Monday 30 November 2009

The ever-changing landscape of conveyancing and referral fees

Referral Fees
The conveyancing profession is not what it was fifteen years ago let alone thirty years ago.

Fifteen years ago when I qualified as a solicitor the conveyancing market was dominated by conveyancing solicitors conducting transactions. I suspect that today more than 30 % of transactions are carried out by unqualified staff.
Conveyancing solicitors have squandered the high esteem in which we were held by the public. The demise of the conveyancing solicitor started when the Thatcher government broke the conveyancing monopoly in the belief that competition was a ‘good thing’

The emergence of licensed conveyancers sparked a price war with conveyancing costs being cut again and again. The lesson that should have been learnt was to compete on price but on service and to collectively highlight the deficiencies of cheap conveyancing. Unfortunately, solicitors did not learn their lesson as will writers, claims handlers, independent advisers – all have chipped away at solicitor’s preserves so that they really do not exist any more. Solicitors need back to justifying why the public should pay for expertise. We all know that cheap equals dear but the public have not realised this.

Solicitors need to create coordinated effort to challenge panel providers or conveyancing factories. I'm not going to bet much on your efforts, but it will certainly outperform a solo effort.

How ironic that so may solicitors have been up in arms in the suggestion that referral fees should be abolished arguing that they are being asked to fight with one hand behind their back. Paying fees for work is a false economy and with 2011 not far away law firms should be thinking about how they can win business directly. Paying referral fees just means you are delaying the inevitable. The panel provider or supplier of business will drive your margins lower and eventually be competing with you. Why feed your future competitor ? Quiet, passive-aggressive whining in the corner is both annoying and ineffective.

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