The changing shape of the conveyancing market

20 April, 2020

Note: This article was written before the Covid-19 lockdown

Bill Gates once said “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten,” and that so often proves to be true.

Now more than ever the pace of change is rapid, with new technologies changing and constantly re-shaping the way we work. And, after a long period where it felt that little was changing in the world of conveyancing and the work of the conveyancer we may well be facing a new era.

While we can predict certain shifts in the market with confidence – in particular the inevitable move to electronic conveyancing – how they play out over the next decade and what it means for the shape of the conveyancing market is less clear.

Alternative business structures

Things have changed a lot in the legal market since the Council for Licensed Conveyancers (CLC) licensed the first alternative business structure (ABS) in 2011.

Law firms have floated, they have accepted private equity and they have combined with other professionals with all of the Big Four accountants now offering legal services through ABSs.

There are now more than 1,000 ABSs providing legal services. It may not have been the ‘big bang’ of Tesco Law, but steadily the legal market is transforming. By 2030, supported by technology opening up new ways of providing services, this is likely to have accelerated.

Investment in new technology

Where will the investment in this new technology come from though? This is tricky in what is, and has always been, a fragmented market.

Compared to the lending side of the market where there are six lenders who account for 70% of all lending, there are more than 4,000 active conveyancing firms.

Within that though there are around 200 specialist conveyancers, who account for around 40% of the market, who have the means and desire to invest in the technology that will fundamentally change the way they work.

The legal sector is also seeing changing forms of finance with private equity and venture capital amongst others providing new ways for businesses to invest in future developments.

More than just the money to invest though, is the desire to invest and progress that change. Conveyancing has been seen as an inherently conservative sector of the economy.

Tales of property law firms that file print outs of emails, do not have a case management system and don’t even know what electronic signatures are do little to help the cause. But is this approach changing?

We think so, there are a number of existing firms, as well as newer business with different approaches who are developing and see the value and potential to be had from digitising the sector.

Digitisation

One conveyancing practice that is seeking to digitise what they can of the process is Juno. It is looking to give clients an experience that is closer to what is expected from other online transactions such as buying groceries or insurance.

This involves giving greater clarity about the options available to ‘purchase’, and a clear overview about the whole process, along with exactly where clients are in that process. It will undoubtedly only be a matter of time until others start to follow suit.

While long established firm Enact is leading the way with the Land Registry’s digital mortgage service; and others such as Premier Property Lawyers already offer an online case-management service that allows clients to manage their case 24/7, via a smartphone, tablet or PC.

Estate agents

More fundamentally it has been questioned whether conveyancing will survive as a service delivered by separate providers or become part of what others and especially estate agents offer.

But apart from very limited examples, large estate agencies have not entered conveyancing in a major way, and one of the reasons for this is due to the cyclical nature of the housing market.

These fluctuations have historically been managed by flexing estate agency staff in branches, but it is far harder to flex conveyancing professionals.

Another consideration for the corporate estate agents is whether the figures stack up better with the current system, where they receive referral fees from independent conveyancers, or by having control of the whole process.

But, as technology plays an ever- increasing role in the conveyancing process, automation will allow the conveyancer’s role to focus on the advisory aspects of their job. Alongside this, figures on active firms in the market indicate that consolidation will continue with fewer firms providing a more specialised service.

So, conveyancing as an industry, as well as individual practising conveyancers, are facing huge shifts in behaviour and ways of providing services to clients.

Data

The future is going to be all about the data. But while machine learning, artificial intelligence and blockchain will remove much of the grunt work from the process, fundamentally the purchaser will still need to receive advice as to what the data means to them.

Digitally supported transactions that are controlled by the consumer, are likely to be the way forward. This could be in the form of an app on smartphones, or an online portal.

Once all the data is collated automatically, the consumer will then be able to communicate with their conveyancer in a way convenient to them, for example, online chat facilities, voice calls, video calls or the traditional face to face meeting.

At this point the conveyancer will be best positioned to advise the clients of the impact of that information on their intended use and enjoyment of the property and the suitability of that property for their needs.

And while savvy millennials and silver surfers may be very comfortable with a more digital approach that requires less human interaction, it is important to balance that against those who will be less comfortable.

Even for digital natives, it’s part of human nature to want some person to person interaction, and in some cases very necessary, so businesses will need to be mindful of remaining accessible to all.

Consumer protection has to remain at the forefront of all development. It will not be progress if we have seamless, digital transactions but consumers aren’t adequately advised on what they’re buying, and don’t feel that they have had the opportunity to ask the questions they need in order to understand the process and transaction.

As much of the administrative side of the role becomes automated, the focus will be on advisory work where the quality of service – as rated by external quality indicators along with comparison or feedback websites – will be decisive in where instructions go.

Technology is changing the industry, and it is also impacting the working patterns of conveyancers, as new ways of practising arise, such as the Solicitors Regulation Authority’s freelance solicitors.

The challenge will be around whether individual conveyancers want to take on the personal risk of running their own business or do the same thing as a home-based employee of an existing firm, supported by technology for remote working.

New skills

What are the new skills conveyancers may need to succeed in this new world? It may be that the curriculum for trainees needs to change and that ongoing training support is provided for those who are already working in conveyancing.

It raises the question of whether it will be the role of regulators to set competences in this area, and that is something that will need to be explored as roles evolve, but at the moment as the role changes, conveyancers will need to invest in training and skills acquisition for themselves and their staff.

Soft skills such as communication skills, listening skills, and empathy will become ever more important as the ability to build relationships becomes even more central.

New business models are likely to emerge and legal businesses may need to restructure to ensure they can compete. This may entail different forms of entity and different funding models.

Disruption in many sectors has been driven by consumers availing themselves of the new technology and so driving change. But given that home purchases are a rare occurrence for most, consumer influence may be less powerful and less effective in driving change.

So, the question the industry will need to ask itself is where will the power and influence to drive change reside?

Discussion paper

The CLC has published a discussion paper Conveyancing 2030 that explores six areas for future developments and readers are encouraged to join in developing the thinking and contribute to shaping what conveyancing may look like in 2030.

You can find the discussion paper on the CLC website and you can have your say by emailing Conveyancing2030@clc-uk.org or completing an online form.

 

This article was first published by Mortgage Finance Gazette

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