and scrapped by the Tories). No sale, no fee packages and fixed price conveyancing offers have been introduced; some estate agents have created in-house conveyancing divisions.
In some ways, the conveyancing world has changed dramatically.
It’s certainly been affected by the credit crunch. For a start, the size of the market has shrunk as the number of completions has fallen off. That’s exacerbated by a less direct impact of the crunch – lenders becoming more selective.
Chris Harris, of Today’s Conveyancer, notes that they are also pushing for more accreditation. “If you haven’t got CQS [the solicitor’s Conveyancing Quality Scheme] you can’t act for Santander,” he says.
Since Santander accounts for one in every five or six homebuyers, removal is a massive threat to a business.
The big squeeze
At the same time margins are being squeezed. Referral fees and soaring professional indemnity insurance rates haven’t helped, but the major factor is an increasingly price driven market. Harry Hill, founder of AIM quoted In-Deed, says it’s difficult to differentiate – consumers are taking their decisions on the basis of the fees charged, and with their finances stretched if they’re making a property purchase, that’s probably going to get worse.
New Licensed Conveyancers are gaining market share, replacing the solicitor’s office with call centres.”
Ian Fletcher, Director of Conveyancing at Move with Us, points to the ‘Tesco law’ that came in over a year ago, allowing companies to own law firms via ABS (alternative business structures). The Co-Operative Legal Services was an early adopter; and, as other firms enter the market, he expects to see price competition heat up further.
Another change, says Stephen Hayter, is that, “When we started in 2001, ‘no move, no legal fee’ was extremely rare – it is now increasingly becoming the norm, which, for the client, has to be good,” but, it means that “conveyancers have had to change their business model to accommodate the abortive work that is inevitable”.
The fallout from these pressures could be huge. Eddie Goldsmith, of Goldsmith Williams, notes that of 11,000 solicitors, only about half do conveyancing, and he reckons only 200 firms have conveyancing as a core business. But ‘occasional conveyancing’ may not remain a viable business model, competing against specialised firms that standardise processes and enjoy economies of scale.
A changing market
There’s a surprising and growing level of fraud going on – criminals cloning solicitors’ firms.” Chris Harris Today’s Conveyancer
Chris Harris (left) says, “The market is dividing between those firms that are doing well and who are making profit, and those that are not.” Licensed conveyancers are gaining share – two, myhomemove and Countrywide Property Lawyers, now both handle more transactions than any solicitors’ practice – and the old-fashioned high street firm is being replaced by a call centre model.
That’s making life tough. The past year has seen several failures; Cobbets, in Manchester, collapsed and Atteys is in administration, according to the Law Society Gazette. Atteys wasn’t a small firm – it was a large, reputable business. So if Atteys couldn’t cope, things must be very hard indeed for the minnows.
Harry Hill bases his business model on buying and consolidating smaller firms, but, surprisingly, he complains that there are few firms out there worth his buying, claiming that many are effectively bust.
The difficulty with a commodity conveyancing market, of course, is the scale of losses when things go wrong. The Legal Ombudsman’s report shows how house sales can fall through because of lawyers’ lateness in processing the transaction. That’s bad enough, but a half-baked transaction can do even worse damage. The Legal Ombudsman notes that the maximum compensation he can order, £35,000, is often not enough; but even increasing it to £50,000 isn’t going to help many purchasers.
Chris Harris warns, too, that, “There is a growing and surprising amount of fraud going on.” The Solicitors’ Regulation Authority issued 22 warnings in 2012 (8 so far in 2013) about criminals cloning solicitors’ firms, and now says that an entry on Find a Solicitor should not be taken as evidence that the firm is genuine – conveyancers should make their own checks (for instance with Lawyer Checker, which verifies both the account number and sort code).
Working with the right people
Few clients will have enough knowledge to choose between conveyancers on anything other than price. It’s down to estate agents to help with the selection, and increasingly firms are working with a panel of conveyancers rather than leaving clients and applicants to find their own. But they need to capture the opportunity early on, says Richard Megson at ETSOS, “Agents should look for a service that allows them the flexibility to capture the Conveyancing Instruction at the right time, at the point of listing or a little later when an offer is received. Having control at an early stage is important.”
Agents are faced with the need to devote time and effort to managing conveyancer relationships if they choose individual solicitors, but systems can help with this, ETSOS isn’t a panel manager so the agent can refer their work to solicitors of their choice and the system helps manage them by allowing for single or multiple quotes from one or more solicitor firms.
Justin White, Sales Director at Cunningtons Solicitors is focused on service, “Estate agents should look for a service that doesn’t just concentrate on conveyancing but on helping people move, working together as one team. Estate agents need a service that has the right attitude towards them and one that values their feedback as a gift. It should feature people who have the skill to turn a problem into the next customer service opportunity.
“There needs to be an easy online and compliant process for estate agents to instruct the conveyancers should they require a referral fee. The conveyancing service should heavily focus on the need for high standards of best practice and good working relationships at all times; a service that is 100 per cent committed to understanding the needs of the agent and considers them as the customer too.” Naturally, agents should also carry out basic
business checks. What is the financial standing of the conveyancing firm? (That’s particularly important given recent failures; what happens if the conveyancer goes bust before exchange of contracts? Or between contract exchange and completion?)
Technology and management
Technology also needs to be checked. These days, when house purchases start with a portal search, the old-style paperchase is no longer acceptable. Myhomemove, for instance, provides realtime updates by smartphone – avoiding the frustrating game of ‘telephone tag’. Agents should also find out what technology conveyancing firms are using to handle the legal process, such as ETSOS that can order searches online.
Agents need to capture the conveyancing instruction at the point of listing.” Richard Megson ETSOS
Richard Megson (left) at ETSOS says, “Whilst clients will often phone solicitors or agents it is important that the conveyancing service offers a degree of visibility to the client so online case tracking is important both as a marketing tool but also as a way of managing enquiries.”
Case management is also important. Will the firm provide a dedicated conveyancer for the duration of the case? Estate agents need to look for efficiency and trust in a conveyancer, says Sam Cherry, Director at Conveyancing Liability Solutions (CLS). “They need firms that can work with them to progress a case and where the agent has trust in the systems that the conveyancer is using. So case management is essential.
“You also need to ensure that they have good search contacts and providers that have access to all the required searches as well as a sensible and pragmatic policy on title insurance which can often be used to deliver what the client needs. Knowing that conveyancers are up to date, taking advantage of new and innovative searches such as the new TitleChecker report and that they are CQS approved and so able to act for the lender as well.”
And customer satisfaction also needs to be checked; the agent, after all, is putting its reputation on the line with its choice of conveyancer. Firms such as myhomemove, which claims customer satisfaction of over 95 per cent, monitor their outcomes and can provide detailed data.
Our call centre works by becoming an extension to our conveyancing partners’ business.” Ian Fletcher Move With Us
Ian Fletcher (left) says Move with Us tailors its service for each agent so that the set up process is fast. “We spend a lot of time working with our conveyancing partners at their offices,” he says, “training them on how to sell the service and ensuring that our call centre acts as an extension to their business. This makes sure the customer journey is consistent, unified, and that we provide a winning service for their brand.” That’s a far closer relationship than used to be the case between agents and solicitors.
Innovation in a tough market
Conveyancers have had to change their business model to accommodate the abortive work.” Stephen Hayter myhomemove
Hayter (left) believes old style case management is broken and needs fixing, saying it’s “a shame that many professionals do not want to recognise that the changing property market and environment inevitably leads to changes in the ways that things get done.” Customers expect their bank, estate agent and investment adviser to be available for contact well outside the Monday to Friday nine-tofive; they also expect value for money, so it’s the conveyancer’s job to work out how to give them what they require. The process can’t be insulated from change.
Some conveyancers have really grasped the idea of innovation; CLS provides title solutions and its new product, TitleChecker, has been designed to assist with preparations for a report on title. It also offers ConveySure, a suite of title insurance products. Both solutions, says Sam Cherry, “help conveyancers in delivering efficient and cost effective conveyancing and are at the forefront of helping law firms deal with new requirements from regulators, clients and lenders.”
ETSOS aims for the highest levels of modernity and functionality, having developed a Conveyancing quotation and referral system (QRS) that, says Richard Megson, offers a wide a and unique variety of user benefits. “QRS is easily accessible online and is free to use. It allows estate agents to generate conveyancing quotes and capture more instructions at the point of listing – the unique iPad, iPhone and android applications means the agents can even generate conveyancing quotes in their clients’ homes!”
We’re available until 7pm every weekday and on Saturday morning… and we always return calls!” Justin White Cunningtons
Cunningtons also operates in a more 21st century style than some others… they have a team of ex-estate agents who work alongside the conveyancers and with the estate agent to ensure that we all work together as one team. “We are available until 7pm Monday to Friday and on Saturday mornings, says Justin (left).
“We have a bespoke web-based client quote-and-instruct process for agents to use within their branch. It’s fully compliant for disclosure of referral fees and is supported by a management reporting facility. This service also provides the agent with automated milestone alerts when they are out of the office and links them into case notes when they are in the office. And we always, always return calls – always!”
The good news
The other point is that estate agents who treat the selection of a conveyancing firm as purely a due diligence process are missing a trick in today’s market. Conveyancers can, if properly managed, contribute to the growth of an agency business. There are referral fees, for instance, possibly as much as one third of a total £600 fee. Hayter says referrals started at £25 in 2001, but are now much higher, despite the fact that overall fees have hardly
Perhaps more importantly, agents who have a strong conveyancing service can use that as a competitive advantage to win instructions.
A number of agents are now either bringing conveyancing in-house, or using white-label products. KFH established its own conveyancing brand, using eight London law firms; Move with Us director Ian Fletcher says, “We have seen from our own figures the success that panel managed conveyancing can bring,” quoting 33 per cent growth in the last 12 months.
Still, conveyancing is never going to become easy. Harry Hill referred a while ago to our “feudal methods of property transfer”, and while laws are changing and the Land Registry is doing its bit, it’s a complex process with some fascinating – and awkward – anomalies.
Agents should choose a service that concentrates on helping people move, working as a team.”
Ian Fletcher believes that greater transparency would help. It’s already happening in part, he says, now that the Consumer Protection Regulations require anyone marketing the property to identify major issues up-front.
“Put the seller in charge of resolving issues,” he says – just as developers already are. “Developers routinely achieve 14 day exchanges simply because they provide all documentation upfront, identify title issues, and provide solutions to those issues with the contract pack,” he says; “that speeds up the whole process and making it much more transparent.”
A couple of things are quite clear about the sector. One is that it’s consolidating – larger firms are going to get larger, and some smaller firms will almost certainly drop out. The other is that customers are getting good value, with conveyancing fees as low as £90 in some cases.
That raises rather an uncomfortable issue for agents. An estate agent, with a relatively easy job, and no legal qualifications, can get £3,000 for a property transaction on which the conveyancing firm – full of well qualified lawyers, and often dealing with tricky leasehold or title issues – might charge only a few hundred.
Whether or not that’s fair, it’s not guaranteed to make conveyancers happy with their lot. No wonder solicitors in Scotland often double as estate agents – as do French notaires. Whether English conveyancers will be tempted into the market remains to be seen.