Use Independent Body? Lawyers Back Idea But Raise Concerns

Source : The Sunday Times, Jan 06, 2008

LAWYERS gave the thumbs up to the news that the Chief Justice is considering a scheme to bar lawyers from receiving money from their clients.

But they also say that such a scheme, which would possibly entail the money being parked with an independent body, may lead to an increase in time and costs incurred for those buying and selling property.

This raises the question: Will clients be willing to pay administrative fees and experience bureaucratic delays in order to protect their money from the one or two bad apples in the barrel?

Sole proprietor Vijay Kumar said he was in favour of the money being held by an independent body. ‘There have been all these changes - tightening the rules, having more signatories - but the problem has never gone away.’

Mr Rajan Menon, senior partner at law firm KhattarWong, is also all for protecting clients’ money. ‘We must develop a system where the client is fully protected, so that no errant lawyer will have the chance to help himself to the money,’ he said.

Lawyers point out that a similar stakeholding scheme is already in place.

Buyers of buildings under construction have to park 5 per cent of the purchase price with the Singapore Academy of Law.

The money is released to the developer only after the 12-month defects liability period.

Mr Mark Chua, conveyancing partner at Tito Isaac &; Co, said it may make legal sense for the academy to hold the money. But from an economic standpoint, this may not be perfect.

He said that legal clients have to realise that efficiency may be compromised. There will be many procedures to undertake and more forms will have to be filled.

While lawyers can act to release the money almost immediately, an independent body may need some lead time.

Mr Chua pointed out that if the cheques came in late - something which would then result in late completion - there would be a question of who would have to bear the penalty.

It remains to be seen how such a system will work out.

He said: ‘In theory, it’s a good thing.’

Mr Menon believed that the money should be kept in banks and administered by the Law Society, a kind of conveyancing transaction settlement system.

He acknowledged that this may increase costs, which would be needed to fund the running of such a system. Nevertheless, he said it would also be possible that the interest earned could offset the costs.

‘Who’s going to pay? Because of the misdemeanours of one or two lawyers, are we going to change the system of more than 100 years?

‘There are no easy answers,’ he said.

Whatever the scheme, it will have to be studied very carefully, said Mr Vijay, in order to ensure that it does not create a new set of problems.

Mr Chua said: ‘At the end of the day, you can put in as many systems as you want. If a person is determined to take the money, he will find a way of doing it.’