With the data suggesting the affordability squeeze is taking its toll on the market, it is only natural that conveyancers ask the question: “what happens to our fees?”
By many accounts, the conveyancing industry has “fallen into the price cutting trap” during previous downturns, making it difficult for firms to keep fees high while their competitors undercut them.
Will this happen again if the market slows down, or will the industry “hold its nerve” and avoid a race to the bottom?
What conveyancers had to say on the topic
Nearly 200 conveyancers* were polled on the following question: “Will you/your firm be reducing conveyancing fees accordingly should case volumes fall amid a slowdown in demand?”
94% of respondents said they will not be reducing fees in such a case, with only around one in 20 doing so. Explaining their answer, one respondent said:
“It is and always has been counterproductive to reduce fees. All you end up doing is struggling to cope with the work, even in a downturn, and have the clients become more demanding leading to a loss of profit, which is already low!”
Another added:
“We offer an excellent bespoke service to our clients and only employ fully qualified staff, therefore this has to be paid for. We have always been amongst the most expensive conveyancing companies in our region and see no reason for this to discontinue.”
Others referred to conveyancing being complex – not tick-box – and being tied in with so many regulations and digital integrations that a reduction in fees is simply unjustifiable. Another said:
“Managing lenders, clients, estate agents, mortgage advisers et al demands a high level of emotional intelligence not really required in other areas of law. Conveyancers need to be remunerated accordingly.”
“If you everybody reduces fees then we all lose. Fees have just started to get back to reasonable levels this last few years and it should be enough to carry us through a downturn. We provide a professional service in an area of law fraught with complexities,” added another.
Asked whether they thought it was likely that firms would undercut each other amid a slowdown in demand as has happened previously, a striking four in five respondents said they thought it was likely – perhaps an ominous figure for the majority of respondents to the previous question who hope to avoid an undercutting scenario.
The message from the industry is clear
Today’s Conveyancer also put the issue to some key voices within the industry, one of which was newly inaugurated Law Society President Lubna Shuja, who said:
“The increase in mortgage rates [and] the uncertainty in the property market and across the country generally is likely to see a tail off in new instructions, with the possibility of some existing chains collapsing.”
This is not, however, a green light to reduce fees, said Shuja – rather the opposite:
“A race to the bottom in fees would simply increase the pressure on an already overworked and stressed part of the profession.
The conveyancing process becomes more complicated every year. The new register of overseas entities […] adds to this complexity.
Requirements under the Building Safety Act 2022 and the heightened awareness and information about climate change may add to the burden.
Adding in the challenge of complying with anti-money laundering legislation and the ever-growing threat of fraud, means that solicitors simply cannot afford to cut fees.
What they can do is regularly review their fees to ensure these reflect the work they undertake, as well as the responsibility and the risk this carries.”
Mike Ockenden, Head of Secretariat, the Society of Licensed Conveyancers (SLC), was similarly supportive of conveyancers maintaining their fees:
“The SLC always supports conveyancers being properly remunerated for the vital work that they do. Fees charged should relate to the level of service provided. A ‘race to the bottom’ through discounting fees is not in anyone’s interest, including the client who may be at the receiving end of poor service.”
Tom Parkinson, Solicitor, Head of Property & Director at Rowlinsons Solicitors, said:
“Property lawyers should absolutely hold their fees and not be deterred by the few who may reduce theirs. If you have an offering, staff, USPs, and a product that you are proud of and believe in, then there should be absolutely no need to reduce your charges.
Yes, new clients may be harder to come by, but if you are confident in the strength of the referrer relationships that you have built, the service you are able to offer potential clients and have the new business team in place to explain this and why ‘cheaper is not always better’, then have the confidence to win new business.
Not wishing to sound controversial, but those who do reduce their fees perhaps lack such self-belief.”
“The majority of conveyancers in the country are operating on very low margins and have been for many years,” said Jeremy Raj, National Head of Residential Property, Irwin Mitchell, something he says is worsened by increasing complexity, competition, fragmentation – not to mention referral fees. Raj continued:
“If the recent chaos in the economy and in Government leads some to cut their fees even further, that will end badly for the firms that do so. It is also likely to lead to a deterioration in service levels overall in the market, given transactions are largely pegged to the worst performing firm in the chain. The last thing we want to see is any further slowing of transactions or drop in service levels. I really hope that any slowdown in the market or economic pressures will not lead to price wars amongst the more jittery or foolhardy members of the conveyancing community.”
Helen Hutchison, Head of Conveyancing (Sheffield), also of Irwin Mitchell, commented:
“Whilst we always strive to provide best value for money, we have no plans to reduce our fees as a result of the recent economic turmoil. Providing a quality service to all our clients is paramount to us. We would encourage our competitors to focus on maintaining the best service levels possible during these difficult times. We still have a full pipeline and are currently particularly engaged in focused on speeding deals through before clients are caught by rising interest rates.”
“Cheap conveyancing can only be profitable for firms if done in bulk, using very junior staff who are often unqualified and inexperienced. The result of this is usually a very poor and frustrating service for clients and a difficult, thankless job for the conveyancers,” said Sarah Edwards, Partner, Beyond Conveyancing, adding:
“Good conveyancing lawyers need to stand firm on price and know their value. A knowledgeable and pragmatic lawyer can make a huge difference to the smooth running of a transaction. Moving house is recognised as being one of the most stressful things we do, but it doesn’t have to be if you use the right conveyancer.”
Rubina Ferreira, Consultant Residential Conveyancer with Woodstock Legal Services, said:
“Conveyancing fees should not be lowered just to get the work in or else you will find that you are taking on heavy caseloads at the expense of not providing your clients with that personal service and having to work extra-long hours just to keep up with the high workload and still not bringing in the level of fees to cover the amount of work you have to do on a transaction.
Clients are happy to pay for a higher fee if they know that they will get the service that goes with it and I think this goes a long way in setting a decent fee and not having to lower your fee just because there is a downturn in the property market.
The property market still appears very resilient to the current market conditions and I do believe that it will bounce back however some firms have gone into “panic mode” and have started to reduce their fees thus creating this race to the bottom as to who can get the most work in.
Low conveyancing fees are not always the best as a lot of clients have had to find out the hard way in the endless delays in their transactions or the lack of communication that they encounter along the way from their conveyancer.”
*Respondents to a Today’s Conveyancer poll
