Trends: property
Some forward-thinking conveyancing practices are seeing the current property market downturn not as a disaster, but an opportunity. Jenny Ramage reports
We know THE story by now: property and plot sales are declining, deals between buyers and sellers are either aborting or are not being struck at all and mortgages are down 70 per cent. For law firms' conveyancing departments, business is dropping off, and many firms are reducing or even closing their residential property practices.
Meanwhile others have succumbed to high-volume panels that a year ago they would not have been seen dead joining.
But a defeatist attitude is not helpful, according to those practitioners beating a different path through the thorns of the approaching recession. Licensed conveyancer Tracy Thompson points out that 'making redundancies only serves to fuel the economic crisis'. She is pleased to report that at her firm, Liverpool-based Morecrofts, there have been no redundancies at all.
'There is an alternative,' says Thompson, 'whereas many local firms are making redundancies, Morecrofts are very much looking at internal systems to consolidate practice areas and improve efficiency to allow the product to continue.'
Fighting the war for talent
Where redundancies are seen to be unavoidable, as was the case at Dorchester-based conveyancers BPL Solicitors, which recently closed its Yeovil office and cut its staff by over half, keeping hold of as many of your skilled workers as possible is paramount. According to the firm's managing director David Bridge: 'We have sought to retain our core skill set, so that when the market does pick up we are in a position to scale up, hopefully as rapidly as we've had to scale down.'
Bill Mackie, head of development at Cripps Harries Hall in Tunbridge Wells, Kent goes further: 'We live in a world where there is a war for talent, we know that it is difficult and time consuming to go out and recruit the right sort of calibre people, so we are very anxious that we don't find ourselves in a position through any short-term measure where we really struggle to gear up again. We've got very good people here and we really want to keep them.'
Mackie also recommends smart distribution of the resources you've got. 'We need to ensure our fee-earners are kept busy,' he says, 'so work as far as possible is done at fee-earner level. The concentration of the partners in the team has to be on business development and on growing the business . . . that is the role of senior people. It is even more the case now than previously. If, meanwhile, younger lawyers are properly supervised and engaged and can deliver work for clients, then that makes for a good combination.'
Reconnecting with clients
The economic recovery '“ whenever that may be '“ is something all firms should have an eye on. Many property practices are using the downturn as an opportunity to focus on marketing and business development. Rob Goffman, property partner at EMW Law, is of the opinion that: 'The current climate shouldn't stop you going out and marketing your business. This is a time to get out and about and be more proactive in this respect than previously.'
Fiona McIntosh, a partner in the residential property team at Cripps Harries Hall, echoes this sentiment; she sees it as a time to 'reconnect with clients, put in place a more organised strategy and make sure our clients remember us'. This is intended to help them capture a larger share of a decreasing market, but it should also help to position them for the future upturn.
Best products, best service
Now is the time not just to market your products, but also to improve them. BPL Solicitors is working closely with a HIP provider to push forward a comprehensive HIP that includes not just the basic mandatory information, but all of the necessary information a buyer could want. The additional information may include, for example, an environmental search, and the seller's replies to questions about the property, such as which boundaries the seller maintains. 'Up until now people have gone for the bare minimum,' says Bridge, 'but there is a value in the current market to having a more complete package. The benefit is that once a buyer decides to purchase, the information is all there and goes off to the solicitor straight away, which increases the reaction time.' Structuring the HIP in this way, says Bridge, will 'ensure that it is of benefit to the transaction, rather than being seen as a barrier'.
Survival depends not just on the product you are delivering, but how you deliver it. Edward Goldsmith, partner at Goldsmith Williams in Liverpool, believes that staff need to be continually trained in customer service. 'Solicitors have still got a poor customer service reputation in the market place,' he says.
'Whether that's a perception or the reality is difficult to say, but clients still don't understand conveyancing; they still don't know how much it costs, how long it takes or why a solicitor does what they do. The SRA has done a lot to make us aware of our obligations, and no doubt everybody complies with the rules of conduct, but ticking a box and actually giving a client a really good customer experience are two different things.'
Bridge says his firm is differentiating itself from the competition 'by focusing absolutely on service'. He says that full communication with all the parties to the transaction is essential. 'We all have to work together, in a difficult market, to get the best results,' he adds.
McIntosh says that because many transactions are going abortive 'we have to show clients our worth; we have to show we can get a transaction through to close, and be proactive. Clients don't want hold-ups, or an obstructive solicitor'.
Reviewing your technology
Streamlining internal processes is clearly key to reducing costs and preparing for the upsurge of work when it finally arrives '“ and this includes firms' use of technology. Cripps Harries Hall is taking the opportunity to review its IT systems, looking particularly at improving electronic transmission of information. It is an area in which McIntosh believes many firms are falling short.
'I am still coming across a lot of practices who say 'our systems aren't that good, we won't accept things by email, it's got to be by post'. Some firms are still unsure about their email service, but these days, that's pretty fundamental and basic, and if a firm doesn't have the basics in place they are looking at difficult times ahead,' she says.
For those firms keeping up with the technological pace, IT continues to present a wealth of opportunity. Goldsmith thinks that in particular, online communities such as Facebook should be given due credit.
'There's a whole market of youngsters coming through,' he says, 'who may not be able to buy their homes this month, but they are the buyers of the future and you have to offer your services in a way that is attractive to them. Ask yourself what they will be wanting '“ a local, face-to-face service, or an internet service which they can use at 3am in the morning?'
Goldsmith thinks that law firms should consider online communities as another communication channel. 'There could be opportunities in those areas,' he says. Some law firms have gone so far as to open 'virtual branches' in the online world, Second Life. For many this is a frightening thought, but viral marketing of this type is growing in popularity. 'It is a bit scary,' says Goldsmith, 'but exciting for the future.'
Mutual benefits
Unquestionably the internet provides opportunities to service clients from a distance, but Nationwide Solicitors Alliance (NSA) co-founder Tracy Thompson feels strongly that local service is something that needs to be preserved. For some larger firms, the credit crunch provides the chance to acquire smaller high-street firms that see this as the end of the road for them.
But, Thompson says: 'We've seen what's happened to the supermarkets, and if small-sized law firms don't act now the high street will disappear and everything will be based in out-of-town business parks.'
Officially launching on 1 October, the NSA has been formed to provide a support network for small- to mid-size local law firms to encourage them to work together to retain local work and enable them to survive in the face of commoditisation.
'By pooling our resources, we have strength in numbers and provide competition to the larger out-of-town law firms,' explains Thompson.
The NSA will look to build chains of legal representation, providing a framework and standardising certain procedures with the aim of cutting down on paperwork and thus increasing the speed of transactions, but perhaps most importantly enabling local networks of solicitors to regain control as an alternative to panel management.
This in turn, says Thompson, will produce benefits in the market, in which so many transactions are falling through. She says: 'We are aiming to overcome the perception that 'the solicitor is holding the deal up'.'
Southport-based Barnetts Solicitors is employing a somewhat different strategy. As reported in Solicitors Journal last week, the firm is offering its services to other law firms 'which, as a result of the credit crunch - either because they have reduced their headcount or not replaced departing employees '“ find themselves unable to deal with the little conveyancing business they get' (www.solicitorsjournal.com/comment).
This, says managing partner Richard Barnett, will allow such firms to retain their core staff and focus on more profitable work, without having to staff up for any unforeseen jump in work that they might receive on a temporary basis. 'It will also help commercial firms,' he adds, 'that have traditionally had to keep on staff to handle residential transactions which they do as a 'favour' to their commercial clients. We would take that unprofitable obligation away from them.'
Open your eyes
The current decline in transactions is an opportunity for firms to look inwards and review their structure and processes. It is not necessarily a call for making redundancies. However, firms must also look outwards at the property market as a whole, and seek out the opportunities that exist here.
Whichever route a firm chooses in navigating its way through the economic crisis, it is important to remain positive and open-minded, and perhaps most importantly, to not just bury your head in the sand.
Goldsmith sums it up: 'The worst thing of all is to do nothing. You can put your hands over your eyes and wish away the next year and hope things don't get too bad, or you can look around and say what am I going to do about this?'
In the midst of an ever-more melancholic population of conveyancing lawyers, he remains optimistic. 'I have great hopes for the profession, which has always been extremely resourceful and full of very bright people,' concludes Goldsmith.