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                                            原載《HKCER Letters》一九九七年三月第四十三期

                                                                                                                              

                                                                             取消樓宇轉讓律師定額收費

                                                                                            Kelly Busche

                                                                                                                              

                           香港現行的法律,要求律師及政府官員議訂律師徵收物業轉讓服務的費用。根據執業
                           律師條例中律師一般收費法例《法例第 159 (74)》,一個獲首席法官批准、由官員及律
                           師組成的收費委員會,要對物業轉讓服務釐定定額收費。而律師必須遵照規定,收取
                           有關服務的費用,否則會受到律師會的紀律處分。

                           香港政府在去年的法律服務(雜項) 修訂法案中建議修改法例,容許律師毋須按定額收
                           費制度收費。但律師會則強烈反對此項建議。筆者將討論律師會的論點以及說明政府
                           的建議是乎合大眾利益。

                           律師會在其回應政府建議的附件中說:「反對或贊成定額收費的基本原則是要維護公
                           眾利益。」可是,在回應的後段,律師會除重申其反對政府建議的立場外,又指出顧
                           客沒有充份知識去分辨律師服務的質素,故此若容許鬆散的市場力量去促進律師間的
                           競爭,只會對公眾及律師行業造成不可彌補的損害。律師會又認為收費委員會應作為
                           公眾及律師行業間的仲裁人,平衡雙方的利益。因此,律師會的基本原則,由原先的
                           保障公眾利益,轉為平衡公眾及律師行業間的利益。律師會的論點,主要是顧客掌握
                           的資訊比律師的少,因而易受各種不公平的對待或剝削,輕則是收費高服務質素低,
                           重則是律師疏忽從事,更甚者是受到蓄意詐騙。事實上,消費者有時確會因所掌握的
                           資訊較提供服務者少而處於不利地位,若引入某些抵銷力量,可使消費者得到較好的
                           服務。所謂抵銷力量包括任何限制律師濫收費用或減少消費者因無知而蒙受損失的機
                           制。但立例加強資訊流通、或廢除禁止律師做廣告宣傳的規定,都可以達到同樣效
                           果。

                           律師會自然了解到抵銷力量的意義,並認為現行由收費委員會審定的定額收費制度,
                           是一種可取的抵銷力量,可幫助消費者免受剝削。他們指出兩個可能性:我們要不是
                           生活在無政府狀況中,任由律師不道德地剝削顧客,就是由首席法官批准的律師及其
                           他收費委員會成員,去訂定公平及合理的收費水平。然而,我們還有其他的選擇,包
                           括政府所建議的廢除轉讓服務的價格管制。這個方法在其他行業也曾施行,航空業便
                           是一個耳熟能詳的例子。

                           律師會試圖在英國於七十年代初廢除律師定額收費的個案中找尋支持它反對立場的論
                           據。它指出英國的房產市場在一九八八年下跌,其後由律師賠償基金支付有關律師疏
                           忽處理物業轉讓的賠償,每年高達五千萬英鎊。然而並非人人皆同意這樣的結論。一
                           九九五年底,前英國律師會轉讓服務特別工作小組主席 Paul Marsh 表示,一九八七至
                           一九九四年間,律師行業處理過合共二千三百萬宗轉讓交易,但律師賠償基金祇對一
                           萬七千多宗交易作出賠償,即每一萬宗交易祇有七宗需要賠償,而平均每宗交易的賠
                           償為十七點四英鎊。經廣泛研究後,結果顯示律師收費減低與疏忽過案的數目並無確
                           定性的關連。

                           即使律師會的說法正確,英國在七十年代初廢除定額收費制度後,律師疏忽問題確實
                           在房產市場下跌後大量出現,這亦不足說明我們應維持舊有的定額收費制度。律師會
                           認為廢除定額收費會後會出現律師疏忽的情況,而疏忽帶來的損失會比—節省的律師
                           費為多,但並沒有否認律師費會因而下降。因此,真正的問題是因疏忽導致的損失與
                           所節省的律師費哪個較高。

                           假設英國平均每宗交易金額為五萬英鎊,那麼據香港律師會引述英國的數字,由疏忽
                           引起的賠償額即為此交易金額的百分之零點零三五。現時香港轉讓三百萬元價值的物
                           業,買賣雙方合共需付百分之一點一,即三萬三千元的律師費。依律師會的論點,若
                           香港廢除定額收費後,因律師疏忽而需要作專業賠償的比率和英國一樣的話,那疏忽
                           的損失便是十元五角。祇要廢除定額收費後律師收費下降多於這個數目,香港社會整
                           體來說便會受惠。因此,若以保障公眾利益為大前題,律師會引用英國的經驗是不足
                           以推翻政府廢除定額收費的建議。

                           美國的航空業在一九七八年開始解除一些重要的管制,當時的主要航空公司均大力反
                           對,它們的理由是解除管制會導致疏忽及增加意外的機會,論點和香港律師會的相
                           似。到八十年代,當數據愈來愈多後,一般的共識是航空安全水平並沒有因航空業解
                           除管制而下降。事實上,有經濟分析顯示,安全水平在消費者享受低廉價格的同時有
                           所改善。

                           律師會認為解除價格管制,除了增加律師疏忽的個案外,還會減低公眾人士對法治的
                           尊重、增加大學行政的不便、及減少律師的收入等。這些說法純屬假設性的。筆者認
                           為公眾對法治的尊重不可能因而減低。解除價格管制剛好符合律師會保障公眾利益的
                           基本原則。即使後果是律師收入下降,但那與保障公眾利益又有何相干?
 
 

                            (Reprinted from HKCER Letters, Vol. 43, March, 1997)
 
 

                      Rendering Unnecessary the Legal "Contrivance to Raise Prices"

                                                        Kelly Busche
 
 

         "People of the same trade seldom meet together . . . but the conversation ends in a conspiracy against
          the public, or in some contrivance to raise prices. It is impossible to prevent such meetings by any law
          consistent with liberty and justice. But [the law] ought to do nothing to facilitate such meetings; much
          less render them necessary."

          Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, 1776.
 

         Introduction

         Existing law in Hong Kong requires solicitors and officials to meet and set the fees solicitors charge
          for the conveyancing of property. Under the Legal Practitioners Ordinance, Solicitor's (General) Cost
          Rules (Cap 159, section 74), a "Costs Committee," comprised of officials and solicitors and approved
          by the Chief Justice, meets and sets "scale fees" for the conveyancing of property. Solicitors who
          provide conveyancing services at fees below the stipulated scale fees are subject to disciplinary action
          by the Law Society.

          The Hong Kong government has proposed a change in legislation under the Legal Services
          (Miscellaneous Amendments) Bill, 1996. This bill would render unnecessary the way solicitors in Hong
          Kong now necessarily meet in what Adam Smith described as seldom anything but a "contrivance to
          raise prices." Under the government's proposal, solicitors would not be required to charge the current
          or any other "scale fees." The Law Society has objected strenuously to the proposal. In this paper, I
          discuss the society's objections and argue that the government proposal is consistent with the interests
          of the Hong Kong public. I do not address the general question of whether a set of scale fees can
          make economic sense. My focus is on the objections raised by the Law Society.
 

         The Law Society's Response

         The Law Society has considered the Hong Kong government's proposal. In its response to the
          proposal, the society starts by stating that, "the cardinal principle for either proponents or opponents of
          scale fees must be to protect the interests of the public" (Annex to Law Society Response to the
          Green Paper, 34). At the end of its response, the society first rejects the government's proposal and
          then rejects its own "cardinal principle." It argues that consumers of solicitors' services do not know
          enough to distinguish good from bad service: "letting loose market forces of competition among
          solicitors would result in "irreparable damage . . . upon both the public and the [solicitors' profession"
          (Annex to Law Society Response, 34). The society states that "the Costs Committee . . . should act as
          the arbitrator in balancing the interests of the public and the profession." The cardinal principle has thus
          been altered from "protecting the interests of the public" to "balancing the interests of the public and
          the profession."
 

         The Law Society's Arguments

         The Law Society's arguments follow a common theme: in a world in which consumers of
          conveyancing services have less information than do solicitors, consumers may be subject to various
          sorts of predation, ranging from simple high-cost/low-quality service, to serious negligence, to outright
          fraud. (In the particular case of the government's proposal to eliminate the regulation provided by the
          Costs Committee, and as part of the Law Society's uninformed consumer argument, the Society states
          that there may be additional undesirable outcomes that include a reduction in respect for the rule of
          law, inconvenience for the local universities, and reduced incomes for solicitors and university
          lecturers. I leave a discussion of these additional undesirable outcomes for later.)

          In situations in which consumers are disadvantaged by having less information than providers do, it is
          possible that they would be served better in the presence of some "countervailing power." Such
          countervailing power could come in the form of some restriction to reduce solicitors' ability to prey on
          consumers, or it could come in the form of some mechanism to reduce or render less harmful
          consumers' ignorance. Legally enforced information dissemination might achieve these ends.
          Elimination of the rules that currently prevent advertising by solicitors might achieve them, too.

          This argument is well known, and the Law Society uses a variant of it to make the point that the
          current mechanism of fixed fees set by the Costs Committee is the preferred countervailing power
          against solicitors' ability to prey on consumers. The society's variant of the argument is based on stark
          alternatives: either we can inhabit a world of anarchy in which unscrupulous solicitors prey on their
          clients, or we can inhabit a world in which scrupulous solicitors, and other members approved by the
          Chief Justice, set fair and reasonable prices. These are not the only alternatives. We have experienced
          some others.

          One alternative is deregulation of the sort proposed by the government and which has been used in the
          market for conveyancing services in other jurisdictions. We also have some experience with
          deregulation in other markets. A notable example of such a market is the airline market, which was
          also thought to be susceptible to negligence. It was widely alleged that negligence in the airline industry
          would increase unchecked because of differential information.
 

         Deregulation of Conveyancing Services in the Market

         The following comments rely on the Law Society Response to the Green Paper, and the figures
          contained therein. Scale fees were abolished in England in the early 1970s. The Law Society seeks to
          support its argument against abolishing these fees in Hong Kong today by claiming that "The housing
          market in the U.K. collapsed in 1988 and . . . as a result, the Solicitors Indemnity Fund has been
          paying out . . . £50 million" per year in claims linked to residential conveyancing (Law Society
          Response to The Green Paper, 4).

          However, not everyone agrees with this claim. In December 1995, Mr. Paul Marsh, former chairman
          of the English Law Society's special working party on conveyancing, wrote:

          Between 1987 and 1994 the profession conducted over 23 million conveyancing transactions [2.875
          million per year], yet the Solicitors Indemnity Fund (SIF) had only 17,125 claims. In other words, seven
          claims for every 10,000 transactions. (£17.39 per transaction). Despite extensive research, no
          conclusive connection has been found between low cost conveyancing and negligence."

          Suppose the Hong Kong Law Society is correct, (and Mr. Marsh is wrong) in stating that the removal
          of scale fees in England in the early 1970s resulted in the negligence that occurred after the 1993
          collapse of the housing market. (Note that this means that in the absence of scale fee abolition, there
          would have been not less negligence, but absolutely no negligence.) Even that, in itself, is not a
          sufficient reason to prefer a return to scale fees. The Law Society asserts that negligence will follow
          and the costs of (additional) negligence would outweigh fee savings, but it does not dispute the claim
          that the abolition of scale fees would cause fees to fall. The real question, therefore, is: would costs
          resulting from increased negligence outweigh the savings resulting from lower fees, or would savings
          resulting from lower fees outweigh the costs resulting from increased negligence?

          Assume that the average value of transactions in England between 1987 and 1994 was £50,000
          ($640,000). The negligence costs cited by the Hong Kong Law Society would then amount to 3.5/100
          of 1 percent of the value of the English transactions. (If the average English transaction value was
          higher than £50,000, the alleged negligence costs would of course fall as a percentage of the value.)
          Current Hong Kong buyer and seller scale legal fees for a $3 million piece of property (the lowest
          price transaction cited in the Legal Society's response) amount to $33,000, or 1.1 percent of the value
          of that transaction. Following the Law Society's arguments, we might assume that abolition of scale
          fees in Hong Kong will result in extra costs of negligence similar to the total English costs of
          negligence per dollar transaction. In that case, a reduction of buyer and seller legal costs (the
          occurrence of which the Law Society does not dispute) of any more than 3.16% to the current fees of
          $33,000 on a $3 million transaction ($1,043) would constitute a saving in legal fees plus negligence
          costs for the Hong Kong public.

          Following the Hong Kong Law Society's cardinal principle of protecting the interests of the public, the
          proposal to abolish of scale fees cannot be dismissed on the basis of the English experience. There
          may be arguments against abolition of scale fees, but they have not been made in the Law Society
          Response to the Green Paper.
 

         Deregulation of the Airline Market

         The U.S. airline market was deregulated in important ways starting in 1978. Significant opposition to
          deregulation arose, much of it from the era's major airline service providers. The specter of negligence
          and falling safety standards was introduced in ways analogous to the Law Society's recent predictions
          of rampant negligence in the event of deregulation of the conveyancing business.

          As data became available, safety records were more and more closely scrutinized in order to detect
          any change in safety standards that might be attributable to the deregulation of 1978. The consensus
          reached in the late 1980s is that the 1978 deregulation caused no deterioration of safety standards.
          Indeed, available evidence suggests that airline safety improved, while at the same time deregulation
          was accompanied by considerable savings on airfare for consumers. Steven Forman, in "An
          Application of Box-Jenkins ARIMA Techniques to Airline Safety Data" (Logistics and Transportation
          Review, 29 (3) September, 1993), states that: "Overall, air traffic was safer after deregulation than it
          would have been had the previous regulatory environment continued." (For similar findings see also
          Steven Morrison and Clifford Winston, The Evolution of the Airline Industry, Brookings Institution,
          1995; Cinton Oster and John Strong, "The Worldwide Airline Safety Record," Logistics and
          Transportation Review, 28(l) 1992; Leon Moses and Ian Savage, "Airline Deregulation and Safety:
          Theory and Evidence," Logistics and Transportation Review, 24(2) 1990; Adib Anafani and Theodore
          Keefer, "Airline Safety and Deregulation: some Econometric Evidence," Logistics and Transportation
          Review, 26(3) 1990.)
 

         Additional Undesirable Outcomes of Scale Fee Abolition

         The Law Society warns that there may be outcomes of scale fee abolition that go beyond increased
          negligence of solicitors: reduced respect for the rule of law, inconvenience for the local universities,
          and reduced incomes for solicitors.

          It cannot be assumed that these outcomes would in fact materialize. It seems unlikely that the rule of
          law would be under threat, and, even in those instances in which the Society's predictions may come
          true, the outcomes would be consistent with the Law Society's cardinal principle of protecting the
          interests of the public. The principle of protecting the interests of the public cannot require
          convenience for university administrators or protection of the incomes of solicitors.
 

         Concluding Remarks

         The proposal to abolish scale fees for Hong Kong solicitors is a sensible one. It is consistent with the
          Law Society's stated cardinal principle of protecting the interests of the public. The public's
          conveyancing costs can be expected to fall, and respect for the rule of law will not be eliminated by
          abolition of competition-reducing scale fees. And, if the abolition of such fees results in the reduction
          of solicitors' incomes, what does that have to do with the principle of protecting the interests of the
          public?
 

 
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