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KUALA LUMPUR: The SREC has advised the Bar Council to refer the partners of all legal firms who have failed to file their returns (Form B) in accordance with Solicitors' Remuneration (Enforcement) Rules 2004, to the Disciplinary Board (DB) for disciplinary action. Since January 2005, all legal firms have been given a notice to file a return relating to transactions on completed non-contentious business for the purpose of obtaining information to ascertain whether or not a solicitor has complied with the Solicitors Remuneration Order (SRO). The Enforcement Rules were made by the Bar Council in its efforts to enforce the no discount rule.

This recommendation for disciplinary action was revealed to members of the KL Bar who attended the forum on "SRO Enforcement - the present status and plans for the future" which took place on Friday, September 22, 2006 at the KL Bar Auditorium. The forum was organised by the KL Bar Conveyancing Practice Committee and was chaired by Lim Chee Wee (Chairman KL Bar). Panel speakers included Roger Tan (Chairman of the SREC and Chairman of Bar Council's Conveyancing Practice Committee); Ong Siew Wan (Deputy Chairman of the SREC) and Andrew Wong (Deputy Chairman of Bar Council's CPC). Also present was Colin Pereira (Chairman of KL Bar's CPC).

The forum was informed that since enforcement started in January 2005, more than 5,000 legal firms have been asked to file a return and about 20% of them have failed to do so.

To set the discussions going, Andrew Wong commented that it would be an unrealistic goal for the SREC to totally stop lawyers from giving discounts in this short time frame. A more realistic goal is to make a difference. The feedback from members of the Bar is that although discounting is still taking place, enforcement efforts have indeed made a difference. Members of the public are now more aware that lawyers are not allowed to give a discount on legal fees for property transactions. Nearly all financial institutions that pay legal fees for "zero moving cost packages" and "free legal documentation packages" are now paying full scale fees.

He further commented that there are now about 12,000 members of the Bar and enforcement of the SRO is an issue that must be addressed by all these 12,000 members and not be left to members of the depleting SREC. Less and less members are willing to serve on the SREC for the reason that the work involved is extremely tedious and time consuming and many members have left because they simply cannot afford the time and money.

The forum was informed that to date, 11 solicitors have been referred by the Bar Council for disciplinary action and there are now at various disciplinary stages. The SREC will only advise the Bar Council to lodge a complaint in cases where the breach is really serious. A majority of non-compliance cases are on overcharging instead of discounting. In many cases the lawyers who had overcharged their clients, were requested by the SREC to refund the excess fees. The SREC will continue to request the lawyer having conduct to appear before them to explain discrepancies in their returns. They have visited a legal firm in Johor Bahru, and visits to legal firms in KL, Selangor, Pahang and Penang have been planned for October and November 2006.

Roger emphasised that it is not the intention of the SREC to go witch hunting for lawyers merely for one or two minor breaches of the SRO. Rather the SREC is more focused on stopping the lawyers who rampantly breach the rules.

Andrew also pointed out that once the SREC has satisfactory evidence that a lawyer is in breach of the SRO, the Bar Council has absolute no power to discipline the errant lawyer and can only refer the complaint to the DB. He was of the personal view that many lawyers want to see some "blood", but unfortunately due process and "technicalities" have not made it possible for any blood to be spilled, yet. He informed the forum that in one case, a complaint against the solicitor in charge of the transactions (not a partner) was dismissed by the DB for the reason that the complaint ought to have been lodged against the partners instead. The Bar Council has been advised by counsel that the complaint had been properly lodged against the solicitor having conduct of the transaction. Whether the partners are also liable is a separate matter. These are some of the difficulties faced by the SREC.

The forum quickly became a stage for some lawyers to voice their concern that since discounting is still rampant in KL, lawyers who comply with the SRO are losing out work to those who do not comply. Lawyers have now resorted to giving "cash refunds" to the clients, after collecting from their clients the full scale fees.

The panel commented that it is not good enough to say that so and so is giving discount and then expect the SREC to do something about it. Aggrieved lawyers must at least furnish some names, facts and figures and some details of the actual transaction. Roger acknowledged that lawyers by nature will not blow the whistle against another lawyer and due to this the SREC will investigate all anonymous complaints. Lawyers who are the subject of such complaints have been asked to furnish additional returns for a start, and these additional returns related to transactions for a period of at least 3 months. Lawyers are advised to use the Hot Line (03-2031 9943) set up at the Bar Council secretariat to report any SRO breaches.

Andrew commented that lawyers should not protect other lawyers who are in breach of the SRO. The errant lawyers are breaking "rice bowls" and those who comply should have no qualms about breaking an arm or a leg. He urged all lawyers present at the forum to offer their services to assist the SREC in this fight.

As for the cash refunds, Andrew commented that although the SREC has received many complaints of this method of discounting, there is really nothing that the SREC can do about it, within the present enforcement procedure. Those who comply can only be comforted that such lawyers will probably not stay in practice for too long as they will go bust. Lim Chee Wee had earlier stated that on the average, the gross profit margin of a legal firm is about 40% to 60%. On this, tax is payable. If the lawyer gives a cash discount it is very likely that the lawyer will end up with a negative income, although in the short term his cashflow may improve.

Many lawyers from the floor commented that the scale fees for property transactions must be maintained at all costs and enforcement of the no discount rule must continue. Many also profess that since enforcement started there is a difference although discounting is still rampant. One member commented that although she is pleased with the response from financial institutions on payment of full scale fees, there are still lawyers asking these same financial institutions whether they would like to have a discount on the fees they are paying.

At around 7.30pm, the Forum came to an end, with a word of thanks from Lim Chee Wee to Roger, Andrew and Siew Wan.

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