The business of conveyancing

I think the future should be considered in conjunction with the radical change the profession is now undergoing, the seeds of which were sown over the last 10 years when scale fees were abolished and lawyers were allowed to advertise their services to the public.  In my view, all legal firms should embrace these changes and regard them as opportunities and not threats - if they do not, I fear that they will find their business suffering, their work becoming less remunerative, and their working days longer.

Although many of you will consider that this is an old message, I would urge you to look again, in a positive light, at the effect it will have on your practices and the ways in which you carry out your work.

Changes in the profession

Over the last 20 years there has been an increase in the number of practitioners.  Due to competition and this increase in numbers, gross fees are not keeping pace with inflation and the overall effect this growth is having is that lawyers are having to work even harder and longer to fight for their share of the total market simply to maintain their previous income levels.  It appears that this is having a greater effect on smaller firms of practitioners who depend on residential conveyancing, with many firms of one to four partners or even larger finding it difficult to make ends meet.  As the number of larger provincial city firms increases so does the pressure on small or medium sized practices to continue to be profitable.  They can and will only be profitable if they operate as businesses, not as an elite group of professionals sheltered from market forces by legislation.

I believe the position in Scotland is similar to that set out in the findings of a Law Society of England and Wales Committee paper from 1998 which stated: “A general marketing problem is that high street firms are not providing services for which it is easy to attract frequent repeat business.  Solicitors are not approached lightly, as people are apprehensive about costs and because the law is regarded as a threatening mystique.  Solicitors are regarded as a distress purchase.”

That may be an old argument but what is new is that there are emerging in the legal marketplace a number of firms who are trying to change things and make the face of law generally more acceptable.  However, not all these firms are firms of solicitors - they include accountants, banks, financial institutions, information providers, estate agents and consultants.  In England, Hambro Countrywide, now regarded as the largest conveyancer and the largest employer of lawyers in the world, is not a law firm.  It is a firm of accountants.

These firms are looking at the core of our businesses and testing the loyalty of our clients, which cannot be taken for granted.  To prosper as an independent profession we must compete in the marketplace, doing more to restore ourselves to a position of strength within the business community and amongst our private clients.  We must dispel the myths that we as a profession are overpaid and unapproachable.  In this respect the conclusions of the recent Monopolies and Mergers Commission report on solicitors’ estate agency services were helpful, but we must build on the good points contained in reports such as this.

It may be difficult for every firm to invest in the marketing necessary to improve their position, but all lawyers can communicate with each other through the medium of local faculties, property centres and the Society.  Firms working more closely with neighbouring firms and sharing resources is one way forward.  Firms must be positive and make use of all and any available initiatives.

Changes in remuneration

I believe there will be more change in the sources of remuneration, a move towards fixed costs, and a decline of hourly billing.

For those dealing with a large volume of work there will be the need to consider volume discounts and value added work.  There is also the growth of fixed fee retainers and the beginnings of subscription advice schemes where the client pays a fixed amount to be kept advised of changes in a particular sector of the law.

It is well known that the pressure on fees is downwards.  Legislation and consumer pressures will ensure that this will remain the case.  Although my comments are mainly pertinent to the residential market I believe that commercial conveyancing is not that far away.  In my view, those who rely entirely on conveyancing to make their living will not be able to do so once these changes take hold.  If firms wish to remain in the residential market place they will need to add value to the services they provide.  That’s the challenge.  While practitioners consider conveyancing an important part of the overall transaction (perhaps the most important since more often than not it is the client’s most expensive lifetime purchase) we have allowed that important service to be devalued in the eyes of the public over the years.

Conveyancing is seen by the public as only one part of the step in a transaction and perhaps not the most important.  Although I doubt whether a massive publicity campaign would change public perception of what solicitors do, we must continue to promote the importance of conveyancing and our role in the process.  We also require to add to conveyancing to retain some profitability by providing estate agency and financial services, preparing wills and even taxation.  If we do not extend into this type of work, other professionals will.

Changes in management

To help us with these changes, management must also be looked at.  By management, I mean all aspects of running a practice - systems, quality control, structure and marketing.

Lawyers need to become businessmen if they are to survive long into the next millennium.  Practices must be run more efficiently and credence given to management principles which other sectors of business have long accepted.  I appreciate that coming to terms with the reality of selling services in a competitive market may be difficult for many solicitors.  Many of us are not sufficiently trained or temperamentally well-equipped to face up to these realities, but if we are to succeed, and indeed to survive, this is what we have to do.

Marketing

We all require to become more client focused.  This means rationalising what the firm does so that it only undertakes work which is profitable and necessary.  It also means telling the clients that is what you do.  It means marketing to clients and setting realistic budgets.  This will dictate whether we succeed or fail.  We should look at the other sectors of business and learn.

Information technology

IT is only a tool and should never be regarded as an end in itself.  Nevertheless computerisation and an increase in the use of all aspects of technology will be a main driver for many practices in the future.  Accounts systems, case management systems, the Internet to legal research are changing and all are examples of change brought about by IT.  There is an argument that only by improving efficiency will any firm be able to manage to undertake work at rates clients are prepared to pay.  Many firms who have invested in IT may feel that the money invested does not always show good returns in terms of reduced time and increased efficiency but this may be because, for many firms, acquiring the equipment and software is as far as they are prepared to go.  The processes of changing practices and procedures to accommodate IT are often put to one side and, having invested heavily in IT, many firms may be reluctant to spend the extra money on training.  I believe that this is counterproductive.  IT is not only about in-house computer systems and account packages, it is more than ever today about communication, client interface research and management of knowledge.  We are entering a “knowledge economy” and a law firm’s strength will lie in the ease with which it may be able to sell “processed information”.  The more innovative firms are in selling this to clients in return for fees, the more successful they will be.

Society needs solicitors

I believe that there is a future for solicitors.  Society needs solicitors, now more than ever before, but we have to reflect change and win over the public.  We must also lobby and win over government and those who manage change.  We must convince them in the argument that lawyers are valuable to society.  We must become more approachable and relevant, move with the times, keep pace with changes in the way in which products and services are delivered and be more accountable and less convinced that we occupy an unassailable business position.  We must manage ourselves more effectively and be prepared to learn from other businesses.

Michael Samuel is managing partner of Miller Samuel and Co.