The SRA have issued new guidance on when a firm can act for both buyer and seller in a conveyancing transaction.
To achieve Outcome 3.5 of the Code, you must not act for two or more clients in a related matter if there is a conflict, or a significant risk of a conflict, between the interests of those clients. This does not necessarily prevent you from acting for both parties in a conveyancing transaction. However, conveyancing is an area in which there is a high risk of a conflict arising during the course of the transaction. For this reason, Indicative Behaviour 3.14 states that this is the sort of behaviour which tends to show that you have failed to achieve the outcome.
As a general rule, you are likely to fail to achieve the outcome if you routinely act for both parties in conveyancing transactions, but there may be cases where it is appropriate to do so. In reaching your decision, you will not only need to assess the risk of a conflict arising during the course of the transaction, but also have regard to other factors which could compromise your ability to act in the best interests of each client (Principle 4) or your independence (Principle 3). For example:
- the complexity of the matter
- the likelihood of negotiations having to take place
- the bargaining power of the respective parties
- any particular vulnerability of either party
- the disruption and additional costs to the parties should you have to cease acting, and
- the length of the conveyancing chain involved
It is important to bear in mind that if you do act, this should be because of a benefit to the clients, rather than the benefit to you.
To achieve Outcome 3.1, you should have in place an effective system to identify and assess potential conflicts of interest. This could include, for example, listing the factors which should be considered and possible safeguards. For example:
- that the clients are represented by two different fee earners within the firm;
- that the parties are informed in writing of the risks and potential consequences (in terms of inconvenience, delay and possible additional costs) should the firm have to cease acting
- that the factors you considered in reaching your decision to act for both parties are recorded
- that you obtain the informed consent of both clients in writing before proceeding.
The last two will assist you in demonstrating compliance with the outcomes.
Bear in mind that if you will also be acting for the buyer’s lender, you will need to consider any specific requirements of the lender (for example, in the CML handbook). See also Indicative Behaviour 3.7.
