Public education best way to keep real estate work

Educating the public about the work of lawyers in real estate is key to keeping the bar healthy.

With the number of lawyers in this area of practice staying steady and competition set to come from various sources in the next decade, making the public understand the lawyer’s role is very important, said a panel of real estate practitioners at the recent Ontario Bar Association Institute.

Thunder Bay, Ont., lawyer Randall Johns told an audience of real estate lawyers that “My experience is that the people that are buying and selling and refinancing properties, by and large - unless they are sophisticated commercial people - the majority of the people I deal with don’t have a clue about what we do. They have no way of assessing whether my work is better than your work and the only thing they understand is price.

“This is a difficulty. We have an obligation to explain to people the difference between price and value,” he says.
He added that this involves communicating with people, including existing clients and referral sources such as banks, accountants, and insurance agents.

“If you can explain to them what they should be looking for, they will come away from that with a better appreciation of what you did and you might actually convince them that there’s some value in what you do,” he said.

He added that the profession also has to sell the things that it can do better, such as turnaround time for clients and good service, and a reduction in the workload for the referral sources.
In addition to public education, the real estate bar has not seen growth in the last 12 years and is reportedly set to see competition from corporate entities over the next decade.

According to LawPro’s Ontario practitioner statistics, there has been no growth in the size of the real estate bar since 1995 and the average age of lawyers practising real estate is 54, compared to an average age of 47 for lawyers in private practice.

Malcolm Heins, CEO of the Law Society of Upper Canada, said over the next 10 years the competition facing lawyers in the real estate field will generally be corporations who want to sell something to the consumer, including the financial sector, lending institutions, realtors, and title insurers.

Members of the bar commented that real estate law will likely stay predominantly within the small firms, rather than moving towards a concentration of service providers.
Paul Kowalyshyn, president of the County and District Law Presidents’ Association, said, “If you look at the way the practice of real estate has developed and what segment of the bar is looking after it, it doesn’t look like it’s going towards large firms.”

According to the LSUC’s sole and small firm practitioner report released in 2005, 46 per cent of practitioners in firms of five lawyers or less practise real estate law.

This area of the profession is now facing a new set of guidelines to educate lawyers on expected standards of practice in residential real estate transactions and how to better inform clients of what to expect from lawyers involved in these types of transactions. The guidelines will also act as the basis for a communications strategy for legal organizations to inform the public of the value of retaining a lawyer for real estate transactions.

With suggestions from the law society’s working group on real estate issues, proposed guidelines for residential real estate transactions as well as several amendments to the rules of professional conduct for real estate transactions were presented to Convocation at the law society last month. Members of the working group included law society benchers and representatives from the OBA real property section, CDLPA, and the Ontario Real Estate Lawyers Association.

Convocation did not reach this item on the agenda at the January meeting, so the set of new guidelines and amended rules are still awaiting approval.

The proposed guidelines for lawyers acting in residential real estate transactions include six principles focusing on the client/lawyer relationship, due diligence, proper filing and record keeping, document preparation and registration, financial issues, and extraordinary matters.

The amendments to the rules of professional conduct have been aimed at addressing the issue of mortgage fraud and will require the lawyer to provide a report to a lender client within 60 days of the transaction and, when acting for both the lender and the borrower in a transaction, the lawyer will be required to disclose all material information relevant to the transaction.

The issue of whether organizations that compete against lawyers in the real estate field should be subject to the same governance regime as legal professionals under the changes to the Law Society Act is still unclear.

Kowalyshyn told the conference that it is up to the profession to be vigilant and if it has any concerns in opening up and allowing other people to practise in this area, to voice them to the law society.
“There’s certain things they can do. We need to speak up for ourselves,” he said.

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