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The future of conveyancing

1 November 02

Survey of opinions as to how the profession will adapt to the age of e-conveyancing and paralegals

by Roger Mackenzie

Four years on, little has changed to alter that perception. Some of those inclined to look back may have retired, and the gallop towards automated registration of title to land may have intensified the trepidation, but as yet no-one’s quite sure what the future might hold in the business of conveyancing.

In his 1998 article Professor Robert Rennie wrote that the “solicitor still enjoys the central role in the conveyancing transaction” and in future the “role of the solicitor will become even more critical”.

He’s still of the opinion that the solicitor will be pivotal to the house buying and selling process – particularly if the seller’s survey is adopted as is under discussion at the Housing Task Force.

“If the conveyancing system is altered to provide for the seller’s pack, the solicitor may have an even more important role to play because selling clients may require to go to the solicitor earlier to ensure that they comply with any obligations in any new system.”

There is, of course, a school of thought that says the role of the solicitor will diminish –  in some firms it has done so already. As the age of electronic conveyancing takes hold, much of the work will be delegated to legal executives.

Dunfermline firm Peddie Smith Maloco have been at the forefront of the streamlined approach to conveyancing, stacking their firm with paralegals operating bespoke case management packages to meet the need for low cost, no frills conveyancing. Kyle Peddie is convinced it’s the way forward.

“Fees are being dramatically reduced due to increased competition and control being exercised by institutions. The work is going to be increasingly polarised as the tradition of people walking along the high street and going to the solicitor as the first point of contact disappears. Increasingly clients will be referred to the solicitor by estate agents, lenders and big mortgage brokers.”

Without adequate IT, firms won’t survive, according to Peddie.

“Firms can’t do the volumes if they don’t have the technology or resources to back it up. It’s only a matter of time before we have full e-conveyancing and by that I don’t mean exchanging e-mails, but a fully web-enabled case management platform with multi-level access for various parties. Solicitors might say I’ll be retired in ten or 15 years, but in five years a maximum of five or six firms will be doing the vast majority of the work.

“A firm like ours isn’t perceived as being a big player so we have to work twice as hard to make an impact and be one of the firms who will be the preferred option of the institutional lenders.”

Robert Rennie, now a partner in Harper Macleod, said “he had never understood why people think that there is some merit in squeezing conveyancing fees in a downwards direction”.

“I would have thought it was more important to concentrate on the standard of service. So far as domestic conveyancing is concerned, on an average basis fees are very low, especially when one compares them with the costs of house transfer in other countries. I do not see ARTL making fees cheaper. We all know, in any event, that the contractual phase of a conveyancing transaction is now much more complicated than it was before and although I would expect there to be electronic missives before long that does not mean that the missives will not themselves be just as complicated.”

While investment in IT has been a feature of their approach to conveyancing, Peddie insists: “It won’t work unless you get the culture right.

“Everything has to be systematised and that could be a big job in a practice where older members might be reluctant to sit in front of a PC and do their own work.”

At PSM, work is largely done by legal executives with partners on hand to help with complex issues. Peddie makes no apologies for that approach.

“Legal executives are better at it than we are: they have more time to devote to clients and it enables the partners to be more focused on business development.

“Our legal executives are a self sufficient unit so because they need no support the work becomes extremely profitable and you can expand dramatically because of that.”

Peddie’s vision is that soon firms will shy away from employing legal assistants in the conveyancing market.

“Solicitors will have to learn to delegate and be confident in who they are delegating to”.

But are clients generally happy to know that they aren’t getting the services of a solicitor when paying their conveyancing fees?

“We are upfront with clients about who is doing the work. Legal executives are confident but they know their limitations.”

It’s a vision David Adie of Glasgow firm Adie Hunter firmly rejects.

“We had a client in here this morning who spent about an hour going over missives. The client does not want to get a text message or e-mails saying this has been done. She wants to sit down with someone and relate to them. Yes, there are certain types of business where it is very easy to sit and click a mouse, churning it over in the kind of hamster-in-the-wheel type of operation and that already happens. But certainly in the market we are in, which is quality private client practice, they want a solicitor.”

Adie also has concerns about the security of electronic transactions.

“I think for the majority of the profession, there is a bit of a resistance. From the point of view of changing our own work methods I do not see my function as someone who is going to click a mouse all day. It is more important to make contact with the clients.  But it is not going to change the solicitor’s role that much, it is only a new way of doing what is already done on paper. What’s important to the client is to be able to talk to their solicitor.”

He’s also concerned about the excessive use of paralegals.

“I think the PI insurers might be interested in the way in which some firms operate. There is no real quality check on paralegals, some people call themselves paralegals and are very good and should be doing law degrees, but others claim to be and maybe aren’t of the same quality.”

Whatever your view, it’s inevitable that conveyancers will have to adapt their working practices. Paul Carnan of Blaney Carnan in Glasgow presents a buoyant picture of what that future role might entail.

“In the future (and I suggest within the next five years), conveyancing will be front-ended and conducted entirely online. Far from being simply the processor, the solicitor will play an increasingly important role in the transfer of property. It will be possible to obtain much more information about property at the click of a mouse. With that wealth of information that will be available to them, clients will require detailed, experienced, impartial and independent advice to help them sift through and interpret the material. As e-conveyancing expands to fully embrace automated transfers of land facilitated by electronic signatures, automated payments and e-lodgements of documents, the solicitor will become the electronic portal through which all property transactions will be channelled. This is all to the advantage of the profession as the clients’ perception of the solicitor changes from being ‘a necessary evil’ to being a facilitator.

“Although it may be several years before legislation and, indeed, technology, permit a truly electronic, paperless environment, we should be reforming our procedures and protocols now in anticipation of the inevitable change.  Also, we should not simply be thinking, “How can I automate the way I presently conduct business?” but, in fact, changing the whole way things are done.  Admittedly, however the easiest way to manage such change is gradual.  That is why I suggest, to begin with, we shift the emphasis from an offer-to-purchase to a Classic Offer to Sell and amend our procedures towards a front-loaded, open and transparent process. As electronic developments occur, the Classic Offer to Sell and the protocols surrounding it can be adapted to suit changing circumstances. As a profession, we have the opportunity to re-establish our role as the property specialist who is the client’s first port of call. To do so, we must grasp the nettle that is e-conveyancing. We must recognise that our existing practices and procedures were designed for a more leisurely age and are now out of date. We must adapt and innovate and lead the practice of conveyancing into the 21st century by embracing e-commerce fully and without reservation.”

So where will this leave the conveyancing solicitor? Is there a profitable future in domestic conveyancing? For a generation of solicitors the response may be to shrug their shoulders and conclude it won’t impact on them prior to retirement. The old methods can prevail for now.

But what about the young conveyancing solicitor. Can they expect to be passed over as multi skilled, lower cost paralegals, take their place?

Twenty-eight-year-old Michael Graham, an assistant with Ketchen & Stevens in Glasgow, believes that with the right IT training, a qualified assistant can still be an effective and profitable operator.

“A failure to embrace IT will result both in the firm concerned finding it difficult to compete in an increasingly price-sensitive market and their being unable to progress transactions with the speed which clients expect. However, with a relatively small degree of training there is no reason why solicitors should not be as IT-literate as paralegals are perceived to be. Not only will this enable firms to remain competitive in terms of their fees, but I expect that it will also have a bearing in terms of the outlays which clients are prepared to pay in terms of the reductions in costs as a result of using services such as Registers Direct and electronic registration of deeds in the future.

“It is true that there are many very competent conveyancing paralegals. However, the ability of the individual to carry out the work required inevitably varies with paralegals as it does with solicitors. Accordingly, I do not think that it is unreasonable to assume that the work of paralegals on the whole requires a greater degree of supervision in comparison with work being undertaken by qualified solicitors.

“In our experience, clients expect conveyancing transactions - which it should not be forgotten are generally the greatest financial commitments most individuals will make in their lifetimes – to be carried out by a qualified solicitor and appreciate that it is done by solicitors at this office when they contact us for an estimate of fees. I think that increasingly discerning clients will continue to require to balance the level of fee against the level of service, bearing in mind the nature of the transaction and the legal issues involved.”

So what crumbs of consolation does Peddie offer to firms reliant on residential conveyancing.

“Those at the top end of the marketplace, charging property finder’s fees will always do well, but below that survival will be difficult. Very few firms work out how much a conveyancing transaction costs them. How can you run a business if you don’t know what things cost? In so many cases, no-one has looked at it and thought are we making money out of the transaction.

“Conveyancing purists don’t like me, I’m demeaning their job by calling it a process, but the vast majority of cases are just that and as long as clients are looked after you can mechanise the process and make money from it.”

David Adie is “cautiously optimistic” about the future.

“In many ways I think electronic conveyancing might put the solicitor back in the forefront of the transaction in the same way as a notary is in the continent, because only solicitors will be authorised to do certain things such as submit online registrations, so it is time maybe the profession stood back and said right we are central to this process, let’s do it, do it well but also let’s charge appropriately for it and act professionally.  Stop slitting each others’ throats over a question of cost and concentrate on service and efficiency.”