Conveyancing Corruption – Lawyers Too!

[Author – Tim ODwyer]

(Following on from “Licensed Conveyancer Corruption Must Be Stopped“, Tim O’Dwyer reports on a lawyer conveyancer’s attempt to attract referrals from real estate agents. Readers are also referred to Tim’s posting Catch 32 On Solicitors’ Independence regarding estate agent referrals to lawyers.)

After the principal of a small suburban law firm sent an email touting his services to several real estate agents, one agent passed it on to a solicitor friend with a caustic comment. That solicitor sent both the email and the comment onto another solicitor who, in turn and disgust, flicked both on to me.

Here is that incredible and appalling email:

“Hello again friends.

Two emails from me in as little as one week, I promise I won’t make a habit of it.

I just wanted to tout my services to you to and ask you to consider recommending our services to your clients. I have thought long and hard about offering you some incentive to do this and what I have come up with is this offer. (You can decide whether it’s a ‘special’ offer or not.)
If you send your clients to me, each time you do so I will give you either a voucher which will entitle you personally (or your client if you wish to pass it on to them) to a 30 percent discount off our normal fee when you buy or sell. That is – one voucher for each referral. The only catch is that the client must not only decide to use our services but the matter must settle. This is because we generally don’t charge a fee if the matter falls over, except in extreme circumstances where the file has given me an ulcer.

To let you in on a little secret – your profession is a major source of referrals for us, and with out blowing my own trumpet ( I don’t know why I said that because I am about to), this is because your profession likes dealing with me.

The reasons are these –

1. I keep you guys informed as to what is going on with the file.
2. I return phone calls – and quickly i.e. within the hour. Usually however you will get me first time.
3. I don’t throw my wait around with anyone but prefer a gentle approach to solving problems on files.
4. I am always available if you need me because I do nothing else but supervise the progress of each conveyance and address your queries. This is how I spend my working day. Aren’t you jealous?
5. My fees are reasonable, but I am not a discount, churn them out, factory style conveyance practice.
6. I am not an inexperience office junior who doesn’t know how to spell ‘conveyance’ let alone do one.

We are making this offer to your agency because we have had difficulty getting you guys to refer work to us, probably because you might feel that it is more convenient for the clients or your office if it is handled locally. Let me assure you – we act for clients who live all over Australia and overseas, and buy properties all over Queensland. In this age of technology it is no longer inconvenient for anyone just because the solicitor is not next door, I promise you that.

All I ask is that you consider us. If the offer doesn’t provide you with incentive to entrust your clients to us, then knowing your clients are in safe hands may. Please try us. We do a good job and we guarantee that!
All the best guys
G.”

Needless to say, I promptly sent this note (without the annotations) to my less-than-learned colleague:

“Dear G,

Thought you should know that one of your recent “tout my services” emails to real estate agents finally made it to me.  In fact, your email went through the hands of a couple of other lawyers after an agent of some integrity had originally passed it on with this insightful remark:  “Check out this load of crap!!”

Needless to say, Peter Mericka and I plan to publish and comment on your actions in the Australian Real Estate Blog.  But first we’d like to give you an opportunity to reply in writing to a few questions we have:

• How should agents, who accept your offer and refer clients to you, satisfy their obligations under Section 138 of Queensland’s Property Agents and Motor Dealers Act 2000 (PAMDA)? (S138 requires selling agents to disclose to buyers any benefits received from, and their relationships with, persons to whom agents have referred buyers for professional services.)

• How will you comply with your obligations under Section 365B of PAMDA? (S365B requires conveyancing solicitors to disclose to buyer clients whether the solicitors are independent of the selling agents and whether the solicitors expect to receive any benefits from those agents.)

• How does your email offer fit in with Rules 32 and 36 of Queensland’s Legal Profession (Solicitors) Rules? (These are set out below.)

• How will agents, who accept your offer and refer clients to you, comply with their obligations under Section 30 of the Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001? (S30 requires agents to give buyers and sellers a genuine opportunity to obtain independent legal advice before they sign contracts.)

• What do you understand to be the difference between agents’ “clients” and “customers”?  (The above Code of Conduct defines a client as someone who appoints an estate agent to perform an activity while a customer is someone with whom an agent deals on behalf of a client.)
  

Regards,

Tim O’Dwyer”

Here are the Legal Profession (Solicitors) Rules mentioned above:

32. Referral fees – taking unfair advantage of potential clients – commissions

1.  In the conduct or promotion of a solicitor’s practice, the solicitor must not:

1. accept a retainer to provide legal services to a person who has been introduced or referred to the solicitor by a third party to whom the solicitor has given or offered to provide a fee, benefit or reward for the referral of clients or potential clients, unless the solicitor has first disclosed to the person referred the solicitor’s arrangement with the third party; or
2. seek a retainer for the provision of legal services in a manner likely to oppress or harass a person who, by reason of some recent trauma or injury, or other circumstances, is, or might reasonably be expected to be, at a significant disadvantage in dealing with the solicitor at the time when the retainer is sought.

2. A solicitor must not act for a client in any dealing with a third party from whom the solicitor may receive, directly or indirectly, any fee, benefit or reward in respect of that dealing unless:

1. the solicitor is able to advise and, in fact, advises the client free of any constraint or influence which might be imposed on the solicitor by the third party;
2. the solicitor’s advice is fair and free of any bias caused by the solicitor’s relationship with the third party; and
3. the nature and value of any fee, benefit, or reward, which may be received by the solicitor, are:
• fair and reasonable, having regard to objective commercial standards; and
• are disclosed fully in writing to the client before the dealing is commenced.

36.  Advertising
A solicitor must not advertise the solicitor’s expertise or practice if that advertising:

1. is false;
2. is misleading or deceptive, or likely to mislead or deceive;
3. is vulgar, sensational, or otherwise as would bring or be likely to bring a court, the solicitor, another solicitor or the legal profession into disrepute.

Later that day I received a phone call from this solicitor. No, not to abuse me. Rather, he wanted a “friendly chat” to explain the background surrounding his unsolicited email. He was, he said, “feeling a bit sick over the whole thing and shaking from fear of having done something wrong”. This man, who’d been a sole practitioner for 14 years, still wasn’t really sure at that point whether he had done anything wrong.

 “I’m a humble person,” he began, while describing me as “older and wiser” than him in relation to these issues.

“You’ve never been in this situation because you’ve set yourself up as an advocate for the clients, and by choice you haven’t got into bed with estate agents,” he continued.

Anyhow he assured me that, with 80% of his business being conveyancing, he didn’t “ordinarily” promote cheaper or discounted fees. But this year his conveyancing volume had dropped, he had “really suffered badly” and only that week had had to lay someone off. “You know,” he said, “in desperate times you’re motivated to try to get work.” Hence he was just trying to find “innovative ways to generate work without falling foul of the rules”, so his offer had been made only to agents beyond his area in the hope of getting some “outside” work.

But wait for it: when local agents referred him clients he would send them “thank you” notes enclosing petrol vouchers for the referrals. “I will do it to encourage them understandably to refer work to me,” he shamelessly added. However, I was assured, any agents who knew him, thought they could send referrals to him then dictate what he should be doing, would find “sadly for them” this was not the way he operated. He would never, he said, do anything that he was “remotely aware of” to favour referring agents over his ethical obligations to his clients.

He bleated on and on along these lines until I told him bluntly that, sooner rather that later, someone would make an official complaint about his actions.  Suddenly he saw the error of his ways and expressed his regret. Then he had the gall to ask of me: “If anything you think I’m doing wrong in the future occurs please call me and talk to me about it because it won’t be intentional.”

I even more bluntly replied that this was not my job, but he should speak real soon with a Law society Ethics Counsellor. And indeed this what he did. Next day he sent me a copy of the corrective email he was advised to send to all the agents:

“Hello everyone. I have further considered the offer made in my email to you and, in hindsight, believe that this offer would not be in the best interests of my clients. I believe that it is important to preserve the honesty and integrity of the solicitor-client relationship, and don’t believe my proposal was conducive to achieving this. Accordingly, in an effort to preserve this relationship with my clients, I am withdrawing my offer. I apologise for any inconvenience.”

Meanwhile I suspect the petrol vouchers are still dutifully going out to this clod’s local benefactors.

[AREB  Comments][/AREB Comments]