In my experience, asking clients who their solicitor might be, normally gets the response of a raise of the eyebrows, a shrug of the shoulders, and the answer, “I don’t know”. Few are likely to go into their mortgage transaction with any clear idea about who they might use for their ‘legals’ and, when push comes to shove, they might suggest they’ll use someone they’ve used before, or ask a family member or friend for a recommendation.
You can understand why we’ve always been pushing the message that the conveyancing opportunity for mortgage advisers has always been there, and that it would be somewhat rude not to take it up, given the fact that the client (at that point in time) is perhaps never going to be as amenable to a recommendation.
Failure to take up that opportunity can not only result in lost income for the adviser but a loss of control on the transaction. How many times have you had to deal with a client that has nipped down their high-street for a conveyancing service or opted to use the family solicitor despite the fact that they are barely interested in conveyancing, have little sector experience, and hardly any staff able to complete the legals?
It ends up causing a large degree of frustration, particularly on the part of the client, who often feels the need to continuously chase their solicitor in order to get the process moving. What has been equally worrying over the past decade is the significant number of solicitor firms who carry out small numbers of cases, who tend not to provide anywhere near the level of service wanted by the client, and yet still manage to pick up regular business.
Take the most recent Land Registry data regarding conveyancing activity – despite the number of firms carrying out such work falling, we still have 3,278 firms handling up to 25 cases a month. And, as we have often predicted over the past decade, while the number of active conveyancing firms in England & Wales is at an all-time low since records began, they still number many thousand. No-one is going to tell me that these are all specialist in their nature or approach, because they’re not.
It’s perhaps no wonder that the somewhat persistent perception of the conveyancing market as a ‘cottage industry’ tends to linger on, although clearly we are moving slowly but surely towards a more specialist operation. For instance, those most recent figures show that 700 firms have stopped carrying out conveyancing work in the last seven years; while the number of larger, specialist firms carrying out larger numbers of cases has risen – up by 31% from 268 to 353.
Search Acumen, who analyse the data, point to the fact that average monthly transaction volumes are rising for those still in the sector, up from 50 in Q3 of 2013 to 60 in Q3 2018. There has been a considerable amount of consolidation in the sector, and those firms who may well have been able to ‘dabble’ in conveyancing are clearly growing fewer each year, especially as the specialists utilise technology to improve their processes, efficiencies and service delivery.
Advisers too have played their part in this reshaping of the conveyancing sector – opting in far greater number to offer conveyancing advice and (hopefully) steering clients away from those firms ill-equipped to deal with their cases. The rise of the large-scale conveyancing business which carries out this work 24/7 and 365 days a year, offering a level of confidence to both the adviser and the client, has much to do with this.
2019 is also likely to continue this trend – my own sense is that advisers are acutely aware that not offering ancillary services, such as conveyancing, is a bad idea. Especially with a mortgage and housing market beset by uncertainty, and with many members of the public holding back on making major purchase decisions, while existing borrowers (at the same time) looking to remortgage in order to gain some level of certainty about their monthly mortgage payments at least.
We are back to a situation where advisory firms are unlikely to be able to survive on the mortgage alone, and those advisers who do opt to provide conveyancing advice can greatly increase income whilst remaining in control of the process. It makes sense for advisers to recommend specialists, which tend to be the bigger focused firms, and therefore as this year continues I expect to see a further contraction in the number of firms actively participating in the conveyancing process. That ‘cottage industry’ tag gets less relevant with every day, and in my view that’s a very good thing.
Harpal Singh is managing director of Broker Conveyancing