According to popular culture, and therefore according to populist politicians, lawyers use their privileged position to charge too much and do too little. They provide their services in an old-fashioned way that is out of step with the service methods of banks, department stores, airlines, holiday companies and other mass-market providers. They are also too clever by half – a particularly British, social sin. This negative feeling seems to operate mainly at the group level. Ask someone to comment on the service that their lawyer provides, and a more appreciative response is often given.
Prejudice against gender, race, religion or age is now outlawed. Prejudice against professions ticks no forbidden box. It is not only lawyers who are disparaged. Other professions, including doctors and teachers, are fair game for public hostility. This leads politicians to chip away at the the legal mechanisms that protect and promote professional services. Why do you need a lawyer to sell your house, when any Tom, Dick or Harriet could do it? Let them do it, and let them call themselves lawyers, it doesn’t harm anyone except overpriced solicitors.
Making these comments almost invites a sarcastic response. Another strand of popular sentiment is that well-paid professionals can look after themselves. Perhaps they can, but consumers of professional services can’t, and they are the ones that need protection.
The public benefits from having highly-regulated professions, and from laws that control the performance of professional activities, whether it be cosmetic surgery or investing people’s money. But who will point this out and stand up for the professions when they are under attack from politicians? If professionals do so, their comments are dismissed as the product of self-interest.
These gloomy thoughts are prompted by a letter that an elderly relative of IP Draughts received recently, on which IP Draughts’ advice was sought. The letter was written by a “financial adviser”. It offered to help this relative to create a “tenancy in common” of her house, and thereby avoid the house being compulsorily sold to pay local authority care home fees, if the relative needed to go into a care home in the future. The adviser offered to charge a fixed fee for this work, and another fixed fee for creating a “mirror will” and trust to support the change of ownership.
This is not an area of law with which IP Draughts is familiar, but some Googling soon revealed the basic idea behind the proposal. In essence it is a scheme for ensuring that the surviving spouse, after the first spouse dies, can avoid selling their home to pay the care home fees. Apparently this works when the first spouse has set up a legal mechanism to ensure that their “half” of the property does not pass to the surviving spouse when they die. As a result the property cannot be sold, or is unlikely to have a market value.
For the benefit of readers who are not English lawyers, property can be jointly owned by two people in two different ways. The two ways are known as “joint tenancy” and “tenancy in common” and they have different legal consequences. When a joint tenant dies, the property automatically passes to the surviving owner. A tenancy in common passes in the deceased person’s will.
The scheme assumes that:
- the spouses originally own the property as “joint tenants” (which many spouses do, including IP Draughts)
- they convert their ownership to “tenancy in common”
- the spouses do not pass their half-shares to each other in their wills but instead provide that they pass to someone else, eg trustees of a family trust
- protection is sought from selling the house when the second spouse goes into a care home
IP Draughts was surprised that a financial adviser should be offering to transfer property, draft wills and create trusts, rather than directing the client to a solicitor. But she told IP Draughts’ relative that she has a law degree, so of course she understands these things.
He was even more surprised by the letter, which appeared to be a modified version of a template letter. The template uses some pompous legal expressions like “sever the [joint] tenancy”, but because the writer doesn’t really understand what she is doing, phrases like “we will severe your tenancy” appear.
For several reasons, this scheme is unlikely to help IP Draughts’ relative:
- Her husband died many years ago, so it is too late to set up the scheme between husband and wife.
- She owns her property outright – there is no current joint tenancy.
If a solicitor offered garbage of this kind, they could be referred to the regulator – the SRA. They could be sued for negligence when the scheme doesn’t work, and they would have compulsory insurance that would cover any losses that might arise. Any competent solicitor would know that they have to check the client’s circumstances meticulously before offering a scheme of this kind. IP Draughts’ experience of local solicitors in the area where this relative lives is that they tend to err on the side of caution.
When a “financial adviser” dabbles in a subject that they don’t fully understand, and when they haven’t checked the facts properly before offering a service, who knows whether the client will be fully protected.
Situations like this one need to be explained to politicians when they engage in periodic bouts of lawyer-bashing. Financial advisers should not be allowed to offer legal services. It hurts the consumer when they do so. Old-fashioned, slightly stuffy solicitors are much better protectors of consumer interests.
This example concerns consumer law, which is what politicians tend to understand. For those of us advising business clients, we may think that situations like this don’t directly affect us (except when our relatives suffer from them). But misguided de-regulation in the consumer arena tends to have effects that are felt across the professional spectrum.