Old habits are hard to break, and maybe that's no bad thing

When I started my legal life in the early 1990s I was taught that it was certainly not the done thing for a solicitor to witness a will where he was named as an executor. Nowadays that does not seem to be an issue. Likewise, when there is a deed or other document to be signed and an independent witness to the signature is required, it was always thought best that the witness not be closely connected to the person signing, so not be a member of the family, or named elsewhere in the document or in any way be construed as having any financial interest in the document. Then the Office of the Public Guardian (OPG) ran a coach and horses through that approach by stating on Lasting Power of Attorney (LPA) forms that one attorney can witness the signature of another attorney. I’ve also now made many LPAs where a even spouse has witnessed the signature of an attorney. However, one rule which does seem to be holding is that a witness should be physically present to see the person sign. Indeed, a recent practice advice note by The Law Society asks if it is possible for a statutory declaration to be taken by Skype video or similar technology. At the moment the answer would appear to be ‘no’ as while the note states “there is no prescribed information or guidance as to the layout or execution of a statutory declaration”, it goes on to make clear “it is customary that the declaration is to be taken ‘before’ a solicitor or commissioner for oaths, and so the declarant must be present”. Furthermore, the advice then highlights the risks of what it calls virtual declarations namely as to “visibility of signature, proof of signature and identification of documents, and inability to check the accuracy of attachments”. The conclusion is that “it remains the custom for the declarant to be physically present before the solicitor or commissioner of oaths at the time of taking the declaration”.

REAL WORLD DOCUMENTS

So, a vote in favour of the real world there; and a vote against the virtual world being a forum for creating legally binding documents. But despite the risks associated with creating and authenticating documents in the virtual world there are other markers that we are heading inexorably into the vortex of the digital sphere. Back in April 2018 the first digital mortgage signed by a borrower was lodged at the Land Registry by that well-known residential property double act the Coventry Building Society and Enact Conveyancing. Fittingly the property concerned was in Rotherhithe, East London, a place admittedly gentrified later than many of its neighbours, but now gentrified nevertheless. Certainly the Land Registry are thrilled and, according to their press release issued on 16 May 2019, they love it that digital mortgages “enables homeowners to sign their mortgage deeds online. They no longer need to be sent a paper form, find the time to sign it in front of a witness and post it back”. You could add into that sentence, “find the time to take independent legal advice”. Because I query if it is a good thing to enter into a mortgage deed without stopping to think about its implications. When I used to do conveyancing, I had the chat with clients about what would happen if they could not pay the monthly repayments, I spoke to joint borrowers about being jointly and severally liable for the mortgage and what would one of you do if the other bailed out. It sometimes led to a Declaration of Trust with a right of preemption included and an agreement to pay the mortgage jointly even if one party had moved out. Giving those entering into a legal document time to think and pause for thought before signing up is no bad thing and benefits everyone.

NEW MISSELLING SCANDAL

First, they take the witnesses away from mortgage deeds and then they make LPAs fully digital. Yes, that’s the next move in the drive to digitize everything legal. The OPG wants to make an online tool to make it possible to create LPAs without the so-called ‘wet signature’. Will there be witnesses? Will they have to be physically present? I hope so on both counts, but such an online tool will run the risk of meaning it will not occur to those using it that taking trusted impartial legal advice may serve them well. As I have rehearsed previously in this column, what we can do as solicitors is add value and offer advice. What a fully digital online LPA tool will do is lull users into thinking they can do it all for themselves and that may lead to woe further down the line. I applaud the OPG for wanting to create more LPAs, but not please at the cost of some of them being ill thought through or worse, created by undue influence or by fraud. I popped up on the BBC Radio 4 programme Money Box recently to talk about Personal Contract Purchase (PCP) Car Loans. Not exactly on topic for a private client solicitor but the story was a tragic one where a listener had bought a new Volvo with a PCP Loan because she and her partner were expecting a baby and wanted a bigger car. Sadly, three weeks after picking up the car her partner died. It was totally unexpected and as you can imagine a terrible situation all round. Not helped by an initially inflexible attitude from the car loan company who wanted to charge a lot to end the contract (penalty clauses etc). The good news is that after the Money Box team got on it, the car loan company backed down and the car has been returned and the PCP loan ended with minimum cost. I was on the programme to talk about how people buying new cars are talked into buying insurances for the car should anything go wrong with that (eg alloy wheel insurance) but not insurance for if something unexpectedly goes wrong with your life which means the car loan is no longer appropriate or affordable. I said I thought that unless such issues where discussed it could be seen as irresponsible lending. It seems to me that it’s a fundamental rule when a person borrows a chunky sum of money that they are asked to think about what if you can’t pay it back because you lose your partner, or your job or you die.

The irresponsible sale of financial products leads to misselling scandals and I worry that unless we stand up for some fundamental rules about how legal documents are entered into, we risk a similar slide into it all being very nice and easy to create a mortgage or an LPA with minimal or no legal advice. And that will not be good. Solicitors will still have work to do including tidying up the messes created, but clients will be the victims of the drive to digitize legal services at the expense of legal advice. “Stop, look and listen before you sign” is my message: we need to tell clients to use the Legal Green Cross Code.