While some may look upon the recent pronouncement by the British Chamber of Commerce (BCC) that it believes Britain has avoided a ‘triple-dip’ recession due to improvement in the performance of the services industry as positive, I can’t be so upbeat. Slipping into recession again would clearly be bad news but, let’s be honest, it’s hardly felt like we’ve emerged from one large downturn anyway regardless of whether the economy has statistically grown by small amounts at various points over the last couple of years.
The British economy is still bouncing along the bottom and the fact we are even contemplating a ‘triple dip’ is evidence of this. Economic growth remains a far-off promise and it looks likely that the foreseeable future will not be any different. Clearly, there will be sectors that continue to outperform however I suspect there will be few businesses that are completely confident about the future being overwhelmingly positive. Indeed, some might suggest that those who envisage ‘bright futures’ for all are overly optimistic and the kind of people who would go chasing rainbows in order to find pots of gold.
In this economic environment we all have to be realists and cut our cloth accordingly. Take the legal profession as a prime example of a sector which, for many years, appeared unassailable in terms of its ongoing success, and yet now many solicitor firms are not just struggling but going out of business. And it’s not just the smaller, family-type practices that are the ones hitting the buffers but some large-scale operations who had (it seemed) considerable resource and expertise; these are also not just under pressure but cracking under the strain.
All this means that we are likely to see far fewer solicitor firms in the near future – they’re not just going out of business but there is a concerted move to consolidate given the cost pressures many are facing. We deal with a number of solicitor firms who operate in the conveyancing sector and it is these specialists that are thriving while others who are more ‘jack of all trades’ are facing pressures. Many firms are looking for their niche – for some it has been conveyancing, others have gone down the personal injury route – the fact is that established players are difficult to shift and, at the end of the day, pricing is vitally important as is the ability to work quickly with a significant amount of resource at your disposal. The major players have this; the smaller firms do not.
So, why is this important for advisers? Well the fact is that your clients are using these firms to complete their mortgages and the last thing you should want is for a solicitor firm to go out of business leaving your client’s case open. It may seem like a distant possibility but it is happening and more frequently than you might think. Choosing the firms you partner with, whether they be conveyancers, providers, insurers, is more important than ever before simply because the future for some of these firms is not just uncertain but perilous. For that reason, conducting due diligence and ensuring your own peace of mind about the firms you recommend and introduce to is vital.
In the conveyancing field you can use distributors like ourselves who conduct this type of work for you. However in other areas, as a bare minimum, you should be availing yourself of that firm’s latest company report and seeing the balance sheet/cash flow position of that business. ‘Cash is king’ is an old adage but in this marketplace firms without certain levels of cash in the bank are always going to struggle. We are not talking about hours of investigative work attempting to go through the firm with a fine-tooth comb but instead some basic research and due diligence to give both you and your clients peace of mind. Ultimately this should mean that your recommendations never come back to haunt you.
Harpal Singh is managing director of Broker Conveyancing