Conveyancing prices most likely to be driven down by ABS entrants
A well respected survey has revealed some interesting views from solicitors generally about the post ABS direction of prices in the conveyancing sector.
As we all know conveyancers are happy to fall over themselves to reduce prices ever lower despite concerns over quality, risk and outcomes.
Every town has a conveyancer who is prepared to offer lower priced conveyancing than his competitor, whatever the cost base of his practice just to get the work. Even if your town isn’t that bad most conveyancers know of a conveyancer that will offer conveyancing for the cost of a couple of chocoloate buttons, without lots of additional costs. The conveyancer though will likely do an awful job amid rumours and anticipation of a pending intervention of spectacular proportions. So it comes as a surprise to us that at a time when price competition seems strong, but lenders and insurers are calling for better quality conveyancing, that the Law Society is promoting the CQS to raise standards and regulation is being imposed to ensure better outcomes, although this is likely to cost most firms an arm and an leg, and that research shows lawyers expect conveyancing prices to be the legal service that is most likely to suffer further price reductions post ABS. We are particularly surprised because ABS type structures already exist in this market with estate agents and others owning licensed conveyancers which is a level of competition that hasn’t really been experienced by other lawyers.
The well recognised annual survey of solicitor attitudes to their market conducted by Selling for Solicitors (see www.sellingforsolicitors.co.uk) has revealed that 64.52% of respondents believe that conveyancing prices are the most likely legal service to see price falls due to the advent of ABS. Only 4.84% felt that conveyancing prices would rise.
It may well be that an ABS will find ways to conduct conveyancing more efficiently than existing firms but we believe that it is the use of technology that might reduce conveyancing prices rather than the ownership structure of conveyancing firms themselves.
Other legal services fared much better, only 12.50% of lawyers believed the price of merger and acquisition advice would fall and only 18% felt that commercial legal advice would suffer price falls.
Now in its second year the survey shows that most lawyers spend little time on business development training or investment in sales or opportunity spotting however 53% believe that their firm is above average or excellent at winning new work.
As the respondents to the survey were lawyers of all types it may well be that conveyancing is deemed by other specialists to be devalued and easy work and it is easy to point at conveyancing as the area most likely to suffer price falls due to ABS. However we feel that on balance conveyancing regulators, insurers and mortgage lenders are no longer prepared to tolerate the “sell it cheap, that is why I have insurance” approach to conveyancing sales and unless technology finds new ways to deliver conveyancing more efficiently it feels, on balance, that the cost pressure on conveyancers is upwards. This might mean lower margins rather than higher prices but costs seem to be upwards.
Whilst other legal professionals believe that conveyancing prices will fall we are aware of many conveyancers who believe that the claims history of the lowest priced conveyancers are likely to put them out of business in this professional indemnity insurance round and that conveyancers are slowly learning not to operate at a loss just to maintain turnover
Whether the new entrants will be able to reduce price and improve risk management will be interesting to see but what is clear from the report is that all lawyers are not investing in the training they need to help them pitch for business successfully whilst adopting a price strategy that delivers consistent good quality work.
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