If the recession has achieved anything it is to confirm that most business or economic predictions should be taken with a pinch of salt. But my prediction for 2010 is, I suspect, safely mainstream.
There are signs of improvement but we are heavily dependent on growth abroad to fuel this progress. The heavy burden of national debt has removed any realistic hope of returning to the excesses of the past and now more than ever, any business that seeks to prosper needs to be lean and efficient.
So how will residential conveyancing feature in such changed circumstances?
First, as legal capacity will initially outstrip demand home movers will seek out lawyers who treat them as clients rather than customers. They will want lawyers who display high professional ethics and put clients’ interests first.
The mistrust of professionals due to the banking crisis has left no adviser unscathed but unlike many in the home moving process solicitors and licensed conveyancers are supervised more strictly than ever. Indeed, the need to comply with high standards may drive many out of the market.
Second, firms wishing to prosper must take it as given that they will be required to provide a service that is personal and tailored to the individual requirements of movers.
It will not be the efficiency of IT processes or scale that reassures clients, it will be the delivery of a service whereby individuals’ concerns are addressed in a timely and effective manner, delivered with the help of efficient IT.
Third, lawyers must provide a service that is good value for money compared with competitors.
Good value does not imply that a service must be cheap. It is a myth that most people buy professional services on price. Some do but most realise that when they are dealing with the most important transaction of their lives, quality is key.
So high standards, personal service and value for money will be necessary whether a conveyancer is targeting the top of the market or lower down the scale, and whether its business is direct or referred.
Which will be the leading competitors as the market improves? Clearly, those that understand and have equipped themselves to satisfy movers’ buying criteria.
The following points may give some indication of how the conveyancing market is consolidating around the quality proposition.
- In England and Wales more than 8,000 firms have provided residential conveyancing services but approximately half of that number are single or two-partner practices, often with limited resources for IT investment.
- It is becoming hard for smaller practices – especially those with poor claims records – to get professional indemnity insurance at a reasonable cost, or at all.
- The Land Registry is moving towards an electronic methodology for title registration. This will marginalise firms that are unable to adequately provide this form of delivery.
- Lenders are concerned about the extent of mortgage fraud perpetrated by complicit professionals – solicitors, valuers and brokers. No matter how intensely the Law Society and others lobby to the contrary the trend of lenders limiting membership of their conveyancing panels will gather pace.
- There are signs of polarisation among providers. It is particularly interesting that a respected industry body says that of the 8,000 firms mentioned, 760 carry out 60% of all activity.
Conveyancing will not go away. On the contrary, it is likely that a release of pent-up demand will soon boost moving activity and in the longer term a growing population with a need for new homes will fuel further growth.
In England and Wales, a reasonably buoyant home mover market has, in the past, produced more than a million transactions a year. In the depths of the recession that fell to about 600,000. It’s not much better now.
It is reasonable to assume that some improvement in the market will drive movers and referrers towards firms that can show they are able to provide the quality of service now demanded by the market.
It’s often said that change represents both an opportunity and a threat, and the crunch and consequent flight to quality is an opportunity for growth for conveyancing firms that are financially strong and technologically astute.