Where house sales are property of solicitors

Perhaps it is a measure of the success of the Edinburgh Solicitors Property Centre (ESPC) that the taxi driver not only drove me straight to the door but double parked and went inside for a look.

Every day 8,000 people join him and march into the smart, spacious central offices to view over 6,000 properties, 300 of which are sold every week.

The ESPC sold 12,703 houses and flats around Edinburgh in 1996, which is close to £1bn worth of property. It controls more than 80 per cent of the city's housing market and produces a property paper which enjoys a circulation of 50,000.

Established in 1971, the ESPC works within Law Society of Scotland regulations on conveyancing through a canny sleight of hand.

It services all of Edinburgh's 260 law firms but none are members – solicitors simply send details about properties they are selling to the ESPC. There is a board of seven non-executive members, all of whom are solicitors. They serve for five years, elect their own chair and eventually decide who will replace them.

Although the ESPC charges a £145 registration fee for clients selling homes and earns more than £500,000 in advertising from its publications, it is a non-profit-making independent company.

This slick set up has kept the Law Society of Scotland happy and consumers satisfied, but has infuriated estate agents in the city. A complaint from an unknown person or company has sparked an investigation into the ESPC by the Monopolies and Mergers Commission (MMC).

The MMC's difficulty in obtaining information from angry Scottish solicitors has delayed its report, which is now due out in the middle of the year. But ESPC chief executive Annie Murray denies any accusation of unfairness.

She argues that while her organisation exists to promote solicitors' services it is not a monopoly, and that the law firms which take part are not a cartel.

“An important point to make is that they are all in competition with each other and the competition is hot,” she says.

How hot is difficult to ascertain. Murray says the ESPC uses a computer programme to pick solicitors at random for conveyancing services if customers so request.

But she admits even if people choose to ring around, most solicitors will not give their conveyancing fees over the phone.

Most Scots, however, have long-serving family solicitors and are traditionally used to them acting as estate agents.

Murray says that familiarity is one of the ESPC's biggest advantages. She warns English and Welsh solicitors who think the lifting of restrictive Chancery Lane rules will open the doors to property centre success that it will not be easy.

Huge capital investment and business acumen is needed, she says, and to be profitable property centres must be established in a town or region where there is a high flow of transactions. While by no means essential it also helps if the majority of law firms in the area belong to one.

Murray also believes property centres will work south of the border only if they offer a complete package of services, which include conveyancing and financial advice.

Under such an arrangement, she says, lawyers could undercut estate agents on commission rates for a one-stop service that would hover at around 2.5 per cent of the selling price.

The proposition is tempting and, unsurprisingly, a property centre bandwagon is beginning to roll in England and Wales now that the profession has reconciled itself to the fact that a return to scale conveyancing fees is unlikely.

But Murray points out that a key factor in the ESPC's success is that it has thrived partly because solicitors are not involved in the day-to-day running of the centre.

Although its board is made up of solicitors, the structure of the ESPC is such that it is the staff who make day-to-day decisions, thereby avoiding internal ructions and bureaucracy.

The ESPC's success can be replicated. Five years ago Murray and her team went to Glasgow and helped local solicitors establish a property centre which now enjoys a 30 per cent market share.

The ESPC is not resting on its laurels. It is about to bring in a new computer system, open an in-house coffee shop and wine bar, and expand its research programme in association with the local university.

Lawyers as far away as Australia and South Africa, as well as a team from the Law Society, have already travelled to Edinburgh to learn from the ESPC.

It may not be too long before Scottish lessons are put into place by English practices.