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Legal firm claims survey shows few lender-borrower conflicts

12 September 2013

A survey of leading conveyancing firms in Scotland has revealed few instances of the type of conflict of interest that is said to justify requiring the separate representation of mortgage borrowers and lenders, according to the firm that carried out the survey.

Glasgow practice McVey & Murricane sent out over 90 questionnaires to firms identified as among those sending the largest number of applications to register house purchase transactions in the Land Register of Scotland. Of the 30 who responded, 73% had had no cases in the last three years where a conflict of interest between purchaser and lender had resulted in them withdrawing from acting in the conveyance – and 90% had seen no such instances in firms with which they were dealing.

The issue of whether to change the solciitors' practice rules so as to require separate representation is to be debated as a special general meeting of Law Society of Scotland members in Glasgow on 23 September. Those in favour of change argue, among other points, that it will prevent solicitors having to disclose matters in order to comply with lenders' requirements that it might not be in borrowers' interests to disclose.

McVey & Murricane has already expressed concerns that to enforce such a rule would be both unworkable and anti-competitive.

Senior partner Allan Radlow said he challenged lawyers who state that acting for both lender and purchaser represents an untenable conflict of interest, to say why they are happy to act now in these circumstances.

He commented: "Groucho Marx was famously quoted as saying: 'These are my principles, and if you don't like them… well I have others.' It is as if those who quote conflict of interest as the fundamental reason for separate representation can ignore these deep-seated concerns on a daily basis until they have made everybody else abide with their viewpoint. Surely, if this was some fundamentally held professional belief they would be withdrawing from acting now?"

Mr Radlow added: "Reduce the argument to actual facts, and the intellectual basis of separate representation rather loses its lustre."

McVey & Murricane say that only three of the respondent firms supported the change, with most  wanting to move to a "standards-based" system setting protocols and procedures.

The firm is also attempting to obtain information regarding the circumstances of successful claims by lenders against solicitors' professional indemnity insurance, the growing number of which is also said to justify changing the rules.

Click here for an article by the firm reporting on the survey.

The September issue of the Journal carries arguments for and against the change from a solicitor on each side of the debate.

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