I’m a specialist in risk, so I can sometimes be accused of being a little conservative in outlook, even for a lawyer. But I suspect that this article will have people reaching for their thesaurus to find stronger words, like “worrier”, “pessimist” or even “doom-monger”.
I’m sticking my neck out today to predict that 2015 is going to be the year of of the file review. And like the mythical Cassandra of Troy, I’m predicting that I’ll be roundly ignored and then proved right. Although unlike Cassandra, I hope to avoid insanity. And seduction by a god.
There are a number of reasons why many files will come under the spotlight by lenders in the next twelve months:
- Regardless of whether and when interest rates move upward, experts predict a correction in the market. However small a correction that is, some borrowers will quickly find themselves in dire straits and we will see a slow but steady return to repossessions, although even I don’t foresee it being on scale of the early 90s.
- Lenders will definitely not, it won’t surprise you, swallow their losses without a care in the world. For conveyancers, that means file reviews because lawyers are an “easy target” for a lender looking to offset a loss – or pass it on altogether.
- The Conveyancing Quality Scheme (“CQS”) was introduced by the Law Society in 2010 in an attempt to drive up standards among its members and thereby improve lender confidence in the legal profession generally. The scheme’s credibility is now being brought into question, with file audits conspicuous by their absence. As such, CQS has suffered various body blows in the last 12 months. Lenders will only maintain confidence if CQS offers up some sacrificial lambs. Rumours already abound that file reviews will be the most impactful and equitable approach.
- Professional negligence cases, mostly initiated by lenders, were up by 20% in 2014. There is no sign of this abating in 2015. This climb in claims is in line with a 30% increase in litigation firms’ requests from Lexsure for archived CML Part 2 requirements. Last week Joe Bryant, partner at city firm RPC said: “On the face of it, this looks like a pretty shocking, sudden and unexpected rise. Claimants – many of them lenders – are rushing to launch claims for perceived professional negligence against law firms before they run out of time.”
Given the complexity of the Handbook and the frequent changes to it, solicitors run the risk of failing to meet the contractual obligations assumed under the CML Handbook. Yet failure to adhere to these obligations may result in a claim for breach of contract – a claim that does not require negligence to be proved.
File reviews are at best an irritation, more usually a source of concern and sometimes lead to embarrassment or worse for firms and for individual lawyers.
Strong risk assurance embedded in your firm’s everyday practice can nullify those worries. Lexsure’s COMPLETIONmonitor, a product that for many can be used for free, is perfect for protecting your back.
COMPLETIONmonitor, built by experienced conveyancers with the assistance of claims handlers, not only gives you assurance on the kinds of errors that often end with firms being sued, but also makes reporting for lenders’ audits as simple as pressing a button.
Even better, if your professional indemnity insurance is with AmTrust, your firm can actually save money, as PI renewals are discounted for firms that lower their risk profile by using COMPLETIONmonitor.
If you’d like to find out more about how COMPLETIONmonitor can prevent risk and save you worry and money send me an e-mail to sseaton@lexsure.com, or join me for a one to one demo by clicking here and hear it straight from the [Trojan] horse’s mouth.
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