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WHAT LAWYERS CAN'T DO (ST 30/5/1996)
 
1)  It is an offence to share fees with bankers or estate agents.
 
2) It is improper to tell clients or allow bankers or estate agents to represent that some conveyancing fees would be waived.
 
3) Buyers or sellers should not be pressured into using a particular lawyer.
 
4) Lawyers should not offer discounts on the prescribed rate of legal fees.
 
LAW SOCIETY ISSUES RULES ON CONVEYANCING.
 
The Law Society has issued rules to lawyers on conveyancing matters, aiming to put a stop to a number of unethical practices such as touting and the giving of discounts.
 
For a start, it has told lawyers that it is an offence to share fees with bankers or estate agents who recommend clients to them.
 
In a circular issued to more than 650 law firms this week, the governing body also said that:
 
  • It was improper for lawyers to attract business by telling clients or allowing bankers or estate agents to represent that certain conveyancing fees would be waived.
  • Buyers or sellers should not be pressured into using a particular lawyer. For example, a bank officer should not " unduly influence his or her borrower to appoint the bank's solicitor as the borrower's solicitor as well".
  • Lawyers should not offer discounts on the prescribed rate of legal fees for conveyancing matters.

Flouting any of these rules could see a lawyer being hauled up for disciplinary action before the Law Society.

These directions come in the wake of a recent High Court decision where Justice G.P.Selvam questioned the practice of lawyers acting for two or more parties in a transaction, noting that the risk of fraud was higher.

In that case, lawyer Edwin D'Souza and his former clerk Solomon George had applied for a $120,000 mortgage loan without the property owner's knowledge.

The judge noted that Mr D'Souza had acted for both the finance company and the owner of the property, Madam Esther Dason and her children.

Evidence in the case showed that the lawyer was allowed to act for United Overseas Finance because his clerk had an arrangement with the manager of the finance company's Bedok branch.

Under this, the clerk would introduce clients to the manager, whom he had known for 20 years. In return, he would get the conveyancing work.

Commenting on this practice, Justice Selvam said banks or finance companies "appointing solicitors becasue they or their clerks bring business to them is an unhealthy practice and it is not in the interest of either party."

In its circular, the Law Society said that while there were savings in legal costs for the public when one lawyer acted for two parties, it cautioned that there was a potential conflict of interest for the lawyer.

Eight lawyers said the directive by the Law Society was timely as touting had become rampant as lawyers fought for a share of the conveyancing market.

Competition for business is likely to be more intense if new measures to curb speculation lead to fewer property deals.

Three of them said that the practice of lawyers sharing their fees with estate agents and bank officials to obtain conveyancing work was very common.

Some law firms were paying real estate agents up to 20 per cent of their legal fees for giving them work.

This can work out to a few thousand dollars, depending on the size of the deal.

A partner in a four-lawyer practice said that a number of the bigger firms did not offer banks a share of legal fees but dangled a different carrot for conveyancing work.

They promise to do litigation and other legal work at a lower charge.

Said the partner, "Everyone is touting. It is the only way to compete for legal work."

 

 

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