The Law Society finally plan on Improving Residential Conveyancing

The Body that represents the interests of solicitors, the Law Society, has recently published a consultation paper entitled ‘Improving Residential Conveyancing’. The purpose of this is to invite the views of its membership on ideas/proposals it has for improving the home buying and selling process.

The timing of this consultation paper is questionable, given that apart from the radical and some would say brave introduction of the Home Information Pack Regulations, no significant change to the selling and buying process has happened since 1925. So why after all this time is the Law Society looking to review and seek the thoughts of its members on possible reform?

The answer lies in the changes that are to occur in last quarter of 2010 that will enable the likes of Sainsbury and Tesco to offer home buying and selling legal services. The Law Society has at long last woken up to the threat of competition. It is concerned (and for good reason) that unless it begins to take the lead in reform, a large number of its members may find themselves joining the queue of bankers and investors looking for alternative work.

So what is the Law Society proposing? To begin with it is saying that on balance there is really not too much wrong with the current system, as on the whole solicitors can be left to their own devices and procedures to deliver a satisfactory service. They do acknowledge however that failure in communication and delays on the part of some do cause the public to perceive the existence of a problem.

This then begs the question that if there is nothing inherently wrong with the system, why is there a need for reform? Again, the answer lies not where it should, with the best interests of the consumer at heart, but rather a desire to ensure the income of the domestic property solicitor does not dry up. In other words what can the Law Society do at this late hour to ensure the closed shop that has hitherto existed continues?

So on close analysis the aim of the consultation paper has no grounding in the promotion of consumer benefit; instead it is proposing reform to safeguard the financial interests of its members. I can understand this, but what is missing is the glaring fact that if the aim of change has as part of it a tangible benefit for the consumer, then there is perhaps, far more likelihood that the change will in time benefit and provide security for solicitors.

So leaving this to one side for the moment, what is the Law Society proposing? This is important to know as some of the proposals are good and build upon the HIP reforms that do, like them or not, present an excellent building block for further and beneficial reform.

To begin with they say it would be a good idea for all solicitors whether they are based in Norwich or Newcastle to follow the same procedure and use the same forms when handing sale and purchase. At present protocols exist, but the problem is that not all those who deal with property sale and purchase adhere to them, so in short they serve little purpose. This then adds to delay, duplication of information and added cost.

A good idea therefore if they could persuade every property lawyer to use them, but therein lies the problem with the idea as proposed. The Law Society’s proposal is that this should take place within a framework of a ‘special club’ to which lawyers would be invited to subscribe. The problem is that without making sure all lawyers become part of this ‘club’ the same problems caused by lack of consistency in approach and handling will still remain prevalent. It’s no good the solicitor in Norwich following the protocol if the one in Newcastle is not.

One way possible solution in my opinion, apart from of course making a national protocol mandatory, is for indemnity insurers who insure solicitors against the cost of mistakes and oversights to make the use of a national protocol a condition precedent for valid cover. This would be to the benefit of the insurers, as it would without doubt help reduce the scope for error.

The Law Society is also proposing the introduction of a ‘completion ready pack’.

By no means an original idea as most of the main players within the HIP industry are already producing packs of this type with new and innovative technology. The idea is that the solicitor should be engaged at the time the property is placed on the market rather than, as is more usual, when a purchaser is found. Upon engagement at this early stage, the client would be presented with a pack that would contain all of the mandatory parts of the HIP (yes the same HIP the Law Society complained about and opposed), but with the added value of other documents including a draft contract and transfer.

This they announce would help to speed up transactions as well as providing the solicitor with the edge over its competitors. This may explain why the Law Society also makes mention within the same paper the idea of solicitors setting themselves up as estate agents!

To make this even more appealing and effective to the solicitor, the Law Society proposes that it would look at establishing an IT system to help solicitors compile the packs and facilitate more consistent and effective communication.

It’s a real shame that before formulating this paper the Law Society did not take the time to look and consult with the HIP industry. Rather then knocking the efforts of this industry, and perhaps only looking at it as a potential threat, it could have learned a thing or two about the concept of upfront information and the benefits to the consumer as well as the solicitor.

I hope the survey the Law Society conducted before publishing the consultation paper, disclosed the large number of solicitors out there who saw and embraced the HIP as huge opportunity to secure existing clients as well as new ones at a time when the market was beginning to shrink. There is no doubt that the solicitor who offers the HIP and who has actively marketed the HIP, is and remains in a far better position to procure Conveyancing work than the solicitor who constantly rants and raves about the damaging impact the HIP has had on the property market. Those solicitors who have survived the worst of the recession are those who saw and continue to see the benefit of getting hold of the client at the point of marketing, rather than later. It’s a real shame the Law Society was too blinded by political manoeuvring to pick up on this earlier.

It must be said, that in the space of only two years (as opposed to the many 100’s of years and more the Law Society has had at its disposal) the HIP industry has taken a piece of badly implemented legislation and through investment and innovation developed and enhanced the product to the stage of actually delivering an idea which the Law Society has only just woken up too.

There are numerous IT systems on the market that already allow lawyers and the like to deliver the benefits of the HIP with the added value of legal documents that have been shown to speed the time up from offer to exchange.

It’s encouraging to see that the Law Society recognise the importance and benefits of upfront information and of the need to build on the success of the HIP, however its disappointing that a Society that purports to be representative of its members has chosen to adopt a rather belated and insular approach to review.

Rather than proposing what appears to be a rather bizarre fall back option (or a perhaps a sign of desperation) for its members, of solicitors becoming notaries similar to their counterparts in France, what it should be doing instead is getting out on the road to speak high street solicitors, as well as engaging in meaningful discussion with other interested parties. In particular, it needs to speak with those within the HIP industry who are already working with large chains of estate agents and property builders and developers, to see and to understand the innovative work they are undertaking to speed up and improve the buying and selling process. Grant Shapps, the Shadow Housing Minister, who we all know does not like the HIP, is, from first hand reports, a supporter of the ‘ready to exchange pack’ and who would therefore, it would appear, be a supporter of such an initiative.

They also need to tune into the needs and expectations of the consumer. If the consumer begins to see solicitors in a different and more favourable light, as a listener for example, there is less chance in my view of a mass migration to other suppliers of legal services.

Written by David Pett – Solicitor.


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2 Responses to “The Law Society finally plan on Improving Residential Conveyancing”

  1. Dear Sirs

    I entirley agree with David Pett’s comments

    Prior to the implemenation of HIPs I formed a company trading under the style of “Spring”.

    This company had property independently verified by conveyancers undertaking title checks independent of buyer and seller with the result that every property that came on to the market had a “property passport” – a guarantee of title supported by insurance.

    This enabled the parties to move straight to exchange /completion without the need for two conveyancers per transaction.

    A sensible solution one would have thought – but no.

    It was opposed by the Law Society to a point where they took disciplinary action against me to prevent me from operating such a system.

    A system that they now seem to want to adopt for their own benefit.

    Well there’s a surprise.

    Stephen Foden
    Solicitor and former CEO of Spring

  2. Yawn….another consultation paper designed to improve the buying and selling process (but a very interesting article by David Pett).These have all been purportedly designed to benefit the consumer but it doesn’t look like the Law Society have them at heart. Love them or hate them, whilst the implementation of HIPs may have left something to be desired, they are playing a major part in transforming an industry that has been left to its own devices for far too long. I am surprised by the Law Society’s suggestion that solicitors should voluntarily subscribe to a ‘club’ that would use the same forms in the conveyancing process. The industry does not need yet another ‘voluntary’ scheme as there is far too much of that element already, creating continual confusion. I have always supported the idea of HIPs because I believe that the fundamental principle behind them is a sound one. I wonder therefore when we can expect some solid alternative proposals from Mr Grant Shapps on how the the Conservatives will enhance the conveyancing process, particularly now the Law Society seems to have come round to embracing them?

    Sharon

    Leasehold Life

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