Conveyancing Lawyers Under Threat From Banks
The Village Lawyer by Pieter Brueghel - source, Wikipedia
Small town conveyancing lawyers are under threat from big banks like Lloyds and Santander who are removing many small legal practices from their conveyancing panels. These two banks and several building societies are seeking to become more efficient by reducing the number of legal practices they rate for house conveyancing.
Small legal practices, which form about 85 per cent of Britain’s 11,000 law firms, are already suffering from the effects of cuts in the legal aid system that have reduced the amount of family-related cases. Now this rationalisation by the banks and building societies threatens the bread-and-butter work which is the financial backbone of many local solicitors.
At the moment a house purchaser can take on a small, conveyancing lawyer to process the legal work involved in the purchase of their new home. If the lawyer is on the bank or building society’s panel the lender will use the same practice to carry out necessary legal checks. Now some of the larger lenders, including the Lloyds group that controls about a third of the UK mortgage market are rationalising their lists of approved suppliers.
What this means is that if a borrower employs a legal practice that is not on the panel of their lender they will have to pay a separate, panel approved lawyer, to carry out the lender’s legal checks, at an extra cost. Small legal practices argue that borrowers will not want to pay extra so will only give their business to those conveyancing lawyers who are on the lender’s panels.
The mortgage lenders are trying to rationalise and make their operating systems more cost-effective by only keeping on their panels those solicitors who conduct a minimum number of conveyancing cases and who are familiar with their requirements and processes. However, they appear to be unable to quantify that minimum number.
The Law Society is receiving large numbers of complaints from solicitors who have been informed by lenders that they are no longer on their panels. They believe that as many as 2,500 small practices are at risk. Des Hudson, the chief executive said: “We’re troubled by this. We’ve got big, powerful banks — some of which were shored up by taxpayer money — who are significantly damaging small businesses.”
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