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16 December, 2021
It was the diversity of the conveyancing market – ranging from volume providers to small law firms that acted on a handful of transactions – that meant it was able to handle the huge surge in work caused by the stamp duty holiday, a roundtable hosted by the Council for Licensed Conveyancers (CLC) heard recently.
It was clear that conveyancers had been stretched to the very edge of their capability by the volume of work, combined by the impact of Covid-19 on staff.
Participants also suggested that the pandemic has accelerated conveyancers’ adoption of technology by five years and led to fees going up for the first time in many years.
Please note that the roundtable took place before the recent cyber-security incident at the Simplify group.
Incredible stress on sector
Mark Montgomery, chief strategy officer at Simplify, the UK’s largest conveyancing group, said: “For over 12 months, conveyancers across the sector have probably been running at 140% or 150% of normal capacity in an environment where, for many, their processing efficiency has been compromised because working from home has forced different ways or working.
“Every conveyancer wants to do a good job, but inevitably, being overloaded has meant a hit on service. The stress that that has caused across the industry has just been incredible.”
Andrew Lloyd, managing director of property data company Search Acumen, added: “The industry as a whole is exhausted – the supply chain has been in exactly the same position as conveyancers. Whether it is local authorities who are being asked to provide due diligence information or the other third parties involved in providing signing services, all of it has been stretched to its absolute limit.”
A survey by Teal Legal last Christmas found that 50% of conveyancers wanted to leave the profession, such was the level of stress, director Sally Holdway noted.
And yet the demand from consumers has been met and, for Mark Montgomery, that is due partly to the shape of the market.
He said: “Some 40% of the market is delivered by the 5,000 smallest firms, and the smallest of those are the equivalent of the oil-fired power station that gets switched on once a year. They are still highly important to being able to deal with peak demand.
“We would not have got through March and June without firms that normally do almost no conveyancing jumping in and doing more. Whatever we do or think about in terms of technology adoption, we have to recognise that, if you exclude those firms from the market, all our aspirations for transaction speed go out the window if everybody is too busy and there is no flex in the system to deal with that excess demand.”
Sustainable fee levels
Rob Houghton, the chief executive of Reallymoving, which owns The Law Superstore, said the “massively supply-constrained but huge-demand market” translated into an average 44% rise in conveyancing fees at its peak.
They have fallen back a little since and the question is whether that will continue. “A lot of people are saying that they have seen conveyancing fees get to a long‑term, sustainable level,” he noted.
A key development, he went on, is that more lawyers and consumers now understand that they never have to meet. “For lawyers, it is significantly increasing the total addressable market. Many more firms are increasing their market footprint because they are happy to pitch to people on the other side of the country.”
It has been a long time since conveyancers have put their prices up rather than down. Beth Rudolf, director of delivery at the Conveyancing Association, reckoned that the “chase to the bottom caused half of the problems that we have seen”.
She explained: “How can you afford technology when you are not making a profit? It has to be a good thing that the market has risen, and that people can be properly resourced. Particularly with transaction times of 18 weeks, your pipeline turn and the cash coming in has been really tricky.”
No going back
Either way, the market has to move on – there can be no going back to the pre-pandemic approach to technology in particular. For Andrew Lloyd, now is the time to ask, “how do we create an industry that can do this kind of volume and capacity in a more efficient way?”
Sally Holdway said the “sit back and see what happens” mindset has changed. “Firms have realised that it can be such a boon to their practice in so many different ways, not just efficiency, but improving risk management, that we are now starting to see a more strategic approach.”
The pressure is also coming upstream, she observed. “We get quite a lot of estate agents or panel managers who come to us and say, ‘We are looking at this process as a whole. Can we start to change the chronology of conveyancing to make things go faster, more streamlined and underpinned by technology?’”
John Reynolds, chief operating officer of Coadjute, a blockchain network connecting the software platforms used across the property market, said the conversation on technology has moved on from being about “customer experience niceties” to “ core business resilience,” with Covid businesses having to go entirely online overnight.
This meant that customers started asking their software providers, not only “how can you make us become more efficient internally” but “how does your software help us connect safely and securely online with brokers, estate agents and panel companies?”
“This immediate shift from hybrid online and face-to-face work to lockdown and fully online sparked a tremendous amount of digitisation. The pace of services opening up and joining up advanced five years in five months, to the extent that even competing platforms connected up to provide a shared view of a transaction’s data to their users.”
Grabbing the opportunity
There was recognition that the CLC is a facilitative regulator – engaging with its community to encourage innovation while ensuring client protection – leading to discussion about the need to spread this message and to what extent it could help in giving conveyancers the confidence to adopt technology.
Certainly for Mike Harlow, the deputy Chief Land Registrar, those with leadership roles in the sector “need to help people understand where this is heading”. He added: “Explaining and making the conveyancer an intelligent consumer will accelerate healthy change.
“We recognise that we are talking about technologies that are well established and can grab the opportunity. The difference is that, before Covid, if you talked about these things with the sector, you would hear a ‘Yeah, maybe. I will look at it. That is something that I might do’. Now it is ‘We had better do that because otherwise we are not going to be as resilient to something like this in the future.”
While the sector should be proud of how it kept the property market moving, Mr Harlow said, “it could have been better if we were better set up”.
“We all recognise that, Land Registry included. There is so much that we can do, and now, culturally, there is the willingness to adopt it and see it happen quickly. You can see the consolidation that is going on in the industry. The sector is maturing.”
Tech investment is permanent
Andrew Lloyd characterised a view in the legal sector of technology as a one-time investment, rather than a “permanent commitment to continually reviewing and updating” it.
He went on: “Lawyers understand as consumers that tech moves on, but as business owners, they think it is a case of ‘I bought the case management system in 2008. What’s wrong with that?’
“As regulators and industry influencers, there has to be an understanding coming out of this period of change to say: ‘Tech investment is permanent. It is a line item on your costs on an annual basis, and you have to, if you do not understand it, hire somebody who does and get on that.’ Otherwise, you will be the small law firm that in five years does not exist.”
Heather Crichton, the general manager for industry readiness at Pexa UK – an Australian conveyancing technology company – acknowledged that this is a good time to be moving into the UK to ease some of the industry’s pain points with a proven digital solution but found most conveyancers were overwhelmed by a range of options.
“What we have learned from that, and what we hope to bring to the UK, is a more human‑centred design approach that meets the current and future needs of the sector.”
At the same time, Geoff Dunnett, managing director of Shieldpay, which provides managed third-party accounts, cautioned about the need to take “measured baby steps”. He explained: “We can wax lyrical about where we want to get to, but how do we practically get there and improve the lives of people along that way and allow that 40% [of the market made up of smaller firms] to deliver more and provide as good a customer service as some of the others?”
Another push could come from demonstrating that technology can improve firms’ risk management and in turn the cost of their professional indemnity insurance. And that would ultimately filter through into prices, Rob Houghton predicted, making firms more competitive as well.
“There is a market route to achieving technology adoption. It is not necessarily the only source of impetus: the market will have a significant role. The firms that are able to articulate the benefits of the technology will clearly gain.”
Single source of truth
Shorter term is the work of the Home Buying and Selling Group (HBSG), a coalition of organisations from across the property industry working to improve the process.
Beth Rudolf reported that the delayed pilot of reservation agreements is now moving ahead, while recognising that on their own they will not make anybody’s life better and will add another step into the process. The pilot will be looking at the extent to which upfront information about the property needs to be part of the package so that the buyer is only locking themselves in when they know what they are buying.
Related to that is the Buying and Selling Property Information (BASPI), a dataset definition launched earlier this year that is designed to be the ‘one source of truth’ when it comes to information about a property. Ms Rudolf said the hope was that, with Law Society support, it would move from a dataset to a form that can be used for the conveyancing process.
“In the HSBG’s upfront information group, there has been a huge amount of work around how we could get the consumer and the industry to adopt upfront information, and indeed whether we should. There is a discussion around having a logo on all of the portals saying, ‘property pack available’ where certain information is available so that the consumer can choose properties suitable for them and their lender’s requirements.”
Alongside this is the property logbook, a digital asset that will contain all of the property’s history. This will save a huge amount of time if it is a reliable source of information but will take a long time to roll out as it will likely only be created as each property is sold and will need a trust framework to ensure that the provenance of the data is known and reliable.
Stephen Ward, director of strategy and external relations at the CLC, said the event, held on the eve of the last day of the stamp duty holiday, also provided invaluable insight into the question: What can the regulators best do to help the market develop?
“We try to be an engaged regulator. We are told we are, so what more could we do? We are very conscious of entering a period in which we might see large-scale and rapid change, or certainly the opportunity for that, and we want to support that.
“We have positioned ourselves at the fulcrum of change by facilitating interaction between different groups of stakeholders, including professionals, suppliers and, of course, clients themselves.
“Innovation is not an end in itself, but we see major potential for it to improve consumer protection and how the housing market functions.”