Solicitors' crash sheds harsh light on bankers
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THE Icarus-like rise and fall of two, and possibly more, high-flying solicitors, is a cautionary tale about the inevitable consequences of the greed, arrogance and recklessness that fuelled the Celtic Tiger.
As caution was thrown out the window, so too, it seems, were standards.
Corners were cut by the government, banks and lawyers in the name of entrepreneurial flair and consumer championship, but we are now paying the price for quick fixes and turning a blind eye to suspect practices. For the past 10 years, credit has been cast around like candy to those who could and could not afford it.
Competition drove down the cost of credit, but it also raised the stakes for those banks and borrowers who were willing to gamble on the halcyon days of the property boom and empty construction sites in far away climes.
Pressure
Under enormous pressure to inflate their profit margins, banks rolled out a rule-free red carpet for big-money clients, but how were they duped into doling out over €70m (and rising) in multiple mortgages to two dishonest lawyers who gave them nothing but their word in return?
What first distinguished solicitors Michael Lynn and Thomas Byrne from their contemporaries was their meteoric rise to a standard of living and unprecedented wealth not known to the vast majority of solicitors who ply an honest trade handling wills, helping you buy your home and securing compensation for you when you have been injured.
The duo lived in multi-million euro homes. They drove top-of-the-range cars and drew the envy of their peers who marvelled at their champagne lifestyles.
They serviced property developers and entrepreneurs; saw the mind-blowing wealth the great and the good had achieved and decided they wanted a slice of the action.
They crossed the line between acting as a decent solicitor and running a successful business empire, and failed spectacularly in both.
Trust
In raiding their clients' accounts they also betrayed the reputation of the legal profession and the trust of the general public already jaded by cynicism towards lawyers.
They were able to do so because of a change in solicitors' rules, introduced by the government 20 years ago, that allows solicitors and banks bypass the independent checks and balances needed to secure title when mortgaging residential property.
When the Boland regulations -- which allow a buyer's solicitor to check and register the legal title of a property for both the lender and borrower -- were introduced, solicitors warned of a conveyancing time-bomb. That fuse has now ignited.
Whilst solicitors are bearing the brunt of most of the public anger, banks should not be exonerated in the remortgaging scam. It was the banks who gave their blessing to solicitors giving "undertakings", or the promise of a promise, to check legal title and register deeds in the land registry.
They did so because they couldn't resist the high turnover of property and because others were doing the same.
Like Icarus, Lynn and Byrne flew to close to the sun. Unlike Icarus, it's not just them who got burnt.
