11 December 2012
Ombudsman warns of dangers of ABS conveyancing factories putting volume over service
Sampson: automated transactions and fixed-price deals could cause more complaints
Alternative business structures (ABS) will create “conveyancing factories” that exert a downward pressure on prices and could lead to an upsurge in complaints because of a focus on volume over service, the Legal Ombudsman (LeO) has warned.
Meanwhile, clients should take steps to avoid having unrealistic expectations of their lawyers, and a universal quality scheme for residential conveyancers might make more sense to consumers than individual schemes, Chief Ombudsman Adam Sampson said.
A LeO report published today, Losing the plot: residential conveyancing complaints and their causes, underlined the danger to consumers when enticing fixed fee and ‘no move, no fee’ agreements were not honoured by conveyancers.
“Traditional high street law firms are evolving into or being displaced by ‘conveyancing factories’,” the report said. While at one level the entities are creating “fundamentally great innovations” in a hard-pressed industry, “these sort of positive developments for consumers are not without risk”.
Mr Sampson referred to a speech he heard at the recent Legal Futures conference, in which the In-Deed conveyancing business founder Harry Hill warned that that traditional firms would face unsustainable price competition from volume conveyancers.
There were consumer benefits “but my concern is that some firms may be too focused on the volume of work they’re creating at the expense of providing a reasonable service”, said Mr Sampson. Simple transactions may become more efficient but “where there are complexities – more detailed searches required for example – that need to be taken into account, such rigid business models may come unstuck”, to consumers’ detriment.
ABSs could exacerbate problems, he predicted: “We are bracing ourselves for an increase in automated transactions and fixed-price deals. This may mean more residential conveyancing complaints.”
Unusually, while the report carried an assortment of case studies based on serious complaints that were upheld – such as excessive costs or delays, and unexpected fees – it also suggested clients should educate themselves to keep a lid on unrealistic expectations.
In around 30% of residential conveyancing complaints, no evidence of poor service was found, Mr Sampson pointed out, adding: “More anecdotally, I know that sometimes complaints are based on unrealistic expectations.” LeO has produced a fact sheet to help home-buyers understand the conveyancing process.
Failing to check paperwork leads to lawyers being blamed unfairly, he said. “Often buyers mistakenly think a piece of land is theirs by virtue of its proximity to their property only to find that the legal title doesn’t include this land.”
Mr Sampson noted that the Society of Licensed Conveyancers (SLC) will soon launch its “SLC Quality Assured” equivalent to the Law Society’s Conveyancing Quality Scheme (CQS). While he was “broadly in favour” of such quality marks, “there is an argument that in terms of achieving market differentiation and demonstrating quality to consumers, lenders and insurers, a more universal scheme might be something to aspire to in the future”.
He continued: “From a consumer perspective, it really isn’t clear what advantage there is to using a CQS accredited solicitor over an SLC Quality Assured licensed conveyancer and vice versa.”
Meanwhile, comparison web sites and word of mouth would help consumers to differentiate between conveyancers, as might LeO complaints data. However, it would be “some months – maybe even years – before this information builds into anything particularly meaningful or representative”.
Mr Sampson said he believed that, ultimately, successful conveyancers would be those who can not only innovate but also “commit to greater levels of customer care”.
“This means keeping to agreements over cost, ensuring delays are kept to a minimum, and maintaining good lines of communication. If lawyers stick to these simple principles, I predict they won’t go far wrong,” he said.
By Dan Bindman
Tags: ABS, Alternative business structures, conveyancing, conveyancing quality scheme, Legal Ombudsman, LeO, licensed conveyancers
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