Smith Murray: Lawyers and Conveyancers Bill — First Reading 
Smith Murray: Lawyers and Conveyancers Bill — First Reading 
[Volume:610;Page:7383] 
MURRAY SMITH (United Future) 
: 
 United Future will also support the first reading of this bill but will not necessarily support it beyond that stage—that will be determined largely by the outcome of the select committee process. Unlike almost all the legislation now introduced United Future has not had the opportunity to discuss with the Government the philosophy behind the bill or to be involved in the development of the policy that is reflected in the bill. This is because the bill has been in train over many years. 
I am aware as a lawyer that there has been much discussion within the profession from the top to the bottom about these reforms and general acceptance of the need for reform to bring the Law Society in line with current business norms. However the detail is yet to be analysed and I look forward to hearing from submitters. I hope that not just the New Zealand Law Society but district law societies—as my colleague has encouraged—firms large medium and small sole practitioners barristers Queen’s Counsel and others will take the opportunity to make their views known so that we can look at all the various perspectives on this bill. 
There are quite a number of issues involved in the bill but there is time in this speech to address only a few of them. Obviously the key one is the licensing of conveyancers and as a practitioner who did a great deal of conveyancing over my 26 years in practice it is my opinion that lawyers have generally abrogated their exclusive right to conveyancing and in a sense this bill is just a reflection of that. The abolition of the scale of charges in the late 1970s led to competitive pricing which meant that solicitors were often doing conveyancing for less than the cost to their practices—a cost that they needed to recover. That led to a subordination of conveyancing to legal executives who often had only a few years of polytech training to prepare them. In terms of the basic paperwork of conveyancing—the preparation of documents for the transfer or discharge of a mortgage—that is all very straightforward work that legal executives could certainly cope with and with the information technology developments that have occurred at Land Information New Zealand over recent years the paperwork has become more and more simplified. 
The problem arises in my view when one comes to the complexities of conveyancing; when there are Resource Management Act issues when there are disputes over contractual terms and when contracts relate to unbuilt or partially built houses—those are just a few examples. It is not just a question of dealing with those issues when they arise and I hope that the conveyancers who do this work will know their limitations and will know when they need to pass issues to a lawyer; it is seeing problems coming that is the lawyer’s real skill. It is providing clauses in agreements to protect against potential problems; it is taking early steps to ensure that potential problems do not arise; it is taking early steps to nip problems in the bud so that they do not become significant. Those are things that will be missed in the downplaying of conveyancing to conveyancers rather than lawyers. I fear that effectively the public will not get the same level of service in those areas. 
However as I said many firms and indeed the profession generally have abrogated that responsibility. With legal executives doing most of the work those issues are not being picked up either. I refer to peripheral issues such as whether a client should register his or her property as a joint family home. That seems to be left to the side and I think we are in real danger of losing the protection of joint family homes generally simply because that provision is not used when it should be. The setting up of trusts and estate planning are other issues that arise at the time of conveyancing that a conveyancer will not have the expertise to address or recognise. There are property partnership issues and things of that nature. That is really where we are going to suffer a loss I think in terms of this proposal. 
The second major impact of the bill is in enabling lawyers to sell real estate. I guess this is an attempt to bring competition into the real estate industry but I have real questions about it. Again as a solicitor with extensive experience I established good working relationships with real estate agencies but learnt that it was very dangerous to get involved in mutual referral arrangements because of the conflict of interest that very easily arises when one does. I remember one occasion when a real estate agent rang and said: “I’ve got a chap here who wants to sign an agreement for a house but he wants a lawyer to check it over before he signs it. Can you see him now?”. I said that yes I was happy to and when I questioned him about it it seemed that the house was probably not the house best suited to him. I had some misgivings and he had some misgivings so I suggested he sleep on it overnight before rushing into a decision. The next day he advised me he had changed his mind and when I told the real estate agent about it he was absolutely ropeable because he had sent me his client and now was going to lose his commission. 
Those sorts of difficulties arise where marketing business such as the sale of houses conflicts with professional business that requires the giving of independent advice. Selling property or any product requires a different sort of approach from that of the provision of independent advice. I know valuers who were used to giving independent advice who became real estate agents and tried to sell properties only to discover that they simply could not tolerate the situation that they could tell the purchaser only the good things about the house and not the bad things and they pulled out from being real estate agents as a result. That just demonstrates the two different approaches. 
Lawyers may simply if they have this power put clients’ houses on a website in order to market them and be fairly non-active when it comes to the actual marketing. But the danger is that if they get into marketing they will end up selling existing homes for their vendor clients to clients who are purchasers and therefore be in a situation where one firm is acting for both vendor and purchasers. However lawyers have looked at this whole thing quite closely over a number of years and whilst initially there were some shopfront stores that explored and flirted with the idea of selling real estate and looked at ways of getting round the Real Estate Agents Act I notice that in the last few years there has been a backing off from that and perhaps this part of the bill will also have little impact. 
However the danger that is there in terms of conveyancers is similar to the danger in terms of conflict and the close affiliation that conveyancers may well have with real estate agents is likely to cause problems. For example mortgage brokers are often aligning themselves with real estate agents and even working out of their premises and I know from my experience that conflicts have arisen that have caused a disservice to the public. If a mortgage broker in those circumstances does not get the finance the real estate agent loses his or her commission so there is a lot of pressure on such mortgage brokers to deliver. Therefore they lose a degree of the objectivity and independence that are necessary for their clients. 
There also can be breaches of confidentiality. Mortgage brokers are privy to personal information that real estate agents are not. I have known examples where that information has been passed on to the client’s detriment. Conveyancers will be expected by real estate agents to get the transactions through so that the commission is received and I have some concerns about that. If the bill goes through I hope that the Society of Conveyancers is able to regulate to ensure that that danger is protected against. Independence lack of conflict of interest and confidentiality are ingrained in the law profession. Legal executives within firms are taught the importance of those. That is not so with conveyancers and whether the same high ethical standards will be able to be expected is yet to be seen. 
As I have said there are a number of issues. The abolition of QCs is another one that is quite contentious. There is the incorporation of law practices. In relation to cost revision I have real questions as to whether it is still appropriate for law societies to be running cost revisions but I do not have time to deal with that now. There are many issues. The select committee process will enable those to be worked through. They are matters that the Law Society and lawyers generally will have to consider carefully. They will have to make sure they have their say so that the select committee will be able to look at all sides of the issue and all the potential consequences that come out of the legislation. I look forward to reading and hearing those submissions and being part of that process.