A review about the service provided by solicitors to the public
Published 5 April 2019
Executive summary
Buying and selling a property is often the most expensive and important financial commitment a person makes in their life. Having access to reliable and good quality legal support really matters. It not only reduces stress and uncertainty, but potentially directly impacts on whether a purchase is completed, and what the long-term financial implications may be for all involved.
While most property transactions are completed relatively seamlessly, figures from the Legal Ombudsman (LeO) show that residential conveyancing accounted for nearly a quarter of all complaints it handled over the past three years.
Our own research of consumers, conducted in 2018, also identified that up to a quarter of recent home buyers were dissatisfied with some element of the service they received from their solicitor. One common area of concern was an apparent failure to fully explain the detail and implications of contractual commitments.
What we did
We carried out this thematic review to better understand how firms are delivering residential conveyancing services, and whether they are fulfilling their obligations to their clients.
We visited a sample of 40 law firms offering residential conveyancing services and conducted a detailed review of 80 case files.
What we found
We found that most firms were fulfilling their obligations. In particular, we found that:
- all firms proactively communicated with clients at all key stages of a purchase, with the majority meeting them face-to-face at least once
- all firms provided clients with clear information on their complaints procedures
- firms are increasingly embracing technology, especially regarding how they communicate with clients.
However, we did identify areas for improvement. The two most significant and widespread were:
- inaccurate initial cost estimates – 34% of firms failed to include all the services/fees a matter could reasonably expect to attract in their initial quotes
- not being open about the real cost of third-party disbursement and their firm’s mark-up on these – specifically telegraphic transfers. In 37% of cases firms failed to do this, with some charging up to 10 times the actual bank charge for processing the transfer.
Other areas where we identified potential concerns included:
- not processing paperwork efficiently – especially in relation to requisitions raised by HM Land Registry
- not explaining the difference between freehold and leasehold ownership
- failing to double-check that a client understands the long-term implications of contractual obligations and fees.
Conclusions
This review clearly found that in the majority of cases, conveyancing firms actively engage with their clients and fulfil their obligations to them. Property deals progress in a timely and efficient manner and clients feel informed and supported throughout.
But sadly, this is not always the case.
Whether its providing unrealistic or incomplete quotes, or failing to make sure contractual information has been fully understood, solicitors are potentially leaving their clients exposed to significant risk or potential financial hardship.
Next steps
This thematic review took place during 2018. In December the same year, we introduced new transparency rules which require firms offering conveyancing services to publish detailed price and services information, and their complaints procedures online.
The requirement to provide clear pricing information was not new. However, these rules, and associated guidance, now provide the profession with absolute clarity on our expectations for how they should be publishing price information.
These requirements include:
- outlining all known and potential costs a transaction may attract from the outset
- specifying all charges being added to the actual cost of any third-party disbursements.
As part of our ongoing work, we will continue to review compliance with these rules and will consider further action where necessary to make sure they are being followed.
On the specific subject of making sure solicitors explain contractual details to clients, especially in relation to leaseholds, we urge all firms to make sure that their clients understand their obligations. If we find evidence that people were not made aware of onerous clauses in their leasehold contracts, such as the regular doubling of ground rents, we will take robust action.
Following this review, we referred six firms onto our internal disciplinary processes. Five of these referrals included concerns about failing to declare that the stated telegraphic transfers fees included an additional charge/mark-up.