XN000022-1996-06-27 — Page 39

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Abolition of scale fees

Clause 20 and Schedule 2 of the Bill repeal the scale fees prescribed for conveyancing work. The main arguments for and against the abolition of scale fees for conveyancing were set out in the Consultation Paper on Legal Services. The feedback received during the consultation exercise indicated that there was public support for abolition. Apart from the submissions from the Law Society and some individual solicitors, there were only 4 written submissions that opposed abolition. Nearly half of the respondents to the Public Opinion Survey who had previously consulted lawyers were dissatisfied with the scale fees system.

The Report on Legal Services set out the Law Society's reasons for opposing the abolition of scale fees, and also set out the counter-arguments. The Report proposed that legislation should be prepared to abolish scale fees in respect of conveyancing work but if, before the legislation was introduced into the Legislative Council, the Law Society were to make alternative proposals in respect of fees for conveyancing that were fair to consumers, the Administration would give them careful consideration before deciding on the way forward.

On 17 May 1996, the Law Society submitted its proposals to the Administration in the form of a Position Paper. The Law Society recognised that, since the last revision of scale fees in 1983, "an escalating property market may have caused the scale structure to become somewhat out of balance." It suggested that the appropriate way in which to address the problem would be for the Costs Committee to be reconvened to determine the acceptable level and structure of the fee system.

In view of the Law Society's response to the Consultation Paper on Legal Services and subsequent correspondence and discussions with us, the Administration had expected that the paper that the Law Society would eventually put forward would contain specific proposals in respect of the fees for various types of transactions, such as project conveyancing, and conveyances where a solicitor acts in the purchase and mortgage of the property. It had also expected that those specific proposals would be supported by detailed empirical data, including the report prepared by consultants commissioned by the Law Society.

This was not the case. The Law Society merely recommended that the Costs Committee should determine the level of fees. without producing any specific proposals. Although the Law Society's Position Paper suggested that "it would be appropriate in general terms for an 'across the board' reduction of 20% of the existing scale in respect of purchaser's costs," it did not give any reason for this.