Legal Affairs Correspondent
The new Law Society president, Martin Mears, has pledged to bring in rules to stop solicitors offering cut-price conveyancing.
He has made the move to bring back fixed prices under pressure from firms whose income has been hit by the recession. They complain that growing competition has eroded what used to be a highly profitable part of their business. They argue that firms offering cheap conveyancing must be cutting corners.
Mr Mears was voted in as Law Society president this summer on a mandate to look after the interests of the high street rather than the London establishment. It was the first contested election for 40 years.
But although many solicitors would welcome a return to fixed fees based on the price of the house being sold, the move would be unpopular with customers and would hit the image of the profession.
A fixed scale of fees was abolished by the Government in 1972, but fees remained high until the mid-1980s when genuine competition was introduced by the abolition of the solicitors' monopoly on conveyancing and an Act allowing solicitors to advertise. Over the past decade prices have plummeted. Three-quarters of homes are now conveyed for less than pounds 300.
Under the Solicitors Act, for a price-fixing agreement to be given legal force it needs the agreement of either the Lord Chancellor or the Master of the Rolls. Neither is likely to consider higher prices are in the public interest.
Without legal backing, a fixed-price scale would be likely to breach fair-trading laws. A cartel of solicitors trying to fix prices in the West Country was stamped on recently by the Office of Fair Trading.
Mr Mears has come up with a plan to force solicitors to keep prices high by increasing their insurance premiums if they offer cheap conveyancing. At present, the cost of the compulsory Professional Indemnity Insurance from the Law Society is based on the firm's turnover.
Mr Mears writes in this week's Law Society Gazette: "The justification for this would be that if a firm persistently undertakes work at uneconomic rates it is inherently probable that it is cutting corners with future adverse consequences for the indemnity fund."
The move to reintroduce price fixing provoked an angry response from the National Consumer Council. A spokeswoman said: "If solicitors are offering an inadequate service because they are charging too little, that is a serious problem which needs to be raised. But where is the evidence?"
At a private meeting last week, Mr Mears's deputy, Robert Sayer, told a delegation of solicitors pressing for fixed fees that research was needed to see if there was a link between low charges and poor work.
Such a link is hard to establish, because in nearly all cases the checks carried out by solicitors during a house sale are a formality. If something is missed, it will seldom come to light until the home is resold.Reuse content