Stability and innovation in conveyancing

Whatever the economy throws at us,
and however volatile the housing market, licensed conveyancer firms have shown they can respond to the changing environment and even grow through the
difficult times.

Specialisation of practice, backed by specialist regulation, has created a branch of the legal profession that maintains high standards of client protection and finds new ways to meet changing consumer expectation through innovation. Bringing a new generation of talent into the sector through a new apprenticeship route will secure an even stronger future.

Price bubble

We are warned by the Organisation for Economic Co-operation and Development (OECD) and by former chancellors of the exchequer that there is an unsustainable house price bubble. But this is not like the last one that we saw, before the downturn.

It’s different because it seems highly concentrated in London and the south east and also because it is not accompanied yet by the level of transactions that we regularly saw before the crash.

In August 2007, the Land Registry recorded 124,023 sales. For the same month in 2008 that number had plummeted to 47,947 and by August 2013 it had only managed to climb back up to 79,224 – just under two-thirds of the level before the crash.

However, it looks like the pace of the increase is picking up. The March 2014 Land Registry data shows an average house price in England and Wales of £169,124, but that is still down on the November 2007 peak of £181,618.

Behind that average figure, though, there is huge regional variation. London saw an average increase of 12.4 per cent in the year to March 2014 while Wales saw an annual price drop of 1.6 per cent, the only region to experience a fall.

We’re in uncharted territory and there is much disagreement about the outlook for the future. Some predict that prices will continue to rise for years because of under supply in the market, while others fear an early bursting of the bubble. We can’t even agree whether the Help to Buy scheme is inflating prices or simply doing the job of getting first-time buyers onto the property ladder.

Through the downturn and through the recovery we’ve seen a lot of churn in the legal sector. Some businesses have disappeared altogether, others merged. The impact of the Jackson reforms is still playing out and the full effect of cuts in legal aid is not yet fully understood. The shape of the legal sector is changing and old business models are having to flex to accommodate new realities.

This year the Solicitors Regulation Authority
is reporting a drop in the number of firms they regulate and the total number of practising solicitors.

Steady growth

Throughout this period of uncertainty and turbulence there has been a surprising pocket of stability and indeed steady growth. This is in the part of the legal sector that is regulated by the Council for Licensed Conveyancers (CLC), on the governing council of which I sit.

Remarkably, given the turbulent economy over the last ten years, the total turnover of CLC practices has doubled in that period while the total number of practices has remained largely static.

The number of small (up to £100k annual turnover) and medium-small (£100k-£500k annual turnover) practices has remained pretty much constant over the last ten years, as has their turnover. But the contribution they have made to the total turnover of CLC practices has halved. That is because the turnover of medium-to-large (£500k–£3m annual turnover) practices has nearly tripled and the number of practices in this range has doubled.

Now, there is some churn hidden by these overall figures. The collapse of the housing market took its toll on medium-to-large practices in the £500k-£3m turnover bracket. Their numbers halved between 2008 and 2009 and it took until 2013 for their total turnover to return to 2008 levels. But it has returned to 2008 levels and so has outstripped the recovery of the housing market.

At the top end of the scale, the number of large practices (£3m+ annual turnover) has also increased significantly and their contribution to total turnover doubled over ten years. This pattern of growth means that the shape of the CLC-regulated sector has shifted significantly and that licensed conveyancers have beaten the market in a way that is dramatically different to the rest of the legal sector.

That out-performance of the market by the firms regulated by the CLC has meant that many of those firms are now finding it more difficult to secure good, qualified conveyancers. Many – both licensed conveyancers and solicitors – left the profession during the downturn and over that period we also saw a fall in the numbers beginning the course to become a licensed conveyancer. That’s understandable given the impact of
the housing market crash on perceptions of the long-term future of conveyancing as a career,
but it has meant that supply still has to catch up with demand.

We need to encourage qualified conveyancers back into practice to meet demand for their services in the short term. For the long term, we need a strategy for the sector as a whole that ensures a steady supply of people with the right legal, business and customer service skills who can drive and support the continued innovation and growth of our client-focused practices.

Apprenticeship scheme

I’m very proud indeed to be working with a consortium of employers of licensed conveyancers that is developing a new apprenticeship in conveyancing.

This is part of a scheme sponsored by the Department of Business, Innovation and Skills and will lead to a new route to qualification that reflects the very best of contemporary approaches to on-the-job education and training. We have signed up to an ambitious timetable that will see the first new apprentices join the workforce in the autumn.

The new apprenticeship will help employers tap into a hugely talented pool of school leavers who prefer to start their careers immediately rather than attend university, or who are simply unable to contemplate the tuition and living costs of a further three years or more of higher education before becoming fee-earning lawyers. They are not just for school-leavers though,
but open to people of any age and are a great
way for anyone wanting to secure a professional qualification. The apprenticeship will prepare people for a rewarding career in property law and bring them to a level of attainment that qualifies them to be licensed conveyancers.

Apprenticeships are also an excellent way for employers to really ‘grow their own’; identifying people with the right mix of intellect and emotional intelligence to work with clients during what is an exciting and stressful time as they undertake the most expensive and important transactions of their lives. Employers will know that their apprentices are being educated in the legal and technical aspects of conveyancing to the high standards that are required by the CLC, while at the same time taking on the firm’s approach to meeting the client’s needs.

The housing market may be recovering and bringing more work for conveyancers, but competition for that work remains stiff. The ultimate winners will be those firms who provide technically excellent legal work alongside a customer-service experience that enhances their reputation and leads to word-of-mouth recommendation by satisfied clients. SJ

John E Jones is a chartered legal executive and licensed conveyancer and compliance director for Total Conveyancing Services