Leave conveyancing to lawyers

THE National House Buyers’ Association (HBA) would gladly defend purchasers’ rights against lawyers but is unable to uphold Datuk Zaid Ibrahim’s concern for them. I am referring to his article in The Star (May 5) titled: End the conveyancing monopoly.

First of all, he says that the conveyancing fee paid by purchasers to their solicitors, based on the scale set out in the Solicitors’ Remuneration Order (SRO), is too high for the routine, mechanical work that they do.

Admittedly, the monotonous work is not very difficult compared to litigation. But the fee is not for the work of the conveyancing solicitor but for the liability he or she bears. The fee is based on the value of the property, hence, it varies.

If the transaction fails because of the neglect of the solicitor, the damages recoverable from the Malaysian solicitor would be calculated, like the fee, on the basis of the value of the property in question.

English practice

No doubt the scaled fee has been abolished in England and solicitors have lost their monopoly of such work.

This happened as a consequence of the introduction of the registration of titles system replacing the titles deeds system in respect of residential properties in England. Before this, the English solicitor had a number of responsibilities: creating the title deeds; keeping them safe in his office; and, most importantly, being able to vouch to a future purchaser that the property is indeed safe to buy.

These functions have now been taken over by the state in England and in Malaysia much earlier. But the responsibility is still that of the lawyer.

When it was introduced in England, the scaled fee was also intended by society to serve as a subsidy to lawyers for doing unprofitable work; litigation for the poor. With the abolition of scaled fees in England, the state has had to fund legal aid. In England, lawyers are paid by the state but not in Malaysia.

These payments by the state have become a constant point of attrition between the state and the Bar in England because of the ballooning financial allocation that has to be made every year.

Malaysian practice

In Malaysia, volunteer lawyers of the Malaysian Bar’s legal aid service receive not a penny from the state but pittance from the Legal Aid Fund.

This is the one important aspect in which the Malaysian lawyer bears a greater responsibility for the public, in exchange for retaining scaled fees, than the English solicitor. The Malaysian lawyer is able to observe the “cab-rank rule” better (Rule 2 Practice and Etiquette Rules 1978).

The “cab-rank rule” holds that a lawyer must be available to any client who requires his services, like taxis waiting in rank; the taxi driver has no choice but to accept the passenger who wants him; subject to certain conditions, most importantly, he is too poor to afford the services of a lawyer

As a fused profession – advocates and solicitors – in Malaysia, lawyers are able to observe the “cab-rank rule” in litigation and in non-litigation matters.

The English solicitor does not have to observe this rule at all; only barristers do and only with respect to litigation in higher levels of court. The Malaysian lawyer handles both conveyancing and litigation at all levels of court.

In addition, Malaysian lawyers pay an annual contribution, whether they earn conveyancing fees or not, to the Legal Aid Fund operated by the Malaysian Bar.

Discounted legal fees

We do acknowledge that the amount of work that has to be done should be, and is, taken into account in the scaled fees. However, in a case where the purchase transaction is governed by the Housing Development (Control & Licensing) Act, 1996 (HDA transaction), or where a loan is obtained to finance a HDA transaction, a permitted lower scale of fees will apply – to as low as 35%. (See Table 2)

Such discounted legal fees are certainly to the benefit of purchasers. Regardless that the said sale & purchase agreement is in statutory form, professional insurance still have to be purchased by lawyers to cover all circumstances.

To my mind, the scaled fees work better for the lower income group. Without the scaled fees, I think lawyers will likely charge more for lower-end properties because the amount of work involved is often the same as higher-end properties.

In the case of purchase of a low-cost house, it entails having to apply for the formal consent of the state authorities, land office and sometimes the local council on top of having to recite the status of the property in the sale & purchase contract – that’s more tedious work than a higher-end freehold property.

With the compulsory discount, I do not think house buyers for low- and medium-cost houses are overcharged.

Solicitors’ Remuneration Order (SRO)

The Solicitors’ Remuneration Order 2005 (the SRO 2005) came into force on Jan 1, 2006. It was gazetted on Dec 31, 2005. Check out the SRO 2005 athttp://www.hba.org.my/faq/solicitor/SolicitorsRemunerationOrder2006.pdf

New scale fees are prevalent: Some legal fees are of a fixed sum (fixed fee) and others are fixed by means of a scale (scale fee).

For ease of reference, a brief table of the current scale fees for transfers and charges is worked out as follows. (See Table 1)

The SRO was drawn up by the Solicitors’ Costs Committee comprising representatives of the judiciary, the Attorney-General – who are there to protect public interest – and the Bar Council under the Legal Profession Act.

Monopoly or encroachment

We would also like readers to know that lawyers do want to keep their monopoly (and scaled fees) from encroachment by other professionals or upstart quacks. But they also observe the same restrictions against themselves; no encroachment on the turfs of others; a lawyer is required to earn his/her living only by lawyering; not by moonlighting; Rule 44 Practice and Etiquette Rules 1978.

By concentrating on legal practice to earn their living they are expected to and they do become better and better at it for the public benefit ultimately.

As to the monopoly mentioned in the article, who should we allow to do conveyancing work if not the lawyers? The “conveyancers” in the UK (those allowed to do conveyancing, other than solicitors) have to sit for exams rather like the solicitors to be qualified.

I don’t know how they are regulated but I would think that it has to be a regulated body because stakeholders’ monies are involved.

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association. - The Star