, whereas in an ILP it would be genuine.

    In a recent seminar I conducted I informed accountants who were thinking of becoming Licensed Conveyancers that they could avoid the problems associated with professional indemnity insurance and the limiting definition of “conveyancing work” contained in the Conveyancers Act by forming ILPs instead.

  • http:// says:

    Hi Peter,

    I see what you mean. It’s a real concern for non-lawyer conveyancers.

    I believe Legal practitioners are often trained in areas of professional liability, which covers the depth of liability they have to clients and third parties. The liability to do with clients in contract and equity, and clients and third parties in tort and categories of breach of duty. I also believe, legal practitioners are assisted and required to have risk management strategies and procedures for preparing professional liability claims for clients.

  • http:// says:

    Peter from what you are saying there is no need for a conveyancer to get there licence and they can just operate there conveyancing business as an ILP with a supervising solicitor as there legal practitioner director and they are not affected by the conveyancer’s act and everything is wonderful. Well if that is true then why would any conveyancer want to get there conveyancer licence and be a licenced conveyancer?

  • Hi Roxy,

    Your comment says it all!

    An unlicensed, non-lawyer conveyancer can operate their conveyancing business by appointing their “supervising solicitor” as the Legal Practitioner Director of their ILP.  That’s all they have to do, and they’re in business.

    Forget the silly Conveyancers Act and all of its failings, contradictions and limitations.  Conveyancers, consumers and the community in general would be so much better off if the grafted-on limb created by the Conveyancers Act could be amputated.

    Queensland regulators take note, and follow the recommendation of the President of the Australian Institute of Conveyancers, Jill Ludwell (see above).

  • http:// says:

    Peter I am not the “david” of the posting of 4th June. I disagree with his comments I think there are lots of jobs for lawyers.  Some are even recently employed by conveyancers and I agree with ms ludwell that an ILP that has a solicitor as a director could also be a conveyancing business.  However I would think the sloicitor director has far more obligations under asic and the conveyancing business would be under the scrutiny of the Legal services board and I dont see any problem with that.  as you said you gave advise to accountants who could also operate a conveyancing business (as some do already)  but my question to you is why do you promote that arrangement (accountants and conveyancers becoming an ilp) yet continue to slander conveyancers for doing the same thing.  There are no cane toads in victoria, there is no evidence of corruption now sky high (which implies its increased) nor professional standards slipping?    I suggest teh opposite is more correct.  Many more conveyancers have had to sit exams to get their licence and future conveyancers now have to have qualifications. commissions whilst I agree should be not allowed are permitted with the correct disclosure which lawyers can do also.  as do the lenders now.  

    so before you shoot of with generalisitc comments which clearly show your continued bias against conveyancers consider your hypocritcal position being paid ( i assume) to tell accountants how to be conveyancers> i am not sure but I would think a conveyancer would know how to do conveyancing better than an accountant.  But if the law permits multi discipline partnerships then so be it. and it could be a good thing. You do it so why not others… its like i said before in my previous comment …….good enough for the goose

  • http:// says:

    Doesnt victoria have the same legislation like all other states in respect to teh legal profession as they move to a national position.   so what happens in other states about ILP’s and multi discipline partnerships.

  • Hi David,

    Client dumping was unheard of before conveyancers were unleashed on consumers, and bribery was no where near as prevalent or as expensive as it is now.

    Balance these (just two of the many) disadvantages associated with conveyancers against the good. What is the good? It all comes back the same argument – conveyancers are cheap.

    Remember David, conveyancers were never introduced on the basis of better service or higher standards. Their sole argument was that they were cheap as compared to lawyers.

    One final point David. You choose to remain anonymous. You have not provided your full name, and you have not divulged the name of your business. Transparency, honesty and openness has never been a strong point with your industry has it.

  • Hi Interested Observer,

    As I understand the situation, it will be quite easy for anyone who wants to open a conveyancing business to do so as an ILP in any state.

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