Reform of solicitors' fees may be unlawful

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Moves among solicitors to curb cut-price conveyancing to increase their incomes appear to be unlawful, the Master of the Rolls, Sir Thomas Bingham, is to warn today's key meeting of the Law Society's council.

Martin Mears, the Law Society president, is strongly pressing for the introduction of minimum conveyancing fees. This was one of his manifesto pledges when he won the first contested election in 40 years for the solicitors' top office.

Sir Thomas, the senior civil judge, has responsibility under the 1974 Solicitors Act for deciding whether the profession may fix prices, and has asked Mr Mears to give copies of the warning to the members of the society's ruling council.

Opponents of the reform see it as disastrous for the public image of solicitors. One senior council member said some were being scared into backing the plan, even though they disagreed with it, because Mr Mears had threatened they would lose their seats if they blocked it. "If they vote for it anyway, they are cowards."

The solicitors plan to enforce higher fees on low-price solicitors by refusing the Law Society's indemnity insurance to members who refuse to charge the prescribed minimum fees. Cheap solicitors would then have to insure themselves on the open market, a far more costly process, and not a real option.

A consultation document prepared by the vice-president of the Law Society, Robert Sayers, argues that firms which offer cut-price conveyancing are cutting corners and making disproportionate demands on the Solicitors Indemnity Fund.

But the fund has said that the sample is not large enough, and the link with quality not clear enough to justify withdrawing cover. As insurers, they say it would be more appropriate to raise premiums according to the number of insurance claims, such as car insurance.

In his letter, which has been seen by the Independent, Sir Thomas says the proposed change must be lawful. In his view, that would only be the case where an insurance scheme was "fair, efficient and actuarily sound". He continues: "It would seem to me clear that the indemnity rules may not be used to achieve ends which do not concern the provision of indemnity against loss, but have some other object." He also warns that the price-fixing plan might contravene fair trading laws.

He outlines his duties under the 1974 Act: "In considering whether to concur in any proposed change of rule, I think it clear that the Master of the Rolls must have regard not only to the interests of the solicitors' profession, but also to the wider public interest.

"If the first consideration were his only concern, one might wonder why the holder of a senior judicial office, not himself a solicitor, should be required to confirm the judgement of the solicitors' own professional body." He says a House of Lords judgment in 1983 makes it clear that the Law Society has two separate roles, one as a trade union, one as a regulator of the profession.

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