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Eddie Goldsmith - Moving With the Times 2011


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Eddie Goldsmith - Moving With the Times 2011

  1. 1. The Industrialisation of the Legal Profession The Perfect Storm and life after 6 th October E R Goldsmith Senior Partner – Goldsmith Williams Chairman of the Conveyancing Association
  2. 2. Who am I and why am I qualified to speak to you today? <ul><li>Solicitor for 30 years </li></ul><ul><li>Partner in firm of Solicitors with 275 total staff, dealing with nationwide, introduced residential property work as our core business. </li></ul><ul><li>Current Chairman of the Conveyancing Association representing both solicitors and licenced conveyancers in the UK. </li></ul><ul><li>Opportunity to talk to many 3 rd parties across the residential property sector. </li></ul>
  3. 3. The conveyancing market as we know it. <ul><li>The cottage industry that we know as the legal profession. Some 117,000+ solicitors represented through 11000+ firms. </li></ul><ul><li>Big boys of the City account for 55% the total turnover of the legal market but only 2% of the total number of firms.* </li></ul><ul><li>84% of legal practices are run by solicitors with four or fewer partners* </li></ul><ul><li>Legal Services market account for around 1.7% of GDP (£24.7b 2009)(Financial services for the same period was 10% or £116.8b)* </li></ul><ul><li>Solicitors accounted for £14b of the 2009 annual turnover </li></ul><ul><li>45% of £14b in the hand of “small” 4 or less partners equates to £6.3b. </li></ul><ul><li>Estimated gross fees earned through conveyancing 2010 £1b-1.5b </li></ul><ul><li>*research note The Legal Services Market – Legal Services Board August 2011. </li></ul>
  4. 4. HM Land Registry figures <ul><li>9000 firms recorded applications with HLMR in the last review </li></ul><ul><li>3000 of these recorded as 10 or applications in the year </li></ul><ul><li>Estimate that 350—600 of firms do 80% of the total. </li></ul><ul><li>That number is more like 150 – 250 at most </li></ul><ul><li>In reality a significant proportion of conveyancing is already in the hands of these larger firms and this trend is likely to continue </li></ul>
  5. 5. Other factors An over supply of conveyancers? Volume of conveyancing has dropped by 55% over the past few years. Prices – remained static or even reduced over the last 30 years. Technology and the industrialisation of the legal profession Something nasty in the woodshed .
  6. 6. The perfect storm <ul><li>Recession and some high profile casualties </li></ul><ul><li>Rising incidence of fraud and conveyancing complicity - £1b worth of property fraud. </li></ul><ul><li>50%of all claims made in PII relate to conveyancing and 50% of those are raised by lenders. </li></ul><ul><li>Growing deficit in APR of £ms leaving others to pick up the tab. </li></ul><ul><li>The SRA and Supervision and Enforcement Strategy for Conveyancing </li></ul><ul><li>SRA’s recent review of Client Financial Protection </li></ul><ul><li>FSA’s Thematic Review of Lenders Systems </li></ul><ul><li>Are we going through what the mortgage industry has already been though with 60% reduction in numbers? </li></ul>
  7. 7. What are the lenders doing? <ul><li>Reviewing Internally </li></ul><ul><li>Due diligence </li></ul><ul><li>Panel reduction </li></ul><ul><li>Panel Management </li></ul><ul><li>Responding to FSA’s review </li></ul><ul><li>Charging for panel position </li></ul><ul><li>Considering Sep Rep and restricted panels </li></ul><ul><li>3 rd party panel managers </li></ul>
  8. 8. What is the Law Society doing <ul><li>Fighting the corner for solicitors </li></ul><ul><li>Putting pressure on the lenders </li></ul><ul><li>CQS </li></ul><ul><li>The solicitors badge </li></ul><ul><li>Why do we needs CQS? </li></ul><ul><li>What are the current numbers are </li></ul><ul><li>What does success look like? </li></ul><ul><li>What will happen if not sucsesful? </li></ul><ul><li>What do lenders think of it? </li></ul><ul><li>What would fill any void? </li></ul>
  9. 9. There is good news Satisfaction rates for conveyancing is “stratospherically” high at 93% fairly or very happy with the service* 51% of clients pick their solicitor either though having used them before or following a recommendation from someone they know* Receiving a recommendation from a friend and “specialising in conveyancing” are seen as more important than providing a cheap quote* The public are less likely to use a solicitor recommended by their estate agent if the agent will receive a commission as a result (although younger people and first time buyers are less like to be hostile to such a recommendation)* *Solicitors Regulation Authority survey of public attitudes toward conveyancing February 2009.
  10. 10. The not so good news <ul><li>Quality factors do not strongly influence the consumers choice of lawyer and they wrongly assume that legal services are risk-free* </li></ul><ul><li>All solicitors are assumed to be technically competent* </li></ul><ul><li>Brand is not a strong feature in legal services with more that 60% of the public unable to name a law firm* </li></ul><ul><li>Consumers do not know what quality marks signify and that they mean very little as they are seen as marketing tools rather than a genuine symbol of a guarantee. </li></ul><ul><li>* Quality in Legal Services – the Legal Services Consumer Panel November 2010. </li></ul>
  11. 11. What to do? Option 1 – Do nothing Option 2 – Retire Option 3 – Sell out Option 4 – Hive off your conveyancing practise. Option 5 – Build it up. Option 6 – Embrace the future and invent the future.