Due diligence the key in wake of Friday's collapse

Published: 24/01/2011

The recent collapse of Fridays Property Lawyers provides a stark reminder of the need for brokers to conduct due diligence when referring clients.

That’s the view of Eddie Goldsmith, partner Goldsmith Williams Solicitors, and John Malone, chairman of PMS, who say that the recurring plight of high profile casualties in the sector, such as Hammonds Direct and Fox Hayes, is “incredibly damaging” to the reputation of the conveyancing market.

Goldsmith says: “Fridays was long regarded as a substantial nationwide firm but, while the failure of such brands would once have been unthinkable, this trend is now becoming a regular event for the industry.

“Reputation is everything and from our experience over the past 25 years, it is clear that clients expect a certain level of professionalism and reassurance. At a time when lenders are constantly tightening their panel criteria, it is crucial that brokers and legal services providers take steps to retain people’s faith in what we do.

“While there is no suggestion of any wrongdoing at Fridays, it goes without saying that if clients are referred to unreliable firms or those in crisis, it can be incredibly damaging to their perspective of the industry and relationship with all parties.

“For us as lawyers, the task is to continue to run robust, committed operations that brokers can trust and it’s clear that the majority of established, respected firms are doing just that.

“The reality for brokers is that, when they refer clients, they should now think about conducting thorough due diligence on the activities of their chosen law firms, rather than assuming that the SRA or other bodies are fulfilling that role on their behalf.

“John Malone spoke only last year of the need for brokers to make greater checks and already it appears his words were highly prophetic.”

John Malone said: “As mentioned on a number of occasions last year, experience tells me that when operating in a recessionary period everyone must be on their guard to ensure our business connections are fit and proper for purpose.

“Clearly another high profile casualty in the conveyancing legal sector further demonstrates how crucially important it is to know who we are dealing with. Furthermore the initiative taken by Goldsmith Williams is one I completely support, in assisting some basic activity to ensure those solicitors that are fit and proper for the work they have been instructed to carry out”.

Content correct at time of publication