Conveyancing is becoming marginalised by all parties within the property transaction, some solicitors believe. With many bulk conveyancing firms emerging in recent times, there is a concern that the profession is increasingly commoditised by those who can provide quick transactions at comparatively low prices.
Moreover, residential conveyancing attracts around 45% of all PII negligence claims and more than half of these claims are driven by the lender, whose ever-changing requirements ensure that adhering to the CML handbook remains a thorny task.
The concern amongst many solicitors might be whether estate agents and consumers, ever eager to push through the transaction at speed, understand that to do so is often at the cost of due diligence and accuracy.
TM Group managing director, Paul Albone, was fortunate enough to attend the recent Law Society Gazette roundtable which was assembled to discuss these issues. This article summarises the extensive & lively conversation that took place and presents some of the solutions that those on the roundtable offered to help deal with some of the forces at work within the property transaction that increasingly place pressure on conveyancers.
The discussion began off-topic, albeit positively, with the consensus that the property market in 2014 is moving well and that transaction volumes are now typically 10% higher than last year. The recent Home Moving Trends Survey, conducted by TM Group in partnership with the Property Academy, revealed some of the issues that conveyancers face, most notably the influence that estate agents have upon consumers looking to instruct a solicitor to do their conveyancing.
One of the major risks identified by the roundtable was the adverse effect on profits that estate agents’ activity can have. Because of their influence on the vendor, a solicitor can’t afford NOT to engage with estate agents and indeed, it is now paramount to build a relationship with them as, for many firms, it is the major source of business.
However, with estate agents keen to prevent the transaction from breaking down, you not only have the vendor looking to accelerate the process but also the estate agent. The volume of transactions is increasing but with fewer surveyors operating in the market currently, each transaction is taking longer.
The modern age has brought about consumers who expect and demand instant results, which has further exacerbated the need for quick transactions.
Furthermore, there is also a squeeze in profit margins. When firms pay referral fees to estate agents to receive new custom, it means that very little profit is actually maintained from an instruction.
The knock-on effect of this is that firms need to employ cheaper, more junior staff to do the actual conveyancing, who frequently aren’t as qualified, experienced or as amply supported, and this is where much of the risk arises.
The solution, then?
One suggestion was for communication to be made better between all parties. If conveyancers could adequately explain to consumers why their services come at a premium, it might relieve some of the pressure on profit margins and enable them to charge higher prices.
Pleasingly for many solicitors, the recent Home Moving Trends Survey reveals that just 18% of those surveyed chose the conveyancer that quoted the cheapest price. Perhaps consumers aren’t as price conscious as the roundtable members perceived?
However, it was also felt conveyancing as a legal service is misunderstood by both the public and by estate agents which suggests that firms need to better explain that conveyancing is not just a box-ticking exercise.
Additionally, if firms could give consumers and estate agents a more accurate picture of the process: likely timescales, the risks involved, the care required, then it would reduce the potential for rushed jobs and ensure that proper due diligence is applied.
And although the influence that estate agents have over the vendor’s choice of conveyancer is growing, firms can still capitalise on their considerable base of existing customers simply by harnessing the power of recommend a friend.
Another suggestion to be considered is the use of technology which could help automate parts of the process. This would help firms to keep up with the demand of speed, but importantly would allow conveyancers the adequate time and freedom to recognise the nuances of the transaction that require the human touch.
Nevertheless, with bulk conveyancing firms not likely to go away any time soon, it is important for smaller or more niche firms to understand exactly what their strategy for winning business is: do they look to compete on high volume/low margin business or alternatively, to carve out their own path based on legal expertise and customer service?