The sluggish property market has had a lacklustre effect on property lawyers, who are now handling 25% fewer cases on average following a 21% fall in monthly property transactions year-on-year[1].
According to the Conveyancing Market Tracker (CMT) from property data company Search Acumen, the average property law firm handled 62 cases in Q3 2023, a 25% decrease year-on year and a 41% decrease from its Q1 2022 peak where firms handled an average of 94 cases per quarter in the post-pandemic frenzy.
The decline reflects a fall in monthly transactions, in which latest data recorded a 21% fall year-on-year. Likewise, September 2023 recorded the fewest property market transactions in nearly three years, in line with figures seen during lockdown[2].
However, 62 cases per quarter is in line with pre-pandemic figures, being on par with the quarterly average from 2019 volumes, which could be an indication of a return to traditional activity levels.
Search Acumen’s analysis also shows the total number of active firms has suffered from the market slowdown, dropping below 3,900 for the first time outside of a pandemic in August 2023 and remaining below that level ever since.
This reflects a market rife with acquisitions and big winners, according to Search Acumen. The top 500 law firms are on track for a 60% market share for 2023, which would be a record high up from 51% in 2011, now handling three in five transactions.
Similarly, the top 100 has edged their market share up to around 77%, which is another record high on an annual basis, up from 65% in 2011. Andy Sommerville, Director at Search Acumen, says:
“As workloads slow for property lawyers, a number of firms are making moves to consolidate in a sign of the changing demands of the real estate market. During periods of significant mergers and acquisitions, it is therefore likely that some of the larger firms may be growing due to this, and why the top 500 firms are dominating market share.”
In a recent study[3], 95% of firms found that implementing technology has made them more responsive to client needs, 72% of firms use tech to improve service quality, and 71% of firms working with large corporate clients use technology to help them deliver services to improve margins.
Furthermore, interest in using AI as a complimentary tool for admin and data efficiency is growing. More than one in four (28%[4]) of the top 100 firms have invested in Robotic Process Automation, according to data from Lexis Nexis.
Andy continues:
“We know a slowdown in commercial and residential property instructions is having a particular effect on caseload volumes, where the fight to win an instruction from competitors has been sharply brought into focus. The data backs up what we know anecdotally, that the adoption of technology in the legal sector is increasing at pace, allowing bigger firms to maintain a competitive advantage.
With rapid advancement in what technology can deliver for businesses’ bottom lines, the use of tools like AI to drive efficiencies is no longer a nice-to-have, but crucial in the race against obsolescence. Staying relevant to clients has to be critical to conveyancers at a time of market crunch.”
[1] Year-on-year reflects Jan to Nov 2022 vs Jan to Nov 203. AT the time of analysis, December 2023’s data was not released from HMLR.
[2] September 2023 recorded 69368 total transactions according Search Acumen analysis of HMLR data, the lowest level since November 2020 where 57632 transactions were recorded.
[3] https://www.bing.com/search?pc=OA1&q=percentage%20of%20law%20firms%20using%20third-party%20IT%20and%20technology%20support
[4] https://www.lexisnexis.co.uk/blog/future-of-law/50-legal-technology-stats-you-need-to-know-for-2022
This article was submitted to be published by Search Acumen as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
