By asking the right questions, you can quickly determine for yourself whether you should trust your conveyancing transaction to a lawyer or a licensed conveyancer. As a law firm dedicated to consumer protection and the representation of consumers in conveyancing transactions, we must acknowledge our self-interest in advising you that you should engage us to represent you in your conveyancing matter. Nevertheless, the material presented on this page is provided openly and honestly to assist you in making an informed choice.
What is the difference between a lawyer conveyancer and a licensed conveyancer?
There are two kinds of conveyancers – lawyer conveyancers and licensed conveyancers.
Licensed conveyancers are non-lawyers who have been licensed to perform a part of the legal work associated with a real estate transaction, so long as it does not go beyond “conveyancing work” as defined in the Conveyancers Act 2006.
Lawyer conveyancers are lawyers whose main area of practice is conveyancing. While licensed conveyancers are restricted to performing only “conveyancing work”, lawyer conveyancers are able to perform ALL legal work associated with a conveyancing transaction. For example, a licensed conveyancer cannot provide a consumer with legal advice about the conduct of an estate agent (e.g. fraud, misrepresentation or criminal deceptions associated with underquoting or overquoting, dummy bidding etc.), and must refer the client to a qualified lawyer.
It is openly acknowledged by all real estate industry professionals, including licensed conveyancers, that lawyers provide the most comprehensive form of legal representation in real estate conveyancing transactions.
There are always times when a licensed conveyancer is duty-bound to refer a client to a qualified lawyer for further assistance (i.e. whenever the matter goes beyond simple “conveyancing work”, or involves issues too complex for the licensed conveyancer to handle). Lawyers NEVER refer clients to licensed conveyancers, as to do so would probably amount to professional negligence.
Are licensed conveyancers cheaper than lawyer conveyancers?
Competition between licensed conveyancers and lawyer conveyancers
The only honest basis on which licensed conveyancers can attract the attention of clients and entice them away from lawyers is by offering comparable services for lower fees. However, this is quite impossible as licensed conveyancers can never offer the same level of service, or range of complementary services, as those offered by lawyer conveyancers.
This situation comes as a surprise to many consumers, as the only justification offered for the introduction of licensed conveyancers through the Conveyancers Act 2006 was that licensed conveyancers would reduce the price of conveyancing for consumers through competitive pricing. The need for licensed conveyancers to refer clients to lawyers for complex matters and issues that take the matter beyond “conveyancing work” renders the licensed conveyancer an expensive “middle-man” when the total cost of the transaction is tallied. (More on this below.)
Referrals have corrupted price competition
Goodman Group Conveyancing is a well known licensed conveyancing business. Goodman Group Conveyancing has also become well-known for the high “referral fees” it pays to estate agents for client referrals. While Goodman Group openly acknowledges offering payments of $150 for each referral, many other licensed conveyancers use the same method for obtaining clients, but they do so secretly.
Cash payments are not the only form of “payment” in return for referrals. Many conveyancers receive referrals from real estate agents because they are regarded as “tame”. In other words, they will not bite the hand that feeds them.
While licensed conveyancers are limited as to the level of conveyancing service they can offer, the effects of corruption on the level of services offered has also been quite profound (we know of no conveyancing business that will represent a client who makes a complaint about an estate agent).
Finally, the cost of “referral payments” is a cost that is inevitably passed on to the consumer, either in higher conveyancing costs or lower levels of service.
For further information see our Australian Real Estate Blog articles:
“Licensed Conveyancers – Client Dumping”
“Licensed Conveyancers – PI Insurance Problems”
“Licensed Conveyancer Corruption Must Be Stopped!”
“Conveyancing Bribes – A New Growth Industry”
“AICVIC “Strongly Recommends” Against Corruption?”
Who has the highest level of professional indemnity (PI) insurance?
Professional indemnity insurance, also known as “PI insurance” covers a professional for carelessness or negligence in the performance of professional tasks.
While a lawyer conveyancer carries PI insurance cover for EVERYTHING the lawyer does on the client’s behalf, the licensed conveyancer is covered only for “conveyancing work”. This creates a massive problem for licensed conveyancers, as it places them in a Catch 22 situation:
In order to ensure that their clients are protected, licensed conveyancers must not perform any legal work that goes beyond “conveyancing work” as defined in the Conveyancers Act 2006. The reason for this is that licensed conveyancers do not have the legal training, qualifications or experience to perform anything beyond simple “conveyancing work”. But how is a conveyancer to know where simple “conveyancing work” ends and other legal work commences if they do not have the legal training to determine the difference? Unfortunately for the clients of the licensed conveyancer, the answer may not be known until the licensed conveyancer’s PI insurer refuses to pay on a claim.
In its document titled “Victorian Conveyancers Professional Indemnity Insurance 2008/2009” the Business Licensing Authority (which administers the licensing of licensed conveyancers under the Conveyancers Act 2006) provides a series of questions and answers to advise licensed conveyancers about their professional indemnity insurance policy.
Here’s how the BLA document explains the PI insurance policy to licensed conveyancers:
“What activities does this master policy for professional indemnity insurance cover me for?
The policy only provides cover for Conveyancing Work as defined by Section 4 of the Conveyancers Act 2006 (Victoria). The policy only covers Conveyancing Work in the state of Victoria. The master insurance policy provides cover for any civil liability incurred in the conduct of the Conveyancing Work, subject to the terms, conditions and exclusions set out in the policy wording.“
This is followed by:
“What about non-conveyancing work which is conducted as a part of my conveyancing business?
Any activities, past and future, not deemed Conveyancing Work under the Conveyancing Act 2006 (Victoria) are not covered under the policy, even if they are conducted as part of your business…”
For the average consumer, this is a massive problem. A licensed conveyancer whose insurance claim can be refused because the claim relates to work “not deemed Conveyancing Work under the Conveyancing Act…” is in no better position than if the licensed conveyancer had no insurance at all.
For further information see our Australian Real Estate Blog article “Licensed Conveyancers – PI Insurance Problems“.
What about support if things become complicated?
What happens when the wheels well and truly fall off a conveyancing matter, and the other side threatens legal action? Most conveyancers panic, and tell the client to obtain legal advice from a lawyer. Lawyers, on the other hand, have senior lawyers and barristers to call upon.
Knowing when it’s serious and when it’s not
Imagine a conveyancing transaction where everything is running to plan and to schedule, and then suddenly a letter arrives alleging a serious breach of the law and the intention of the other party to cancel the contract. A licensed conveyancer has to decide immediately as to whether the client must be told to obtain legal advice from a qualified lawyer. However, a lawyer conveyancer will assess the situation first and determine whether or not the alleged breach has sufficient legal merit to be of concern. (It must be remembered that not all breaches of the law or contract have serious consequences.)
It is important that your conveyancing legal representative has the ability to determine the seriousness of the matter, the resources to research the legal issues, and the ability to call upon senior lawyers or barristers if things look like becoming really serious. When it comes to legal disputes knowledge is power, and a well worded letter from a qualified lawyer who has researched the issues and has had the benefit of advice from a barrister, can solve problems before they get out of hand.
Licensed conveyancers have no-one to ask
Before the introduction of the Conveyancers Act 2006 a large number of non-lawyer conveyancers used to falsely promote themselves as “lawyer supervised” or “lawyer consulted for all legal work”, to indicate to potential clients that they could consult a lawyer for assistance if the matter become too complicated. In fact, the conveyancer’s reference to a “supervising lawyer” simply meant that the conveyancer had engaged a lawyer to protect the conveyancer from her own clients. Thus, if the conveyancer made a mistake the “supervising lawyer” would advise the conveyancer to cease acting for the client and to say nothing that would harm the conveyancer’s defence.
Licensed conveyancers, now operating under the Conveyancers Act 2006, are not permitted to pretend that a lawyer is available for the client’s benefit. If the matter becomes too complicated, or the conveyancer discovers that the matter is moving beyond simple “conveyancing work”, the conveyancer must advise the client to engage a fully qualified lawyer. However, this creates further problems similar to those associated with real estate agent referrals and conflicts of interests. Lawyers, on the other hand, are expected to have an understanding of ALL areas of law likely to impact on any conveyancing transaction. Lawyers are also skilled in legal research, so that even new legislation can be quickly assessed and dealt with by the lawyer without the need to consult others.
Lawyers have direct access to senior lawyers and barristers
A barrister is a lawyer whose full-time role is to represent clients in court. Barristers operate in a manner similar to medical specialists, and a consumer cannot access the services of a barrister unless a specialist referral has been made by a qualified lawyer. It is the lawyer’s role to identify the legal issues arising from a client’s matter, and to provide the barrister with a synopsis of the problem. The barrister then provides specialist advice as to whether the matter should proceed to court, or be dealt with by alternative means.
Using a barrister for specialist advice allows a client to determine whether or not it is worthwhile pursuing or defending a matter. Early involvement of a barrister can often save thousands of dollars, particularly if litigation can be avoided entirely.
The only way a client of a licensed conveyancer can access the services of a barrister is to have the client engage a lawyer. Again, this renders the licensed conveyancer an expensive “middle-man”, as the client is always better off if a conveyancing lawyer is engaged in the first place.
Conveyancing and Legal Best Practice – LAW9000
There is an easy way to choose the safest form of conveyancing service, and that is to make the choice based on certification to the Australian standard for legal services – Legal Best Practice LAW9000.
Australian Standard – Legal Best Practice LAW9000
LAW 9000 – Legal Best Practice is a standard which uses the internationally recognised ISO 9001 as its foundation and contains best-practice criteria specific to a legal practice.
In order to achieve accreditation a law firm must develop systems and processes that ensure maximum client satisfaction, and risk minimisation. A crucial element of every process is to ensure that a conflict of interests check is done before a client’s matter is commenced.
The certification process involves development of specific, transparent and accountable processes over many months, and culminating in a rigorous audit conducted by external auditors. The audit examines every aspect of the law firm’s operations to ensure that they meet high quality standards. Some of the key areas audited are:
- The firm’s commitment to quality;
- Commitment to ensuring client satisfaction;
- Processes for delivering legal services;
- Business and risk management plans;
- Human Resource practices;
- Professional obligations of the legal industry; and
- Continuous improvement of the firm.
Lawyers Conveyancing is accredited as a LAW9000 Legal Best Practice law firm.
A new direction for real estate and Conveyancing
In order for the conveyancing industry to shed the corrupt and improper practices that have dogged it for years, and which continue to bring it into disrepute, those offering conveyancing services must demonstrate that the services on offer are reliable and of high quality.
The most effective way for a conveyancing consumer to be satisfied that he or she will receive value for money when engaging a conveyancer is to ensure that the conveyancer is a lawyer conveyancer, certified as LAW9000 Legal Best Practice compliant.