Wednesday, 9 September 2015

Open Letter to the President of the Law Society - Conveyancing Fees

Open Letter to the President of the Law Society - Chancery Lane, London


Dear Sir,


I am a practitioner who manages a practice which provides residential conveyancing services to clients nationwide.  

I have over the past 5 years worked hard to introduce efficiencies as well as measures to combat the increasing risks which continue to arise.  Much of the work has centred around the development of an ‘in house’ risk and case management system.  I along with my co-directors have invested a large amount of time and money to ensure we have a business which can compete with larger conveyancing practices and which more importantly can offer our clients a safe and efficient service.  It has not been easy and apart from an understanding Bank we have had no help or support whatsoever  from the Law Society or any other body.  

Instead we have had to adjust and  show complete flexibility to accommodate the ever increasing flow of regulatory and compliance hurdles thrown our way.   As conveyancers we are required to fund not only our own overheads but also the cost of money laundering checks and the long list of statutory and  other compliance requirements.  Indeed we have had to employ one person who spends all of her time watching out for changes and making sure these are applied within our practices. Tracking as we do the number of hours we spend on each type of transaction it is clear that the hourly rate we receive from providing a good and reliable service is barely above that paid to our office cleaner! 

It never gets any easier, and indeed  if there is at the end of the day any profit left  within a conveyancing transaction it is almost lost in discharging these obligations and taking out PII insurance.  The  financial pressure this imposes is highlighted in a an article which appears on your Small Firms Division website written by Mark Carver : ‘Conveyancing - is the reward worth the risk?’

In this article  Mr Caver makes the following salient observations:

‘In real terms, solicitors are earning less now than they did 10 years ago from conveyancing, with average fees increasing by 36.5 per cent – significantly less than standard inflation for the same period (40.63 per cent). This is in stark contrast to estate agents, who have clearly benefited from the increase in property prices as their earnings are linked to the sale price, and to a lesser extent, surveyors, whose fees have increased above the level of inflation’

‘Not only are solicitors getting paid less for conveyancing than in 2004, but the potential risk is significantly higher, driven primarily by an increase in property prices’

‘Even firms fortunate enough not to experience a conveyancing claim should be aware that approximately £100 of an average conveyancing fee will contribute towards professional indemnity insurance premium for the transaction’.

These are findings which do not come as a surprise but are still nonetheless alarming and must on any interpretation be viewed as a stern warning.   Unless something is done, and done soon, to address the imbalance between fee income and the increasing risk,  high street conveyancers like ourselves will, despite our efforts, be condemned to history. 

Its shocking that through inactivity and unnecessary distraction in projects like Veyo the Law Society has allowed this situation to continue  unaddressed for so long.   The time has now come for action to be taken to reverse this trend and to make sure that conveyancing is not seen as a worthless and inferior profession.  

So some questions for you to answer please.

How much has the Law Society invested in Veyo?

Was any thought given at the time Veyo was conceived about spending the money on forming a strategy to  see how the difference in value attached to the fees of a professional conveyancer and those of estate agent and other  property professionals could be addressed? 

Why is that as a profession  our indemnity insurance is one of the highest when compared to other professionals?

Do you consider  the Law Society has discharged its duty to its members by failing to protect its members who undertake conveyancing  from suffering a severe erosion in the level of their fees at a time when the burden of compliance and other risk management has increased substantially?

Finally, what do you intend to do to make sure action is taken to address this concern?

Yours, 


3 comments:

Anonymous said...

I'm afraid there's only one sensible question on this list, and that's the one asking the Law Society to reveal how much money has been invested in Veyo, which seems to have lost all its staff and has just appointed a turnaround specialist as its new chairman. Members would be entitled to be concerned that this investment has been disastrous, especially with the Legal Software Suppliers Association announcing an intention to launch a rival, free product.

The rest of this Canute-like tirade is pitiful - if you can't do the work profitably, don't do it. Many firms make good margins by refusing to join the race to the bottom on price, and concentrate on a quality offering instead. Only the biggest operators with a cost leadership strategy can ever succeed that way. Be the excellent local butcher with a queue outside your door, selling less, to fewer people, but at higher margins, rather than the price-slashing supermarket courting the masses.

But I do feel sorry for the member of staff who had to be 'emptied' (sic)

Anonymous said...

How much has the Law Society invested in Veyo?

GOOD QUESTION - PROBABLY TOO MUCH


Was any thought given at the time Veyo was conceived about spending the money on forming a strategy to see how the difference in value attached to the fees of a professional conveyancer and those of estate agent and other property professionals could be addressed?

NO - IT WAS BORN OUT OF A DETERMINATION TO COMMERCIALISE EVERYTHING AT TLS - RILIANCE IS ANOTHER (BUT BETTER) EXAMPLE, AS IS THE SELLING OF PREFERRED SUPPLIER ARRANGEMENTS WITH IT PROVIDERS AND ACCOUNTANCY FIRMS. WITH NO TRACK RECORD IN NEW-START IT BUSINESSES, TLS HAS TAKEN A BIG RISK - WITH MEMBERS' MONEY.


Why is it that as a profession our indemnity insurance is one of the highest when compared to other professionals?

BECAUSE THE CLAIMS ARE HIGHER - SIMPLE


Do you consider the Law Society has discharged its duty to its members by failing to protect its members who undertake conveyancing from suffering a severe erosion in the level of their fees at a time when the burden of compliance and other risk management has increased substantially?

THE PROFESSIONAL BODY CANNOT BUCK THE MARKET OR RESTORE PAST MONOPOLIES


Finally, what do you intend to do to make sure action is taken to address this concern?

WHAT DO YOU THINK TLS SHOULD (OR EVEN COULD) DO?

David Pett said...

The point of this letter is to highlight 1) the marked difference between the fee charged by a conveyancer and the fees charged by others involved in the process ( e.g agents and surveyors and IFA's ) and 2) the ridiculous premiums demanded by our professional insurers. If the consensus is that our professional body has done enough to protect the conveyancing community then so be it. I don't subscribe to that view and I am certain there are a large number of conveyancers out there who feel the same way.

This is not a question about the level of fees charged as many business can charge lower fees due to efficiency savings, its about standing up and demanding to be viewed as something other than the poorest paid component in the home selling and purchasing process. Moreover a lower fee does not equate to a poor service; on the contrary an efficient run organisation can not only offer competitive pricing but can also provide a proficient and highly regarded service.