In the lead up to the October deadline for solicitors’ practices to renew their insurance, as was the case last year, the press have picked up on the fact that solicitors’ practices which happen to be sole practitioners or with a small number of partners are the ones that are being penalised the most. This coincides with Times identifying small law firms threatened by soaring insurance costs.
This news coincides just a few weeks after lenders Britannia and Co-operative announced that due to a dictat by their insurers they are no longer able to have sole practitioners on their panel. Despite all this devastating news for sole practitioners I am yet to see any journalist ask the question as to whether or not building societies or professional indemnity insurers have correctly identified where the risk is.
Is it correct that there is a higher risk of a negligence claim, and mortgage fraud with sole practitioners handling conveyancing ? Where is the evidence to back this up?
Fridaysmove has no axe to grind here, we are a national law firm and conveyancing practice on the panel for almost all banks and buildings societies and our insurance has actually gone down as opposed to up in the last year. That being said, I cannot help but wonder whether or not insurers and lenders are picking on the easy target. It is interesting that neither the insurers nor the lenders have ever produced statistics which indicate a greater propensity for property fraud or negligence through sole practitioners.
Unfortunately, very few sole practitioners would have the finances or stamina to be able to mount a challenge hence the fact they are easy targets. I cannot help but wonder what would happen if the insurers had targeted the volume conveyancers and suggested that they were much prone to property fraud or negligence claims . I would expect the insurers and lenders in those circumstances to be forced to show their data under the threat of legal action.
There is certain logic that could actually suggest that sole practitioners are less likely to make mistakes. Many sole practitioners handle their own cases from beginning of the transaction as opposed to breaking up the transactions into separate parts. In some conveyancing factories unqualified and inexperienced staff handle high risk areas, for example, post-completion matters. Some conveyancing firms have even started to have the majority of the conveyancing work completed outside the UK. No conveyancing lawyer worth their salt could possibly argue that there is not an increased risk in the file being passed over from party to party, even if they do argue that they have the benefit of technology as a safety net.
If one argues that the commoditisation of conveyancing is more likely to result in negligence claims, error and poor quality work then surely the counterargument is that sole practitioners are smaller practices that have qualified lawyers, with experience in abundance, handling their cases is a much safer way of dealing with conveyancing.
Come on Insurers and Lenders ! Show your data please !