As from the 6th October, new provisions will come into effect which will allow companies to provide legal services, including Conveyancing. These have, up to now, been the preserve of Solicitors and other qualified Property Conveyancers.
Does this mean that you will soon be able to buy Conveyancing services while shopping for food, or queuing for the post office in your local convenience store?
And will that mean charges for Conveyancing fall dramatically?
Dubbed ‘Tesco Law’ by the media, the new provisions enable Alternative Business Structures (ABS) to be set up which can provide reserved legal activities to the public. At present, the preparation of a property transfer deed is a reserved activity (if done for a fee) which can only be carried out by Solicitors and other qualified lawyers. As the transfer is at the centre of Conveyancing, the remainder of the work involved in buying or selling a home has traditionally also been carried out by firms of Solicitors.
How Conveyancing Solicitors firms are organised today
Solicitors have always worked either as sole practitioners or in a partnership, but they have not been allowed to form partnerships or companies with non-lawyers. That means that they could not, for instance, be part of a company which also operated as estate agents and property surveyors.
In recent years, Licensed Conveyancers have also been allowed to carry out Conveyancing work. While many such qualified Conveyancers work in Solicitor’s firms, some have set up their own firms which have provided competition to traditional law firms. They are regulated by a separate Council, and are subject to the jurisdiction of the Legal Services Ombudsman.
What difference will ABS make?
The Legal Services Act 2007 due to come into force imminently, is intended to open up the legal services market to wider competition. It enables new forms of legal practice to develop—both legal disciplinary practices or LDPs (firms involving different kinds of lawyers, and up to 25 per cent non-lawyers, but still providing legal services) and alternative business structures or ABSs, which will allow external ownership of legal businesses, multidisciplinary practices (providing legal and other services) and many things in between.
Many will see this as providing an opportunity for the cost of Conveyancing and other legal services to be slashed. They envisage that major commercial companies, such as banks, estate agents and high street stores, will set up subsidiaries which can offer these services cheaper than either traditional high street law firms or the newer online organisations.
ABSs will allow external investment and ownership of law firms, providing an opportunity for new financial investment in such companies. It is therefore likely that they will have substantial resources enabling them to carry out extensive advertising and marketing which is beyond the means of traditional firms.
Banks and estate agents have a substantial high-street presence, as do chain stores and retailers. This will undoubtedly give them the opportunity to offer Conveyancing as well as other legal work in conjunction with other services – “now we have granted you a mortgage, why not use our Conveyancing service too?”
It is also likely that there will be a rise in the number of organisations offering Online Conveyancing.
Although most existing firms have their own websites, some are also linked with ‘marketing’ sites offering Conveyancing Quotes and other services provided by the individual firms.
Already many agents and mortgage providers can provide a quote for Conveyancing on their own websites, which will be carried out by a separate firm, so building their own company to provide these services is a logical next step.
Outside Regulation, and Conveyancing Complaints handling
Consumers may initially appreciate being offered a wider choice and perhaps lower charges, but the question must arise as to who do you complain to when things go wrong?
Who will you be able to sue if things go wrong?
Conveyancing Solicitors and Licensed Conveyancers are regulated by their respective authorities, and generally operate under well-established professional protocols.
ABSs will still have to be licensed by an approved regulator, and they will be required to have at least one lawyer-manager. Although they will have to satisfy the regulator that they can comply with the requirements of the regulations which have been laid down under the 2007 Act, it is likely that such companies will operate in an entirely different ethos to that prevailing amongst traditional firms.
At present complaints by consumers which the firm has not dealt with satisfactorily may be referred to the Legal Ombudsman’s office. However they will only look at whether the level of service provided was acceptable and, if not, what the consequences were. Questions of negligence or are outside the Ombudsman’s remit, and would either be the subject of litigation or some other form of dispute resolution. All regulated firms must carry professional indemnity insurance, which should therefore cover any loss to the client.
The SRA and the CLC have powers to discipline or strike off Solicitors or Licensed Conveyancers and can also intervene to close down firms which are unable to continue trading or are in breach of regulations. They can also provide some assistance where firms owe money to clients or other firms.
Although new ABSs will be similarly regulated it remains to be seen how effective this will be in practice. Since such firms may not operate in the same way as existing law firms, their practices for handling complaints may vary widely, and only time will tell how effective they are.
Of course, it can be argued that customer relations are already an important matter for high-street stores, whereas many Solicitors regard it as an unwelcome development.
How independent will new firms be?
One big question which will be raised by many consumers is how independent will an ABS firm be from its parent organisation. If an ABS is controlled by a mortgage lender or an estate agency, will they put the individual client’s interests ahead of their parent company? Referral fees (when lawyers pay for an introduction to a client) are already a heated topic, and the debates look likely to continue in future.
There is no doubt that the introduction of ABSs will lead to a major shake-up for the existing legal firms. To what extent they will be able to compete with the big financial institutions who are likely to set up new companies remains to be seen, but it is likely that smaller firms may either have to shut up shop, or look to amalgamate with others in order to survive.
Multi-disciplinary partnerships may also be a way forward, able to provide customers with a range of related legal services including Conveyancing.