As legal representation in bridging deals continues to surface in industry-wide debates, it has become apparent that the pros and cons of dual legal representation in bridging cases are not fully understood by the entire market. 

With this in mind, Eddie Goldsmith, of Goldsmith Williams Solicitors, a dual-representation pioneer, talks us through some of the benefits and drawbacks from an insider’s perspective, attempting to make this debate more even-handed…  

First and foremost, dual representation is not appropriate for all cases. This is self-evident. For instance, in cases where there are company directors or company property, overseas properties, complex legal arrangements to implement and clearly opposing interests of the parties looking to bridge, dual representation is likely to be inappropriate. In fact, this is true for any case where there is evidence of a conflict of interest. 

Not only is this against the outcomes of the solicitors’ Code of Conduct but any self respecting solicitor would not wish to act for lender and borrower in those circumstances - it would be asking for trouble.

For dual representation to be appropriate, the lender should be FSA-regulated. Why do I say that? Well, by the very nature of regulation they are required to provide the client with appropriate documentation, including a Key Facts Illustration. Not only will this provide a breakdown of the finances but other information too, such as payments to third parties and various warnings.

This is not to say that other non-FSA lenders do not do the same. However, the client, under FSA regulations, has the legal right to receive such information, and of course there are comprehensive remedies and resources built in for those clients.

The client should always be given the right to choose their own legal representation. It would be a short term benefit and unprofessional for a lawyer to accept instructions from a client who felt they had been pressurised into using them. A client should choose their legal representation freely and be confident that they will be receiving free and untainted legal advice from their lawyers. 

There should be continuous monitoring of the case and the legal team should be sensitive so that any conflict that may arise during the case is dealt with professionally. This could mean withdrawing from the case completely if necessary.

The solicitors should be able to demonstrate clearly that the lay client understands the risks and consequences of entering into the bridging contract. It is not good enough these days to say that the client understood - you have to be able prove it. This should be by way of clear, informed consent of the client with evidence of the client’s understanding - possibly a face-to-face or at least a telephone recording of a conversation. 

It is early days but our experience so far in those cases where we have provided dual legal representation is that:  

• The client’s journey is far improved - both in terms of time  (average time to complete is considerably reduced) and managed expectations; 

• The legal cost is considerably reduced; 

• The cases are what we would describe as standard property transactions - all involving residential property; 

• The risk of fraud is reduced – because we are in direct contact with any third party solicitors without any other intervening legal professionals. 

From our experience, dual representation should be approached with caution - of course clients need to be advised comprehensively - but in the right circumstances with the right firm of lawyers everyone can be a winner, and that indeed is a welcome innovation in these difficult times.