There is evidence that the transparency requirements placed on conveyancers is encouraging consumers to shop around without any sign of a ‘race to the bottom’ on prices, the Council for Licensed Conveyancers (CLC) has found.
It also reported that Brexit has become the most commonly cited business risk over the coming year among the firms it regulates.
The figures come from the annual regulatory return, which all 212 firms licensed by the CLC – of which 30% are alternative business structures (ABSs) – had to make.
In December 2018, the CLC and Solicitors Regulation Authority both introduced new rules requiring firms providing certain consumer and business services – including conveyancing – to publish price and service information to help consumers shop around when looking for a lawyer.
According to the survey, just over a quarter (27%) of CLC-licensed firms said customers have started to shop around more in the last year when choosing a legal services provider.
This is consistent with this year’s tracker survey by the Legal Services Consumer Panel, which reported that, since 2018, there has been an increase in people saying they saw transparency information when shopping around for a provider, from 35% to 40%.
However, the panel said the group of legal consumers least likely to have seen it was conveyancing clients.
At the same time, CLC firms said personal recommendation (37%) was the most common source of conveyancing work, followed by an estate agent referral (25%). A direct approach from the client was third at 13%.
Despite concerns that publishing prices would lead to them falling, the CLC recorded that over one-third (37%) of firms increased their prices in 2018/19; just 4% had reduced them.
The majority of firms reported that their conveyancing fee levels remained steady, although a third expect them to rise in the next year.
Some 30% of firms highlighted Brexit as the biggest business risk over the coming year, compared to 19% last year.
There was also greater fear of cybercrime (cited by 26%, up from 22% last year), but fewer firms identified fraud/money laundering as a risk (25%) compared to 2017/18 (34%).
The CLC said this drop was likely to reflect the greater attention licensed conveyancers have been paying to fraud: just 12 firms said they had been the victim of fraud in the previous year and only three incurred a cost as a result, the most being £15,000.
A further 20% of firms reported stopping an attempted instance of fraud (17% in 2017/18).
Some 23% of firms had made at least one general suspicious activity report (SAR) to the National Crime Agency over the previous 12 months, while 11% made a ‘defence against money laundering’ SAR – which is where a firm seeks consent to carrying out an activity that may otherwise result in committing a money laundering or terrorist financing offence.
Overall, the research found strong levels of business confidence amongst the CLC’s regulated community, with almost a half of practices (45%) expecting their work volumes to rise over the next 12 months.
A further 42% expected volumes to remain the same, with just 13% expecting work to shrink over the next 12 months.
Other findings included:
- Though a number of CLC-regulated firms are very large practices, on average they employ four full-time qualified fee-earners, six unauthorised fee-earners and 12 administration and support staff. Over half of firms (60%) reported that at least some of their legal work is carried out by non-authorised staff.
- Half of firms received at least one complaint. Firms most commonly received between one and five complaints (34%).
- 85% of firms had at least some measures in place in relation to bullying and harassment, but only a small proportion had a published policy. Small firms were more likely to not have any measures in place (25%) compared to large firms (5%).
CLC chief executive Sheila Kumar said: “Against the background of uncertainty created by Brexit there has been remarkable consistency in the performance and outlook of the practices we regulate. It is encouraging to see how many firms expect to keep growing in the coming year.
“The efforts to improve transparency for consumers are still in their early days, but the very high levels of compliance with our new rules – and the signs that consumer behaviour is starting to shift – is a testament to CLC-regulated firms’ commitment to the public interest and enabling consumers to make an informed choice of property lawyer.
“When the rules were first introduced practices were concerned that publishing prices would create a ‘race to the bottom’, but this has clearly not happened.
“We as a regulator and our regulated community have worked hard to identify and combat the risks of fraud, money laundering and cybercrime, and the signs are that this is paying off.
“But we are all too aware of how quickly criminals adapt, so focusing on these dangers remains one of the central priorities of our monitoring work.”