It used to be two - one to change the lightbulb and another to sue him for malpractice. But if the Law Society have their way it will be three, though in the context of obtaining a loan from a bank to fund a property deal – one for the buyer and one for the seller (the existing set-up) and a new additional one for the bank. The Law Society will be meeting on 25 June 2010 to debate a change in the way property deals are managed with input from lawyers and to examine a proposal to insist on the bank using a lawyer who would oversee aspects of loan transactions.
This comes after banks have launched a barrage of actions against solicitors for alleged failings during the property boom. The London Times reports that in recent weeks, INBS and AIB have launched “at least five actions” (in the case of INBS) and “a similar number” (in the case of AIB) against solicitors for alleged negligence. BoI and ACC are reportedly also jumping on the litigation bandwagon.
Why? Because solicitors are accused of failing to execute undertakings. “During the boom, solicitors often breached undertakings given to banks over how to use funds released by banks to complete deals, and in some cases diverted the monies elsewhere instead of paying off existing mortgages on the property or paying stamp duties.”
And what is the Law Society’s response to this history? Introduce a third set of legal eyes into the transaction on behalf of the banks. The Irish Banking Federation says this will push up loan costs. And examining the circumstances, you would have to ask why the two existing lawyers can’t just do their jobs properly. And that isn’t a joke.