Tuesday, 15 January 2013

Predictions for Conveyancing in 2013

Predictions for Conveyancing in 2013

Looking back at 2012 it was quite an eventful year, although, that being said it was simply keeping apace with 2011.

So what might 2013 have in store for the conveyancing fraternity? Here are my top predictions:

  1. The Law Society and CQS can look towards 2013 with a degree of optimism. A slow but steady stream of lenders making CQS a prerequisite to be on their panel, will result in an increasing number of firms viewing CQS as a necessary evil. The level of CQS firms will likely grow to over 4000 meaning that the majority of firms conducting conveyancing will be accredited.
  2. As the popularity of CQS grows it will face increased criticism from lenders unless the scheme sharpens it’s teeth and starts auditing firms. During the latter part of 2012 lenders were becoming increasingly vocal in their questioning as to the extent to which CQS monitors firms. CQS are aware of this issue of credibility so expect some attempt to address this via the introduction of auditing technology or standardized processes (such as a centralised  transaction portal).
  3. CQS’s gain is the Licensed Conveyancer’s loss. If lenders follow Santander and HSBC’s requirement for a firm to be CQS accredited and licensed conveyancers may find themselves on the sidelines. The Society for Licensed conveyancers are going to have to show value for their membership fee SLC has to launch a credible alternative to CQS. There was talk in November of 2011 of the SLC having had good feedback from lenders to their quality scheme which was supposed to have launched in Spring 2012.
  4. Despite the difficult financial climate this year will see law firms significantly increase their budget for risk management and compliance technology. Over the last 10 years a firm’s technology spend has mainly focused on improving efficiencies such as case management systems. The driver for improved processes was necessitated due to the increased commoditization of legal services together with it’s associated lower margins. With ‘compliance’ being the buzzword for 2013 expect the technology spend to shift towards compliance software.
  5. 2013 will see the continuation alternative business structures being created but there will be very little impact on the conveyancing the market. Conveyancing has largely remained untouched. Don't expect to see AA, Tesco or Co-Op on an employment drive to conduct conveyancing. Whilst they may panel out work there remains little chance of them actually conducting conveyancing themselves not least because there is hardly any money to be made. There are many other reasons for this area of law being left alone but let’s leave that to a separate article.
  6. Although the recent Court of Appeal decision affecting Davisons Solicitors is welcome news to conveyancing solicitors there will clearly be a backlash by lenders this year. By way of quick reminder about this case. The High Court had previously held that Davisons Solicitors of Birmingham had to repay £184,500 to Nationwide Building Society ruling that the firm caught up in a mortgage fraud was liable for the loss after it was tricked by a bogus practice which was SRA registered. The appeal court stated that while the firm had committed a breach of trust in releasing funds before obtaining a fully enforceable legal charge, it should be excused and relieved of liability for it.

As a result of this reversal one can expect changes to be made to the CML Handbook particularly relating to the obligations to investigate the legitimacy of the other lawyers on a transaction. To track changes to lender’s requirements consider subscribing to the LENDERmonitor Notification Service for free.

  1. As already mentioned ‘compliance’ is going to be the main area of concern for almost all solicitors firms until the mist shrouding the new regulatory regime disperses. Firms who conduct conveyancing are more likely to have an intrusive relationship with their regulator. I anticipate the accusation of ‘disproportionate response’ to  be levied at the SRA fairly frequently in the last quarter of 2013. It’s no longer enough for a solicitors focus on compliance to be limited to occasional glance at the SRA handbook sitting on the shelf gathering dust in his or her office.
  2. This year is likely to witness the continuance of the trend for lenders to embrace breach of trust arguments rather than traditional negligence claims against conveyancing lawyers. Call me a ‘conspiracy theorist’ but I suspect that this approach has something to do with lenders’ fear of their previous risky lending practices coming back to the haunt them if the court finds contributory negligence.

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