With the numbers of conveyancing transactions on the increase throughout 2014 and with many firms looking to recruit good quality staff in this area you would be forgiven for thinking that conditions are set fair for the next few years. This does pose the question however that just because you can increase your fee income from property transactions, does this mean that you should?
Inevitably many law firms will go with the flow and before they know it become once again rather dependent on income from this area to drive the growth in their business. Firms could however be storing up problems for a later date.
The conveyancing market has already been split down two very distinct lines and the differences continue to become more stark: –
- The commoditised transactional model is becoming rather common, with customers wanting a cheap “arms length” service. This work is generally being completed by teams of non legal professionals who are overseen by perhaps one fee earner or partner. The challenge to this model is clearly the ability to scale up the service to such an extent that you can drive a profit from this kind of work. This then begs the question “how do you ensure that quality is maintained?” After all in this environment it is easy to replicate the same mistake over a large number of files, creating a real headache when claims start to materialise.
- There are clearly still clients out there, who want a quality, personal service and are willing to pay for it, however this can be difficult to resource, given that the flow of work is difficult to predict. There will also be strong competition for this kind of work, which will once again serve to drive down prices.
In recent discussions with a leading professional indemnity underwriter it is clear that Insurers are still wary of the risks posed by property work. Whilst volume claims generally flow from a property recession, as demonstrated since 2008, the insurers need to put reserves aside in the good times. This means that Solicitors will continue to pay a higher premium on property work than other low risk areas and if the proportion of property work increases as a percentage of the overall fee income firms could seriously limit their choice of insurers going forward.
As ever the key to this is to understand how changes in the market impact on your business and plan accordingly. Don’t become over reliant on one type of work and sleep walk into problems with your PI renewal further down the line.