PETALING JAYA: The Bar Council has warned legal firms against giving discounts on fees for conveyancing transactions falling within the purview of the Solicitors’ Remuneration Order 2023 (SRO), saying doing so is tantamount to professional misconduct.
The governing body of practising lawyers said other breaches such as overcharging disbursements and reimbursements are also considered acts of misconduct under the provisions of the Legal Profession Act 1976.
The council warned that members found guilty of such misconduct stand to lose their professional indemnity insurance cover, a prerequisite for their practice.
“If your law firm is on the panel of solicitors for any client, you may not have the requisite insurance cover available for transactions (that) do not comply with the SRO,” it said in a circular sighted by FMT.
It is understood that the warning comes in the wake of complaints against some lawyers for charging below the rates prescribed in the SRO, a practice known as “undercutting”.
The SRO prescribes fees for non-contentious legal work, including acting in the sale and transfer of properties, leases and tenancies, and the preparation of security and financing documents.
The Bar said that if it discovers that a discount was given beyond what is permissible in the SRO, any claim made against a lawyer for civil liability will be repudiated by the insurer as the member would be deemed to have committed misconduct.
When contacted, Selangor’s representative to the Bar Council V Kokila Vaani, said the new rules came into force in July last year to raise lawyers’ fees in uncontested matters to a more realistic level on account of the increased costs of doing business.
She said the SRO allows discounts of up to 25% in certain circumstances, resulting in fees from as low as RM500 for the sale and transfer of property for a consideration of RM50,000 or less, to a maximum of 50% on scheduled fees in respect of properties valued at RM1 million or more.
“(Charging) anything above or below that is tantamount to misconduct which can then be used by insurers as a legitimate reason to avoid liability under the lawyer’s professional indemnity insurance cover,” she told FMT.
Kokila Vani said this is a concern especially in housing projects where some lawyers are doing bulk sales at a nominal fee per file or even not charging at all in exchange for handling the legal work for purchasers in respect of their housing loans.
“Lawyers must bear in mind the consequences of their actions and are strictly reminded that undercharging or overcharging is against SRO,” she added.