SDT slam solicitor firm for misleading cost information

Last month we reported that Andersons Solicitors had been removed from a number of lender panels ahead of a Solicitors Disciplinary Tribunal hearing.

The hearing was to consider whether they had misled their clients regarding cost information.

We now know that the firm had been removed from at least eight conveyancing panels and that it’s future is now jeopardised.

Following the outcome of the tribunal Mr Treverton-Jones QC explained that Andersons were “considering termination of their business albeit the summer of 2013 would have been the firms 40th anniversary.”

The case is of particular relevance to firms that have “additional costs” commonly incurred in most transactions which are not stated in the headline price. Such firms should read the judgement itself. It can be found at this link.  

Whilst most conveyancers who operate using this type of model will not be concerned by the tribunal’s outcome, it is worth understanding how the tribunal reached its decision and how to avoid the same situation. 

Andersons appear to have routinely sent a quotation letter to their clients early in the process along with a number of booklets providing additional information, one of which set out additional costs information.

The allegations against Andersons were brought under the old Solicitors’ Code of Conduct 2007 and also the 2011 SRA Principles, the specific grounds were that:

– Some clients were either not provided with adequate costs information or that the information provided was misleading. 

– Andersons overcharged conveyancing clients and/or took unfair advantage of their conveyancing clients because they made additional charges for advising on joint ownership, on mortgage conditions, and on additional titles where the charges were wholly disproportionate.

– In some cases Andersons charged more for specific items than they set out in their costs documentation.

– The firm failed to obtain client consent prior to earning and keeping insurance commissions.

– They stated that they were regulated by the Law Society rather than the SRA on their publicity

– They made inappropriate reference to the Solicitors’ Complaints Bureau

– They failed to provide their SRA number on publicity

– They failed to achieve outcomes 1.7 i.e. “you inform clients whether and how the services you provide are regulated and how this affects the protections available to the client”, outcome 8.1 i.e. “your publicity in relation to your firm or in-house practice or for any other business is accurate and not misleading, and is not likely to diminish the trust the public places in you and in the provision of legal services”, and/or outcome 8.4 i.e. “clients and the public have appropriate information about you, your firm and how you are regulated”.

– Allowed residual client account balances to remain on client account ledgers in breach of the Solicitors’ Accounts Rules 1998.

Whilst the tribunal did not find every technical aspect of the rule breaches to have been proven the broad the general nature of the claims were proven.  The judgement states: 

“The Tribunal found that in using the method of providing costs information which they did, they intended to put themselves into a position where they could give prospective clients a low headline quote which would encourage prospective clients to use their services. There may have been clients who would have been charged no more that the headline quote but this would have been a  small minority. Most would have been subject to significant additional charges. The Respondents made provision for these charges in the various documents which contained costs information but the method had become so complicated relying on four different documents delivered at different times that it was rendered inadequate and misleading.”

An example of the charges that SDT was uncomfortable with was the firm’s practice of charging £225 plus VAT for a Joint Ownership Form.  This was considered excessive with the judgement stating “in relation to the value to the client, such as the Joint Ownership Form and charge of £225, the Respondents had sought to rely on the importance of that Form and advice to the client but the work involved had simply not justified the charge, including the value element by the mere printing off of a form.”

The partners claimed in mitigation that the penalty of already being removed from eight lenders panels, not applying for the Conveyancing Quality Scheme and the stress which had caused ill health for some of the partners was already significant.  The partners were fined £1000 plus £80,000 towards the SRA costs.