Quality Solicitors went wrong, but there is still a position for them in the market

So Quality Solicitors have decided to take stock (http://www.lawgazette.co.uk/analysis/comment-and-opinion/qs-drifts-towards-normality/5047570.article). Their initial spending and scattergun approach to gaining new clients is over. It appears that a new version is about to be rolled out. Let’s treat the first attempt as Quality Solicitors Beta version.

Where did they go wrong?

1. The brand name was stomach churning;
2. They offered glorified marketing and not enough back room support;
3. For unknown reasons, they did not collaborate with third party funders (this is an underappreciated point)
4. Individual members lost their identity; and
5. They joined with uninspiring partners.

It is unsavoury to carry out a post-mortem in any further detail. The focus should instead look at how they can improve in what I am christening QSv2.0.

QSv2.0

1. Use collective bargaining. Focus upon what discounts can be obtained through issues such as ATE premium offerings (due to volume); Professional Indemnity insurance; panel relationships with chambers; etc. If you can expose another company to potentially 100 separate referrals of business then this would give you the financial muscle. It is potentially a massive book of business. If QS could obtain 15-20% reductions then it would be a great offering to their members.
2. Link up with a litigation funder. The bulk of the cases will be towards the lower end of the market, however if there is a number of high value claims which need funding; make sure there is a relationship with a third party funder. There is still a potential link-in with insurers at the lower end of the market (e.g. insuring against failure in conveyancing transactions).
3. Offer financial advice and packages to members. This could be a financing service to cover WIP, tax payments, and other short-term cash flow issues. If QS is smart they could get paid at both ends – once by the finance company they arrange this through for their members and another payment from the membership fee paid by the firm.
4. Act as an outsourcer for back room support such as payroll, IT, HR, compliance, complaints handling, auditing, etc. This could be sub-contracted out with QS getting a cut. There could be varying rates depending on whether there is a full service of back room support, or just a couple of departments
5. Establish panel chambers on favourable rates. QS could learn a lot from insurance companies involved in litigation if they want to go down this route.
6. Stop linking with those past their prime and who peaked in the 1990’s (WH Smith and Amanda Holden). Link up only with those that are up and coming, or do not bother at all.
7. Allow member firms to rename themselves. A good old fashioned name is fine. It can still have the QS brand in there somewhere. It could just be “Jones Jones and Jones… a member of the QS firm network”

I was going to list 10, but unless QS pay me as a consultant, 7 is all they are getting!

Over and out.

Legal Orange.

The definitive guide for laymen: “how to help your conveyancer so they can help you”

The majority of consumers only encounter solicitors for life-changing matters such as moving house and making or administering wills. This insight to conveyancing is irrelevant to commercial property (particularly the tax planning *cough* trust/tax dodging*cough*) and addressed to “the man on the street”.

While people are technically free to do their own conveyancing, some mortgage companies such as HSBC insist upon using their nominating conveyancers, and the truth is that conveyancing for the man on the street is overly technical. Even solicitors and barristers who handle other areas of law will not dip their toes into conveyancing as it falls outside of their expertise.

Before I get into the meat of this article, there are some important things for consumers to know.

1. The majority of complaints made against solicitors involve conveyancing for residential property;
2. There is a “rush to the bottom of the market” as firms try to undercut each other to achieve the cheapest fees – which impacts upon quality;
3. Most consumers do not know the difference between a Licensed Conveyancer and a Solicitor;
4. Mortgage companies have a large amount of control and influence over the instructions of conveyancing firms (this is known as the “lenders panel”); and
5. There is a lot of outsourcing of property searches.

Point (1) needs to be looked at. The high level of complaints means that either consumers are frustrated from receiving a poor service, or the firms are not communicating well enough to the consumer.

Hopefully this guide will assist, and both consumers will understand the system better; and firms will outline the steps and timeframes in clearer terms to their clients.

Firstly, be aware of this – everybody wants the conveyancing to be completed in the earliest possible timeframe. The seller wants their money; the buyer wants to get the keys to their new property; the estate agents want their commission; the mortgage company wants to get their risk (i.e. the property) protected; and the solicitor wants to get paid. PLEASE WORK TOGETHER.

Everybody tries to nudge the process along. Be aware that the process normally involves many stages. This is particularly the case with flats and apartments on leasehold property where managing agents are involved.

The stages therefore need to be known:

1. Offer and acceptance. This is normally agreed via the estate agents. At this stage the estate agent will try and push their recommended conveyancer on you so they can get a commission.
2. Acceptance of mortgage. This can be the agreement in principle before the purchase, or successful mortgage borrowing after an offer has been accepted.
3. Instruction of conveyancers or solicitors. The buyer’s representative will contact the seller’s representative to ask for a copy of the draft contract and any other details, such as the property’s title and the standard forms.
4. Standard enquiries. The seller provides details of matters such as the utility companies, managing agents, fixtures and fittings, etc. Your solicitor will examine the draft contract and supporting documents and raise enquiries with the seller’s solicitor based on the draft contract and standard enquiries. You will be expected to go through the forms the seller has completed and let the solicitor know if you have any queries or concerns.
5. The conveyancer will most likely outsource the property searches to a third party company. They will contact the relevant agencies such as the local Council, flood register, water authority, environment agency, and other “area specific” agencies. These will be reviewed once received and you will be advised on their findings.
6. The mortgage company will want a mortgage survey. This is simply to check the property is valued to protect their exposure in lending money to the buyer. It is possible the buyer may want to go a step further and obtain a full survey from a structural engineer. The choice is yours.
7. Insurance will need to be arranged to cover the property. If you are unsure of how to arrange this, an insurance broker can be consulted. If you have a leasehold property then the managing agents may already have buildings insurance cover in place.
8. Once all of the above has been completed it will be necessary for contracts to be signed and exchanged, which leads to a completion date. Your representative will handle this on your behalf, which involves dealing with the other side and the mortgage company. Between exchange and completion your solicitor will lodge an interest in the property which will mean that the deeds to the property are frozen for 30 working days to allow you to pay the seller and lodge your application to the Land Registry to transfer the deeds into your name.
9. Completion is normally around midday on the day you move into the property. You can collect they keys.
10. While you enjoy your new home or property, your solicitor will continue beavering away on the final matters involving the stamp duty, land registry, Mortgage Company and other relevant parties (e.g. notifying freeholders about new leaseholder).

The usual suspects for delays

Any delay causes a log-jam further down the chain.

Typically these are the problems:

1.  A lack of awareness of the process and timeframes involved by buyers and sellers;
2. Contracts falling through elsewhere in the chain, which falls outside of the control of others in the chain
3. Poorly drafted responses to enquiries by the seller (e.g. “N/A” or “Unknown” for matters that should clearly be known to them)
4. Unnecessary requests for enquiries by the purchaser that exceed ‘standard enquiries’
5. Managing agents being slow to provide information such as historic accounts and minutes of meetings
6. Surveyors and engineers having full diaries that delay inspection and valuation reports
7. The mortgage company requesting further information or documents to satisfy their lending criteria, or refers the decision to underwriters (e.g. if someone is self-employed and their income varies a lot over the last 3 years)
8. Unexpected search results (e.g. property being on an old quarry where the buyers have intentions to carry out building works engineering advice states it would not be sensible to excavate or build on the land)

10 Top tips of how to help your conveyancer to help your move go as smoothly as possible 

1. Get an agreement in principle before making any offers. You will speed up your formal mortgage application later on.
2. Instruct the most appropriate solicitor for you and your needs. Licensed conveyancers will not want to hear this, but solicitors offer clients better protection in the event something goes wrong. The regulation and protection (insurance and industry fund) is of more comfort to consumers.
3. Do not go with the cheapest provider or use the estate agent’s recommended company. Please do not Google the cheapest cowboy providers. A local firm is better for you as they understand the area. Local knowledge is vital when you are buying the most expensive thing in your life (and often a 25 year commitment to pay).
4. Familiarise yourself with the stages involved in the process and the likely timeframes. They are guides and you need to make contingencies. Do not put yourself in the position of leaving a rental property before moving into a mortgaged property. See if you can get a rolling monthly contract agreement with your landlord and allow a short overlap with 2 properties. It may be costly, but it will result in lower stress levels.
5. Make a list that contains all of the people and companies involved in your property purchase. Think about their role, how they can help you, and what you can expect from each other.
6. Be realistic with your enquiries of the seller. Make a list of what you want to know about the property and provide this to your solicitor. This can be cross-referenced with the standard enquiries by the seller. Your solicitor will tell you if something is irrelevant.
7. Don’t be unrealistic over fixtures and fittings. They can often be negotiated. Don’t allow small things to be a sticking point that can result in deadlock. It’s a business negotiation rather than a battle – you can both be winners. Do not jeopardise a £100k-£250k purchase over a £100 curtain rail!
8. Decide on your survey early on. With a smaller property like a flat, your mortgage valuation survey is likely to be fine. In older houses you should look for a full structural engineer survey. Do not simply go with the mortgage company.
9. Insure the property to the hilt. Make sure it is for the full reinstatement value of the property to protect you and the mortgage company. Sometimes the mortgage company will offer insurance cover through their non-lending branch; it is normally more expensive, but it may allow you to sleep a bit easier. Insurance brokers can be consulted and do not be afraid to get their help if you do not understand insurance.
10. Have access to funds for all stages of the process. Budget accordingly in the time leading up to the purchase to avoid last minute additional borrowing.

Over and out.

Legal Orange