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30/03/2007

And now?

So that’s that, then. The Law Society takes advice on a last minute injunction to halt the process, but is advised against it. Partners’ arms are twisted. Deadline passes, contracts are signed or not.

So we’ll stagger, somewhat shellshocked, into next week with three questions awaiting answers.

1. What is actually going to happen around residual matters?

2. Is the scale of non-signing low enough to allow the LSC to claim business as usual? What level of loss would be fatal to the project? It is hard to say but my gut feeling is that anything over 30% would be not only disastrous but beyond the capacity of the remaining firms to absorb, thereby finishing off the LSC’s insistence that provision to clients would not be affected. And what happens if, as seems likely, there is significant regional variation? A national headline figure could well be a smokescreen for virtual collapse in some regions. Can the LSC assert sufficient capacity in those circumstances? It would probably try.

Given the valid points made by the Law Society and others about the level of commercial uncertainty affecting firms ability to get financing, it will be difficult for remaining firms to obtain capital to expand into any voids. This was always the problem with the LSC’s preferred ‘large firm’ vision, but even more so now.

3. What will be the outcome of the Law Society’s application for Judicial Review? It doesn’t touch on some of the real problems of the proposed reforms, of course, but should the contract be found unlawful, would it mean a fresh round of signings? Or merely the amendment of the existing contract for those who have signed?

There is another question, but not one that will be answered in the next fortnight. Will the relationship between the LSC and providers ever recover to something approaching workability? There is no short term anwer here, but at this point, the answer would look like no. Even the signers have done it with great reluctance/with gritted teeth/under protest (pick the cliché of your choice), knowing that they are going to be screwed over gain in short order. For some firms this is simply buying time in order to work out their exit strategy.

The LSC has come out of this appearing to:

  • fail to listen to valid commercial and practical concerns,
  • steamroller dissent,
  • be incapable of producing a finished contract in time,
  • utterly mismanage the contract signing process and misrepresent the situation.
  • place itself in an utterly antagonistic relationship to suppliers,
  • lose some key leading firms to legal aid, including ‘preferred supplier’ pilots.

This will take some living down, to say the least, whatever happens in the next fortnight or so.

It isn’t even as if the LSC can claim to be administratively competent in its day to day operations, which might have given it a faint moral edge in the insistence on efficient practice by suppliers. What’s the administrative budget of the LSC? In the region of £92 million?

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

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