The SRA’s consultation into the future of law firms holding client monies closed on Friday 21st February. The Law Society ‘slammed’ the proposals in its submission to the consultations, saying removing client account ‘may have huge ramifications for the quality of legal services including higher costs, delays and reduced access to justice.’
Now the Property Lawyers Alliance (PLA), formerly the Property Lawyers Action Group, has published details of its submission, describing the proposals as an ‘existential threat’ to law firms.
The group, which doesn’t publish its membership but says many of its members work at the coalface of conveyancing, has raised its own concerns about the proposals.
In its submission it raises concerns any switch to Third Party Managed Accounts (TPMAs) was a reaction to the collapse of a small number of firms such as Axiom Ince. it goes on to say the centralisation of funds in a few accounts raises the spectre of cyber crime on a ‘massive scale’
Other areas of concern raised by the PLA include
- TPMAs would increase the regulatory burden, which already runs to 1500 pages plus of AML guidance notes, rules, and regulations. And as one of the most regulated groups in the UK are solicitors, rather than a few third-party companies, not best placed to deal with client money
- Despite the claims of the SRA CEO, PLA’s view is TPMAs would not mean reduced PII premiums
- TPMAs are largely untested, would be expensive, and pose distinct risks with possible unintended consequences still not yet fully understood.
- TPMAs providers in the view of PLA would charge significant fees that would have to be recharged to consumers.
It is the view of PLA conveyancing is the ‘bedrock on which property lawyers practise. Removing the ability to hold client funds would shatter it.’ Citing the words of Sir David Napley, past President of the Law Society, the PLA submissions includes the lines
“The professional man does not work in order to be paid. He is paid in order that he may work in accordance with the standards, requirements and ethical principles laid down by his profession.”
adding
“Allow me to give only two of many examples: If a solicitor either has reason to believe that some act or omission on his part has caused damage to his client’s interest it is his bounden ethical duty to advise and require his client to seek independent advice. There is no other occupation – or, for that matter, profession – which exacts such a high standard of integrity, with the ever-present risk of being removed from practice on failure to act accordingly. Whilst every agent is required by law to act at all times with the utmost bona fides towards his principal, strictly to account, never to allow his interest to conflict with his duty or to make a secret profit, it is the profession of all voluntary institutions – for all practical purposes alone, who suffer ‘double jeopardy’. They are not only liable in law but are at risk at best of losing their hard-won individual status but, at worst, of being deprived of their right to practise their discipline.
Concluding the submission PLA Chair Stephen Larcombe says
“To Sir David’s ‘double jeopardy’, we must now add climate change, red tape, planning, environmental laws, vast numbers of AML controls, excessive, and sometimes broken digitalisation, badly drawn legislation, conveyancing factories and the demands of clients, as factors that justify the elevated professional status of a property solicitor and in return a good income for doing so.”
