I was drafting this Sale and Purchase Agreement wherein one of the clause pertains to the payment of the balance deposit money by the purchaser to our firm to hold as stakeholders until a caveat memorial number in obtained and then to release the money to the vendor.
After vetting the draft, the purchaser reverted with an email saying:
If we pay the full and solicitors not responsible and he refuse to pay, how?
Here’s my reply:
All legal firms are required to be insured under the law, our firm is insured up to RM6 million. A lawyer hold the purchaser's money as stakeholders in trust and deposit the money into the Client's Account which cannot be withdrawn by the lawyer without client's consent or authorisation. Therefore if a lawyer commits breach of your trust (let say, took your money and make a run for it), the firm is liable to pay.
Many people (if not all) don’t understand why should they hire a lawyer when he/she basically just do some paper work (it seems), affix a rubber stamp with the lawyer’s name on the document to attest it and then charge them a hefty legal fee for it (telling people it’s a standard fee).
They don’t realise the reason why they are coming to a solicitor’s office for an agreement. Why can’t they just go any where, and get their signature signed by anybody, bottom line is the document is witnessed, isn’t it?
Why you go to a lawyer is because:
Legal firm has a Client’s Account, where client’s money could be deposited. This account is governed by law and untouchable by the firm or the lawyers. As such, the lawyer or the firm acts as the reliable middle person (“stakeholder”) and receive money or document of title of the purchaser and the vendor and are responsible to keep them in safe custody. In case of lost or manipulation, the firm is insured and is able to repay you if they are liable. And that’s why you can have peace of mind with a firm handling your documentations.
Lawyers can be trusted not just because they are lawyers, but because they are insured!