To sell or not to sell? That's the question
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Solicitors control over 90 per cent of the conveyancing market. So why are they being told to radically rethink the way they operate? asks Chris Fogarty
Thousands of firms will have to address how they carry out conveyancing this year or face the prospect of being swept off their financial feet, according to solicitors engineering a revolution in the house-buying process.
The past 12 months have seen lawyers, title insurers and banks introduce proposals aimed at making conveyancing quicker and easier. And, last December, the Law Society finally cleared the way for solicitors to sell property.
High street firms, for whom conveyancing is bread-and-butter work, are being offered plenty of choices but few easy answers on how to prepare for the future.
'People are confused, there's no question about that,' says Solicitors Property Group (SPG) executive officer Leslie Dubow.
But according to Dubow, whose 200-member organisation helps solicitors selling property, many lawyers are burying their heads in the sand when it comes to change.
Other firms are simply too busy dealing with present problems to strategically plan for the future let alone contemplate revamping their conveyancing procedures or reviewing the pitfalls of selling property.
'People have to think these things through,' stresses Dubow. 'There is a real time-bomb ticking away.'
Yet National Association of Estate Agents chief executive Hugh Dunsmore-Hardy says that high street solicitors that his members talk to are less than enthusiastic about the idea of property-selling. His contention is backed up by research commissioned by the Law Society which shows that just three out of 20 firms surveyed were considering property-selling. But then estate agents are hardly enamoured with the idea of solicitors moving into the property market either.
'If lawyers want to get into house selling then estate agents will look into how they can get into conveyancing,' warns Dunsmore-Hardy.
Privately, many solicitors say a greater fear preventing them moving into property selling is the prospect of losing longstanding and occasionally lucrative relationships with local estate agents who pass on conveyancing work.
Asked if estate agents were essentially holding a loaded gun to solicitors heads, Dunsmore-Hardy says: 'Nobody has to threaten anybody, it's just common sense.'
Law Society Property and Commercial Services chairman Kenneth Byass says that, in his experience, lucrative business relationships between lawyers and estate agents are few and far between. He says while it is true that solicitors control over 90 per cent of the conveyancing market, cut-price competition means that there is now little or no money in it. Turning to property-selling, argues Byass, is a risk worth looking at.
'I'm keen to see solicitors go into property-selling providing they have done their research properly and worked out if it is a viable option,' he says.
While the Law Society is officially neutral in recommending just what conveyancing or property-selling route their members should take, Byass strongly favours a single initiative and backs the proposed Solicitors Property Centres (SPC). The idea of a solicitor-run chain of property centres was pioneered by the chairman of Conquest Legal Marketing, Richard Berenson, last summer.
SPC will see groups of local solicitors run their own property centres with a national parent company taking on the marketing of the scheme. More than 500 firms have signed up already with the first centre expected to open its doors at an as yet undisclosed location this spring.
Byass has doubts whether title insurance schemes being developed by London & European, First American and Stewart Title Insurance to revamp the conveyancing process will emulate overseas success because England's land registry already guarantees title on a house.
And while the Edinburgh Solicitors Property Centre is planning a summer opening of a property display centre in London's West End, doubts have been expressed privately by solicitors north and south of the border as to whether the dramatically successful Scottish scheme will work in a different property climate.
Meanwhile Dubow's SPG has been supportive of Michael Garson, whose firm Phillip Hodges & Co has been selling property for a decade and recently launched the Independent Property Selling Organisation. This is a grassroots group for solicitors who want to sell property either by themselves or in small groups, though it has none of the marketing muscle of larger schemes.
Publicly, all the competing groups compliment their opponents but privately there is intense competition to win lawyers hearts, minds and investment. Although one thing competing groups do agree on is that property-selling and any restructuring of the conveyancing process will not be suitable for all solicitors.
'If you are a small, cash-strapped firm and you are asking me, 'should I open a estate agency?', I think the answer would be think once, think twice and then think again,' says Dubow.
However, the Law Society seems to have no such reservations. At the end of 1997, Chancery Lane did away with rules restricting solicitors to acting for only the buyer or the seller. Former Law Society president Tony Girling was among campaigners calling for an end to a 'nanny' regulation, despite the deep reservations of some council members.
While lightning progress has been made in most areas of conveyancing, talks between the Law Society and major lenders over a set of standard mortgage instructions trundle on.
The Standard Mortgage Instructions would help protect hapless high street solicitors from being served with multimillion-pound writs by lenders unhappy that they were not told by a borrower's solicitor that they were a bad risk. Yet the talks seem to be going nowhere and, as Halifax group solicitor Chris Jowett warns, lenders' patience is running out.
Meanwhile, a ministerial task group, made up of senior government ministers and professional bodies such as the Law Society, the Council of Mortgage Lenders and the Consumers Association, has been set up to examine Britain's house-buying system one of the cheapest but also the slowest in the developed world.
Lawyers will be an easy target in any government plan to institute change in the house-buying process, although the task group's findings risk being outdated by the shear pace of private sector initiatives that only a year ago were a glimmer in their proponents eye.
If solicitors do pioneer a new way of buying and selling property instead of being led by government decree, the profession may find it has backed a risky winner.