In The Press

Aggregating Conveyancing Capacity

What is the single greatest imperative underpinning the whole raft of changes the conveyancing market is either undergoing or anticipating?

Obviously this is the sort of question that could raise lively debate across the industry.

For me, the biggest challenge and the greatest opportunity flows from the aggregation of conveyancing capacity. Getting this right and on your terms is, I believe the single most important criteria for success in this uncertain future for all players (not least conveyancers).

Why? Well to start with, you have enormous market tension built up and building up around the dislocation in scale between the lending and estate agency market on the one hand and the conveyancing profession on the other. This market dislocation is sustained by the regulatory protection the conveyancer is subject to but the pressure is building. 9 out of 10 mortgages come from one of only 15 lenders and the top 20 corporate agents, (crudely estimated) have 35% plus of the circa 1.5million property sales. Ranged against this, every transaction has one of more than 8,000 law firms acting. Only a forward thinking fraction have scaled up their operations. Most importantly, none of these firms are just bit players in the process. Despite the massive disparity in scale, they are the ultimate arbiters of the speed with which transactions move. The cashflows of all these corporates hinge on the performance of what is still largely, a cottage industry.

So what? you say. If they are such a structural anomaly, such a brake on the smooth progression of a case, simply engineer them out of the process or marginalize them. After all the remortgage model is heading this way. The risks are minimal, a range of insurances are available, the workflows are easily systematised and the role of expensive (legally qualified) labour is diminished or removed. So why not with transactional conveyancing?

Obviously there are some that take this view, however, I think they are misguided. Firstly, given the 'bucks' that fly around the complex home mover market every minute of every day, there is an understandable reluctance on the part of agents and lenders to engineer away their insurance policy. Secondly, in every transaction the role of a trusted adviser of professional standing who understands what to the client are a bewildering array of external dependencies is vital. It is the structure of the conveyancing market that grates against the rest of the industry not the nature of the fundamental role of the conveyancer.

But the world is set to change. We are now faced with the prospect of the protection afforded the industry by regulation falling away. Where now for the conveyancing industry faced with a tidal wave of competition that may be driven on to almost tsunami proportions by HIPs?

In order to keep heads above water, the profession must build a critical mass that presents a credible option to lenders, agents, governing bodies, new entrants, intermediaries or anyone else who has the principal client relationship, either by virtue of their position in the process or their ability to apply the necessary marketing clout.

So, how to build the necessary critical mass? Unfettered corporates have a number of options each of which turn around cost, control and quality. Most simply they could build or acquire their own. The Licensed Conveyancer route has always offered this headstart and now the prospect of using a Solicitor route to follow Countrywide and nPower is on the horizon. The cost however is not inconsiderable and profit is at best a medium term objective. Add to that the problems of building a fixed overhead and then experiencing the wild fluctuations in volumes that are a trade mark of the industry. Then consider the risk to expensive brands of customer dissatisfaction and the option fades for all but the strongest of stomachs.

Any other option needs some way of uniting capacity into an operationally efficient entity whilst allowing for a range, perhaps even a very broad range of different ownerships. Now, the industry has a relatively small number of established aggregator or panel management models, (not sadly one from within the legal profession) which address this issue but I venture that there is scope to improve the functionality and rework the business relationships between the owner of the customer, the conveyancer 'manufacturing' the conveyance and the hub, facilitating the smooth operation of the panel.

Reaching this conclusion has led me to help shape just such a proposition and to be successful, I believe that:

• clients and panel firms must be properly integrated and the cost of such integration shouldn't be a barrier for any firm.
• the client decides who's on the panel, not the manager. It's their panel no one else's.
• the income to the manager must be a) transaction based and b) directly related to the value delivered not the leverage they can exert
• the model shouldn't succeed because any party is being commercially coerced. A collaborative business process needs a collaborative business model.
• Any solution should not threaten any party - its role is simply that of an objective, facilitating hub that supports a range of business relationships rather than trying to create its own.

If you adopt this stance, and you are lucky enough to apply robust and proficient technology, then a whole new game opens up in which panel management isn't a threat to the conveyancing industry, it's a fantastic opportunity. There are law firms who see this model as the 'glue' that can bind them together as a prelude to themselves taking this newly aggregated capacity to market. They don't see a need (and there isn't one) to rely on others to feed them instructions. This is hugely enabling and has the potential to be a fantastic tool in the self-help armoury for the profession.

If that is the 'push', then the 'pull' is at least as powerful. Corporates are looking for a step change in the quality and breadth of Management Information. Such a change is needed without relinquishing headline operational control to a traditional intermediary who for me, create barriers in an environment crying out for collaboration. This model provides this change. It allows them to instruct a panel of their choice with a confidence building level of MI and operational control. It also gives them access to an industry-wide network of law firms that they can 'tap into' as their capacity requirements fluctuate.

This last point, around stepping out onto an industry platform is of course vital should we ever find ourselves working with Home Information Packs. In anticipation of their arrival, there is a range of players jostling for position, forming alliances and pledging capacity. I judge that a non-prescriptive service, offering robust interactivity whilst only looking for a modest transaction cost should appear as a breath of fresh air.

PISCES is obviously important here but so too are other initiatives that promote the standardization of operational quality in conveyancing. The emergence of content rich ASP or 'rental' models for conveyancing case management is going to be especially significant in opening up new opportunities.

I don't think there is much of a future for proprietary solutions. The big game is around removing barriers in order to support constantly shifting commercial relationships and consequently managing fluctuating demand on a macro rather than a micro level. Using technology to lead players into prescribed relationships misses the biggest advantage that emerging panel management propositions offer - an ability to open up, not close down options.

The conveyancing role is vital in the home moving process. If impending market reforms are to realize their full potential, the structure of the conveyancing market has got to step up to the mark.

Article by Richard Hinton, Business Development Director of Synapse Panel Management.

Published by The Property Forum, Friday 28th November 2003.