Solicitors are fat cats. They deserve to be undermined…

The reason I became a solicitor is nondescript and boring – it seemed like a good idea at the time.  Frankly, I have become more cynical, but strangely more idealistic as I have grown older, and seen more.  That strange principle, of what it means to be a professional, separates me from those whose only motive is to make money – with no overwhelming and overriding principle of responsibility.

 

Perhaps it is being a parent.  Or perhaps it is having the knowledge that you are told so much in confidence, in complete trust, by people who are vulnerable by imparting such information, let alone by the circumstances that brought them to you.  You are the last bastion of truth and honesty before the marketers get their way.

 

But we are also businesses – we no longer have a monopoly of being service providers.  And I am told that this is because solicitors are fat cats (don’t make me choke, if I rented a house I would be on housing benefit and that would bring in more).  And because solicitors are the establishment.  Such establishment needs competition.  Competition is good, competition makes us thrive.

 

Except, it is not a level playing field. There are some activities that are not restricted to solicitors only – activities like will writing and estate management – both of whom I would suggest do ask for a high level of trust and confidence not only in the skill concerned, but also in putting the customer first.  There is a huge amount of regulation that a solicitors firm has to comply with, not only in relation to client money, but also in relation to good behaviour of the individuals (outside their working hours) and there is a standard by which they can be judged – even passing the standard by a very small amount does not mean you have come away looking good – being called to account in itself is potentially damaging, and something that most law firms will try to avoid.

All modern law work is about risk assessment for the solicitor – either risk of getting it wrong, risk of appearing not to do the right thing, risk of overcharging, risk of having a complaint made against you.  And that’s all well and good – we should be kept on our toes.  But…  here’s the rub – not all people providing legal services are bound to the same standards.  If you choose an unregulated body to do the work for you, then you may be in the unfortunate position that you cannot complain that the charges are too high (look in the small print of the glossy charges brochure) or that the service is too slow (who are you to say what is slow?) or that you think they have not done their best to sell your auntie’s house – they virtually gave it away – it was worth far more! or that they never kept you informed (after all, you are the one that gets the proceeds of the estate in the long run.

 

How is it that unregulated companies manage to sell their service in this way, calling themselves “almost solicitors” and yet are not obliged to abide by certain professional standards?  Everyone from the establishment agrees on how to play fair, and makes an effort to give the customer the benefit of the doubt in all things, and yet…

Is it the pricing?  Solicitors have been charging by the hour for a long time – because that is one of the ways of working out how long something will take – how much work you have to put in, means the fee is commensurate with the job concerned.  Solicitors should give an indication of how much it is likely to be for each stage of the work – there is an estimate of costs for you.

Would customers prefer that every little detail is written down and added to the bill?  So that they know the price of every single step?  Having recently seen the third party disbursements brochure for a non regulated business, I can see all sorts of things that I just bundle into the price of doing the job.  And consider them essential in order to do the correct job for the client.  There is no way that I could cut the corner, then blame the client on the basis that “you didn’t want me to do that search, so I didn’t do it, and lo and behold, look at what a pile of mess you are in”.  The search is an essential part of the transaction, without which you have not correctly advised.  Interpretation of the search is my job, and advising on it.

What is it like for the customer?  Do customer’s seriously like a contract that is followed by pages and pages of sub-costs for this that and the other?  Trouble is – if you are paying for work from an unregulated body, you can’t complain anyway!  How is that remotely fair for the public, who can’t be expected to know what sort of expenses are involved.  If replacing the engine oil is a necessary part of my car service, as the current oil is drained to reach the part that needs replacing, am I happy with the thought that the service is £200, plus oil drainage fee, plus environmental disposal fee, plus 6 litres of fresh oil, plus an oil gauge testing fee?  (you can tell I know absolutely nothing about how much oil is needed for a car…    You might as well charge me the amount it will actually cost you, rather than adding on spurious details that make it seem like you had to do more…

*cough*  This has turned into something of a rant.  Partly because it seems so damn unfair  – how does the public know what they are buying?  And how do they know the difference between a regulated person and someone who is not?  How do they have any idea of how vulnerable they are, if the service is not good, or the product is substandard?  To whom do they turn?  Just have a quick word with the Legal Ombudsman, as I did, and you will find that they cannot be turned to, if the will writer is not an “approved person”.

 

Being a solicitor is for me about trying (I am human, so I fail, hopefully not too often) to do the right thing, the legally correct thing, and to use the law to protect and serve the interests of those who do not know the law, but have other excellent reasons for needing assistance.  When I come up against people whose main ethos is to make money and to push customers in at one end and relieve them of their money at the other end, without regard for the actual person, that offends me.  I told you I have got more idealistic as I’ve had more experience…

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Give Generously: why leave it to the taxman?

It is a truth universally acknowledged that a person with fortune must give some of that wealth to the government of the day.  But it is not necessary to do so with every appearance of enjoyment, and it is not a moral obligation, but a legal one.

Death and Taxation are two of the great certainties.  In the UK, we have a wealth tax that is calculated on the amount a person leaves when they die (Inheritance Tax).  This is in addition to the wealth tax that a person pays when they dispose of an asset that has increased in value (Capital Gains Tax) the wealth tax that a person is in the process of acquiring (Income Tax) and the wealth tax paid on the transfer of a property (Stamp Duty).

It might almost seem as if the money that a person makes, saves, invests and then finally dies owning has been taxed two or three times over before it can be passed on to one’s family.  The moral certainty about paying one’s fair dues can wear a little thin, in the circumstances.

If you are an individual and have assets exceeding £325,000, then there is a real possibility that you will be giving the taxman a large chunk of what you have worked hard for – everything over this amount will be taxed at 40%, unless it goes to an exempt person.  The figure of £325,000 is not an arbitrary sum – it is the amount that an individual can leave at 0% tax, and has been set for the next three tax years.

Happily, there are some ways of lowering an inheritance tax bill. Essentially, the basic way to reduce the tax is to be poorer by the time you die.  To spend so that there is less money, or give money whilst you still have many years to live, when your children can appreciate it.  By the time you die, your children might be well into middle age, and perhaps may have got past the difficult years.

The very basic patterns for giving are permitted by legislation – an annual amount per donor of £3000, together with small gifts that can be given, and gifts out of surplus income.  The one that people know best is the Potentially Exempt Transfer – this is where you give something away (completely, and do not keep any benefit from it) and if you survive that gift, it is out of your estate.  You are thus poorer when you die.  A direct gift is a potentially exempt transfer.

My uncle, now in his seventies, made a trust for the benefit of his children and grandchildren.  That trust fund was set up a few years ago, and is the means of providing for not only his daughter (who is not quite married but not quite divorced), his disabled granddaughter but also his able sons and grandsons.    By using the trust, he can retain control of the assets, to a certain extent, and make sure that the money is used in a way that truly benefits his grandchildren, rather than giving them too much money too young.  This also indirectly benefits his adult children, who have their lives lifted slightly, by knowing that there are some reserves for school expenses when times are tough.  And best of all, with luck, in a few more years, the amount put into the trust will have ceased to be counted as part of his estate planning strategy.  This latter sort of giving is not potentially exempt – but if kept within a single 0% band, is effectively without any lifetime Inheritance Tax to pay.

This is not a complete list of all the ways in which you can reduce your inheritance tax liability, and if you are planning to give away a substantial sum to lessen the inheritance tax burden, you are best advised by a professional, to make sure that your objective is achieved.  Your own situation is the most important to bear in mind, when giving, and your legal adviser can give a particular view based on your particular circumstances.

 

Auth comment:  yes, this was written to be a small article.  Now I look at it, I know it is not really a blog post.   Soz.