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In a volatile market, it may be hard to find time to address practice management, but, says Peter Rodd, you can’t afford not to. Are you really working as efficiently and profitably as you can be? And if not, what can you do about it?
In 2014, Mark Carney, the governor of the Bank of England, warned that rising house prices posed the biggest risk to Britain’s economic recovery. Three years later, and the picture is confusing. Property prices have continued to rise in many parts of the country, due to high levels of employment and a shortage of property. Central London, by contrast, has seen a levelling-off in prices, if not an actual fall, particularly at the top end of the market. Brexit is certain to have an effect, but the full implications have not yet really been felt. And rising inflation has resulted in one interest rate rise, which boosted the stock market but not the pound, with the possibility of others to follow.
In light of all this, those responsible for running conveyancing departments will already have been asking themselves whether we are likely to see a gradual slowing down of the market or whether, as has happened on too many occasions before, the market will drop off a cliff. But the more important question is how they can structure the department to be better able to weather those changes.
Of course, the biggest challenge which many organisations face is finding the time to sit down and analyse whether they are working as efficiently and profitably as they could be. During periods of conveyancing ‘glut’, it’s all hands to the pumps simply to keep up with the flow of work. During a conveyancing famine, you’re fighting to find new work and keep the ship afloat. There is, however, growing pressure from many sources to improve the conveyancing process, and no one can afford to rest on their laurels. You need to ask yourself some tough questions. If uncertainty grows but the market continues to soar, will you employ more conveyancers – and do you understand the risks of doing so? How do your current conveyancers spend their working day – are they using their time efficiently, or are they doing work which could easily be done by less qualified (and cheaper) staff? Do your people know how they can develop and grow in your business so they’re less likely to leave? In this article, I look at some of the challenges conveyancing firms face in this volatile market.
During conveyancing booms, increasing capacity usually involves employing additional conveyancers, often at enhanced cost as market forces drive up salaries, not only of new staff but also of those currently employed. So your gross income increases in the short term, but by how much does your net profit rise? Employing a new conveyancer at the salaries then being offered may mean paying a figure of, say, 15 per cent more than that paid to your existing staff. As a result, you may find it necessary to increase their salaries, both to be fair to them and to ensure their retention. If so, and you have five existing conveyancers, your new member of staff has effectively cost you a salary of 175 per cent of the norm. Add to that the increase in your professional indemnity insurance next year, which will be based on this year’s gross fees, and you may find the improvement in your net profit is marginal. And, of course, the more work you undertake, the more claims you run the risk of facing.
We often see a cycle: staff leave a firm to join another, necessitating the first firm to recruit and employ a conveyancer from another, and so it goes on with the salary bill gradually rising. Good for individual staff, but a concern for those responsible for balancing the books.
If there is then a property crash which results in an excess of capacity necessitating redundancies, there is then not only the financial cost, but also the additional detrimental effect on staff morale. Those who have worked through previous recessions will remember only too well how unpleasant and devastating the situation can be for all concerned.
But if you don’t want the cost and risk of taking on more people, you equally don’t want to turn away clients when you’re too busy, with the risk that they won’t come back. So you still need to increase capacity – but how?
To understand this challenge better, we need to look at how conveyancing practice has changed over the years.
The traditional high street model for many years saw a conveyancer working with one (or more) secretaries, producing bespoke letters. Some still operate this way, and a surprising number continue to work without the assistance of a case management system.
Firms that operated this model would argue that the client receives a personal service from a named individual (although this begged the question of what would happen when the person was on holiday or off sick, or their workload expanded too much to offer the same level of service). Thirty years ago, such practices were affordable. Conveyancing fees usually contained a ‘value element’, often half of one per cent of the consideration, in addition to a charge which was designed to reflect the cost of carrying out the work.
Since then, the conveyancing process has become far more complicated, with the conveyancer assuming greater risk, quite apart from the complications of fraud, cybercrime and money laundering. Case management systems have reduced considerably the amount of ‘secretarial’ time involved in a transaction, but not as significantly as fees charged for the conveyancing process have dropped: they have not just failed to keep pace with inflation, but actually reduced to levels which are unsustainable and simply unrealistic. Google ‘cheap conveyancing’ and you will find a number of offers of ‘Conveyancing from £99’. Even allowing for the fact that much of conveyancing is now simply process-driven, it is difficult to see how such a level of charging can produce a service which most clients would consider acceptable.
Meanwhile, client expectations have increased dramatically. The major change is that people no longer look for skills and knowledge in their conveyancer – they simply assume all conveyancers have them (although we all know that may be a mistake). Instead, their key differentiators in terms of success are communication and time. Do they feel they’re informed throughout the process, without having to chase for updates, and is the transaction completed within a period of time they feel is appropriate?
Of course, clients seldom realise what period of time is appropriate. A client emailed me recently to regale me with the efficiencies of the Norwegian system. His son had bought a house and the process took 24 hours! A simple purchase of a clean registered title with no related transactions or mortgage sails through in a month and the conveyancer is wonderful. By contrast, a complicated acquisition of a stair-casing leasehold property as part of a chain of 10 other transactions takes six months, and it’s the conveyancer’s fault!
People have become used to instant communication. Information is available immediately on their smartphone. They struggle to cope with a system which seems antiquated and out of pace with today’s high-speed world.
All this means that a major part of the conveyancer’s life is now spent in managing expectations and communicating the latest updates. The busier we become, the more time we seem to spend answering queries from estate agents and clients about why the matter is taking so long – and as much as you might wish to, you can’t answer that question by saying, ‘because I waste half of each day talking to people like you, which prevents me from getting on with the job!’.
So, could you increase capacity without increasing headcount by reducing the amount of time conveyancers have to spend in this type of interaction?
The best technical conveyancer in the firm may have poor communication skills, preferring to keep their head down and get on with the job. Pairing them with another member of staff who is empathetic and excels in communicating in a positive manner could mean that both enjoy their working day more, as well as provide a better service
Managing expectations at the outset can help. Some estate agents will promise whatever they think the client wants to hear to tie up the sale or to secure the referral to their preferred conveyancer. It then falls to the conveyancer to explain that exchange of contracts on a leasehold sale where the managing agents have a reputation for taking a month to respond to any query is not going to happen within the next three weeks. There is immediate friction between the client and the conveyancer who suggests that three months is a more realistic timescale, especially as there appears to be a chain of at least six transactions involved. But it’s still better to tell the client such home truths at the outset than let them believe what others have told them.
You could consider following the lead of large conveyancing firms, which tend to have more disciplined arrangements with their referrers, whether it be weekly updates on all matters, or a set time on a set day for dealing with queries.
Automated emails or text messages to clients reporting progress can reduce queries, provided the client has been given a clear explanation at the start of the transaction of what those messages mean and what comes next.
You also need to look at how technology can enable us to keep our clients informed proactively: that will stop them having to call or email us, and us having to constantly field such enquiries. An online progress chart could assist, provided that it is always up to date and there is evidence of outstanding issues being chased by the conveyancer.
Could you also structure your firm differently to better manage work and free up resource?
In large firms, conveyancers often work in teams. Of course, this may mean the client (and the conveyancer on the other side) will find themselves speaking to a different person every time. But the important thing, especially for clients, is to be able to communicate with someone who knows what is happening, what is outstanding and when the transaction is likely to be ready to proceed.
In terms of team structure, a common option is one senior conveyancer with the necessary technical skills, supported by a competent deputy with less knowledge, and then one or more support personnel, who may have a good knowledge of procedure, but less underlying legal knowledge. As well as ensuring clients’ queries are answered, as everyone in the team will have sufficient knowledge of the transaction, this structure also has the benefit of allowing the experienced conveyancer to allocate work within the team appropriately, so no one wastes time dealing with matters that others may do more efficiently.
Some organisational structures will see new matters set up on the firm’s case management system by a separate team, and then allocated to an appropriate fee-earner or team based on level of complexity or perceived risk, also taking into account current workloads, imminent holiday commitments, and so on.
Another option is to ‘pair’ conveyancers. The best technical conveyancer in the firm may have poor communication skills, preferring to keep their head down and get on with the job. Pairing them with another member of staff who is empathetic and excels in communicating in a positive manner could mean that both enjoy their working day more, as well as provide a better service.
Another issue for firms to consider to ensure their resource is as ‘future-proof’ as possible is retention. And this is where firms need to consider career development.
Getting your team structure right can, of course, support career development for those seeking to progress. An ‘apprentice’ may start with a data entry role, but with training, either informally or in larger organisations as part of a structured learning module, progress to a support conveyancer job, and ultimately to a senior conveyancer role, with or without qualification, as a licensed conveyancer, legal executive or solicitor.
But truly effective retention requires a considered and resourced career development pathway, and that means training.
The larger the organisation, the greater the investment in and the more structured the training is likely to be. My Home Move, founded in 2001 and the ‘UK’s leading provider of mover conveyancing services’, runs its own ‘Learning & Development Academy’.
The Conveyancing Association, which claims that its members now collectively undertake approximately 25 per cent of all residential property transactions in England and Wales, offers ‘The Training Academy’, said to provide ‘members with the ability to train their staff quickly, thoroughly and cost effectively’.
Smaller organisations are unlikely to have access to such facilities, but the development and structured training of staff can provide greater flexibility and the ability to adjust capacity to reflect demand.
The Law Society’s Conveyancing Quality Scheme provides compulsory training courses to ensure the competency of conveyancers. Could it also provide a structured training scheme for those currently working in a support capacity but with a desire to progress and learn? Would there be sufficient demand for such a scheme from smaller firms, to enable them to upskill their staff and indirectly provide greater support to existing conveyancers, increasing a firm’s capacity with minimum risk and cost?
Technology is clearly going to play a growing role. Can it simply be bolted on to how we currently operate, or will we need to adapt?
Statistics suggest that more and more work is being carried out by the larger conveyancers. For years to come, there may still be a demand for ‘local’ conveyancers, particularly from those who are less computer literate and who prefer to read paper rather than documents on a screen. But the future is clear, and has been since land certificates ‘dematerialised’. Only the timescale is uncertain. It is worth taking the time to look into the future (possibly not very far forward) to see how process and procedures may change.
The Infrastructure Act 2015 provided for the transfer of responsibility for local land charges (LLC) from local authorities to HM Land Registry, enabling the creation of a central, digital service for LLC by consolidating local authority registers into a single register, accessible online.
HM Land Registry is looking at the use of new technologies, such as blockchain and artificial intelligence, to see how these could be used to improve the overall process of land registration and buying or selling homes. One of the aims of the Government Digital Service transformation programme was that: ‘Home buyers and business intermediaries will be able to search for, gain data on and register property in the UK, without the need for the delays inherent in current paper based systems.’ The consultation on proposals to amend the Land Registration Rules 2003 included a proposal ‘to allow for the introduction of fully digital conveyancing documents with e-signatures to be used for land transactions and land registration’.
Some will say that we’ve been there before, but the days of the ‘chain matrix’ are now well behind us. Now (if you’re not inundated with work) is the time to consider how flexible your working model is. How profitable is your conveyancing department when you take into account the hidden costs? How ‘future-proof’ are you?