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Jane Moir

Getting a lawyer out of bed in Hong Kong for less than HK$200 is a feat worthy of Houdini.

It may sound unconscionable, but such bargain-basement prices have become the means of survival for solicitors relying on the SAR's flagging conveyancing market.

As the property market took a nosedive, so did conveyancing fees. In monetary terms, the price war appeared to hit rock bottom last week with HK$191.50 per flat being charged on a Housing Authority project.

Anecdotal evidence suggests otherwise - solicitors have been offering to bill clients for photocopying charges alone in a bid to undercut rivals.

The heyday of HK$20,000 commissions on a HK$3 million flat are long gone. Solicitors would now be lucky to get HK$4,000 on the same property.

A relaxation of rules on scale fees during the boom times has opened the door to competition never quite seen on such a scale in the profession.

Lawyers are permitted to negotiate conveyancing fees with their clients, a concession made by the Law Society in 1997 amid concerns of inflated charges based on the value of the property rather than the amount of work involved.

The volume of work on offer is now dwindling: Hong Kong's 5,000-strong solicitor workforce is competing for about 6,000 conveyancing jobs a month.

They also have to contend with big developers who have muscled into the market in a bid to woo more home-buyers, offering conveyancing deals as part of their marketing ploys. Inevitably, during the past two years, law firms relying on this work for their bread and butter - mainly small- to medium-sized local practices - have been forced to lay off staff. Others have been closed down.

As the recession started to bite, several law firms were forced into liquidation - 30 in 1998 and 27 last year. Those struggling to keep people in jobs have become embroiled in a cutthroat battle.

On the face of it, the price war has taken on illogical proportions. Fees of HK$191.50 will barely cover a solicitor's taxi fare never mind the hours spent wading through land titles and records.

It also begs the question of quality. How can a job done for, say, 10 per cent or 15 per cent of the cost guarantee that corners are not cut at some point? The reality is, however, that this price was being offered for a job lot -  for example 300 flats - and the solicitor also takes on the buyer's mortgage work for a few thousand dollars.

The picture is not quite as bleak and this is probably why Law Society president Herbert Tsoi Hak-kwong does not seem too worried: 'They may be working at a loss, but they are still getting the business, people are employed.' It is also a godsend for the average consumer.

'It is a question of survival,' Mr Tsoi said. 'Some can continue [in conveyancing], others change to other fields of the law.' The profession is concerned, however, that it will take just one multimillion-dollar negligence lawsuit against a conveyancing practice to send indemnity premiums through the roof. In extreme circumstances, the Law Society's own indemnity fund could be wiped out. Nevertheless, Mr Tsoi is optimistic. He believes Hong Kong will ultimately follow in the footsteps of the British experience.

'We are very lucky in a sense that we have seen this happen before in the United Kingdom, in 1973. They scrapped scale fees for conveyancing, prices dropped a lot. Firms closed down.' Prices soon started to edge up again. Today, conveyancing charges in Britain outstrip those in the SAR.

However, this process has taken a generation. Mr Tsoi's optimism also fails to take into account the far from rosy state of Hong Kong's property market.

Conveyancing solicitors seem destined to continue to be roped into the price war; the only means of escape may require skills of illusion on a supernatural scale.



Conveyancing fees at starvation level