Council for Licensed Conveyancers Conveyancing 2030 www.clc-uk.org A DISCUSSION PAPER CLC Conveyancing whitepaper

Welcome I am pleased to introduce our Discussion Paper on the future of conveyancing. It is an exciting time to be involved in the property sector as technology rapidly replaces the old ways of operating. We are probably just a few short years away from a fully digital conveyancing system that promises a faster transaction and a better experience for all those involved.

Digitalisation will open up a range of opportunities for improving the home buying and selling nexperience for consumers. But it will not come without risk, and this paper explores how the conveyancing market is already changing and could be radically reshaped in the years to come. This change points to questions for the CLC as the specialist regulator and for conveyancers as they seek to develop their businesses.

While there are many areas of the law where there is little public pressure for Janet Paraskeva - Chair, reform, that is not the case for property and efforts to speed up the process Council for Licensed Conveyancers are already underway. This report examines the longer-term trends and posits a future where the conveyancing market could look very different from today.

We do not expect paper and typewriters to suddenly make a resurgence, nor to see a return to personal completions. Instead we expect smart homes to enable properties to maintain an up-to-date electronic logbook that automatically collates much of the information that conveyancers are currently tasked with gathering. In other words, we could bring into existence a ‘digital twin’ for each property.

Our aim is to help licensed conveyancers and others think about the impact of these changes on their businesses. Of course we do not seek to offer a future- proof strategy –but to encourage those we regulate to give early thought to what is coming their way.

The changes detailed in this Discussion Paper also present significant challenges for the CLC as a regulator. How might we need to adapt our regulatory model to an era of artificial intelligence, for example? We don’t pretend to have the answers, but this report is further evidence that we are actively thinking about the issues and what our response should be. We urge others to do the same and would love to hear your thoughts too.

02 Council for Licensed Conveyancers www.clc-uk.org

About this Discussion Paper While it is not the role of this paper to necessarily provide answers to all of the issues raised, we do use it to highlight areas that we believe raise questions that will need answering by regulators, those in conveyancing and wider stakeholders who will affect and influence how conveyancing will develop.

In the latter part of this paper, you will find questions and issues we have identified as coming out of our research. We know we have not identified them all, but we will use these and others over the coming year to help us develop our thinking.

We encourage you, the readers of this discussion paper, to join us in developing the thinking and contribute to shaping what conveyancing may look like in 2030.

? 2030

Regulating Property And Probate Lawyers 03 CLC Conveyancing whitepaper

Future 1 There have been attempts in the past to use technology to improve the What we Conveyancing will home-buying process, such as the be a fully electronic Land Registry’s Chain Matrix system discuss process by 2030 back in 2007. However, none have After assessing how Issues identified by the yet come to fruition, perhaps because matters have developed CLC for discussion: they were ahead of their time. What over the last decade are the barriers to success and why As conveyancing becomes ever more may the next decade be different? and examining current automated, what are the implications trends this paper looks for how the consumer is protected? The Government have previously Will digital conveyancing demand ruled out mandating changes, at a range of potential a new regulatory approach or will but is this incremental market led future developments. principals of legal businesses remain approach the right way? Should accountable for the output of the e-conveyancing be mandated? It The analysis raises technology they either develop would undoubtedly have a huge themselves or buy-in? impact on the market, with the long questions and issues tail of ‘part-time’ conveyancers less for us to consider as a While it is possible to envision a likely to have the ability to cope regulator and we hope time when technology could replace with this. But if progress is too slow, that you will also feel the conveyancer, will clients ever when should government move from be prepared to have a purchase as encouragement to compulsion? you wish to engage with significant as a property transaction these and the wider proceed without the involvement of matters it discusses. a qualified lawyer to advise them and Future 2 ensure their interests are protected? Money and financial information will Technology also has the theoretical move around potential to enable ‘unbundled’ quickly and securely conveyancing, with the consumer taking on more of the process for Issues identified by the themselves. This, though, raises a CLC for discussion: number of issues that will need to be tackled for it to become a reality. How As new risks emerge, is the regulatory will the conveyancer’s responsibility system ready to ensure that those to other parties (such as lenders) risks are managed effectively through be protected? Will consumers regulation by legal and financial understand and be willing to take on specialist regulators? additional risk? Who becomes liable if things go wrong? Will the insurance As new solutions emerge, there are market develop products that will multiple regulators with a potential enable conveyancers and consumers interest in property transactions, to share risks? Just because it may including legal, financial and be possible for this to happen, will it information. Should legal regulators actually be a positive for consumers? take the lead in developing common How will it affect the profitability of standards for providers or is this a conveyancing practices? These are financial regulation matter? challenging questions that we do not attempt to address in this paper.

04 Council for Licensed Conveyancers www.clc-uk.org

Future 3 Improving the UK’s standing in the Future 5 World Bank’s Ease of Doing Business It’s all about the data The shape of the index has previously been of concern conveyancing Issues identified by the to Government. A low ranking on market will change CLC for discussion: the ease of property transfer drags down our overall rating. Would Issues identified by the The centrality of data to the future changes such as BASPI and the CLC for discussion: raises big issues that are already live other work of the Home Buying and in other sectors. If the data becomes Selling Group have a material impact Conveyancing businesses are exposed the single source of truth, then what on how easy it is to move and so to many factors out of their control, needs to change to ensure all parties increase our performance against including the overall condition of the can trust the data? Who will validate competitor nations? economy, the state of the housing the information and who becomes market, and changes in attitudes responsible if that data is incorrect or and demographics. CLC practices something goes wrong? recovered from the credit crunch Future 4 better than others but how do we To enable data to flow across the The conveyancer’s ensure that firms are able to prepare system and to allow interoperability, role is going to themselves for future disruption? there needs to be agreed standards change for the data itself. Should the Will new business models need standards be developed by consensus Issues identified by the to emerge and will the existing or is there a role for Government CLC for discussion: predominate model of the practice or others? survive? How may legal businesses What are the new skills conveyancers need to structure to ensure they can As providers begin to develop may need to succeed in this new compete and will this entail different different standards and seek to world? Will curriculum for trainees forms of entity and different impose their approach, is there a need to change and can ongoing funding models? risk that they effectively become training support those who are non-statutory regulators mandating already working in conveyancing? Disruption in many sectors has change without any oversight and Will it be the role of regulators to set been driven by consumers availing imposing additional burdens on competences in this area? themselves of the new technology businesses? There are already many and so driving change. But given similar pressures on conveyancers How do we ensure users of systems that home purchases are a rare from other players who set rules for understand why they have to do occurrence for most, consumer engagement in the process. something rather than just what they influence may be less powerful and have to do? less effective in driving change. So Can insurance play a role in providing where will the power and influence a backstop if things go wrong Do regulators have a role in to drive change reside? for consumers or is the potential facilitating the use of new technology detriment such that we need different within regulated businesses? safeguards?

The legal market for conveyancing remains highly fragmented, although it is – very slowly – consolidating.

Regulating Property And Probate Lawyers 05 CLC Conveyancing whitepaper

Future 6 Does the potential for regulators to have access to the technology being Regulators will used in firms allow for more rapid need to be flexible real-time intelligence and compliance to keep up monitoring? What should the Legal services are Issues identified by the relationship be between regulators CLC for discussion: and the technology developers increasingly being judged and does this mean that regulators against a range of other Will new technology require changes need to become more involved in digital service providers in the way we regulate to ensure the development of technology public protection? Is an outcomes- specifications? that are much more focused structure where responsibility advanced, and this will ultimately resides in the principals of As Professor Mayson argues, does become increasingly regulated businesses still the best way the current regulatory structure to deliver protection? provide an incomplete and limited problematic for law firms. framework for legal services As the AI ‘black box’ begins to guide regulation that will struggle in the legal decisions, will legal regulators near-term and beyond to meet the need to widen their remit to cover demands and expectations placed the technology firms developing on it? If so, how does the regulatory the systems used by conveyancing system need to adapt to ensure it is practices? ready for future changes?

The CLC will be returning to the issues identified in this discussion paper over the coming year. We would also be keen to hear your views.

Please feel free to email us at [email protected] or complete the online form at https://www.surveymonkey.co.uk/r/Conveyancing2030

We look forward to your engagement.

06 Council for Licensed Conveyancers www.clc-uk.org

“We always overestimate the change that will occur With these same expectations in the next two years and underestimate the change beginning to impact the property industry, the question is the degree that will occur in the next ten,” to which this will flow through to said Bill Gates. He may not have been speaking about conveyancing, but he conveyancing. could well have been. There are constant headlines about In a world of rapid technological We live in an age of technological robot lawyers taking over, new forms change, automation and instant change which is continually reshaping of home ownership, and radical purchasing, it is entirely possible to consumer expectations. Customers reform at every stage of the home- envision the conveyancing process of no longer differentiate between buying process. Is any of that change 2030 based on a range of Amazon- industries: where they may have going to hit in the next two years? style one-click websites with the once compared the experience at By the time we reach 2030, will legal professional replaced by an AI two supermarkets, now they will conveyancing and those who deliver chatbot and the human involvement measure the supermarket against it have gone through a revolution? a receding memory. While this can Uber or Amazon. At the same time, Which of those possible changes be pictured, it is perhaps harder to customers increasingly have the will not have happened and which imagine that parties to such major guided technological literacy to others might have surprised us? transactions will be happy to dispense interact with more advanced systems That is what this Discussion Paper with advice from a trusted legal and so undertake more complex aims to investigate. professional in such a relatively tasks themselves. short timescale.

Regulating Property And Probate Lawyers 07 CLC Conveyancing whitepaper

We now have a range of disruptors On the technological side, most The last in the market such as, to name just people were still using PCs based three, Purplebricks, Nested – an agent on Windows 98 and this was the 10 years that enables sellers to move chain year Apple launched the iPad, while free by advancing the seller money on Facebook passed Google to become If we had written a the sale before it has been agreed – the world’s most visited website. report like this in 2010, and Settled, a fixed-fee online agent The app-store model pioneered by would we expect to be that aims to make a property ‘buyer Apple took off in a big way in 2010, ready’ earlier in the process than now. signalling a paradigm shift in how where we are today? programs were purchased. Could Much of the OFT’s concern in relation we have anticipated then that our Probably not – 2010 was a to conveyancers was the role of text and data use on phones would challenging time to be a conveyancer. referral fees in securing instructions far outstrip our voice calls by the We were still in the eye of the from estate agents’ customers – 20% end of the decade? And IT advisory financial storm that had begun two of buyers and 29% of sellers used a firm Gartner was recommending years earlier. Residential conveyancing lawyer referred by the seller’s estate that organisations think about their transactions, which had peaked at agent, its research found – while it approach to cloud based computing 1.6m a year in 2006, were at 900,000 also predicted that “in the longer- services. in 2010 (having been even lower in term much more of the conveyancing 2009), so the industry was gloomy, process will be conducted online.” even if many lawyers were cheering the new Coalition Government’s The Government’s response to the immediate ‘suspension’ of home study said it had no plans to reform information packs – a suspension that the home-buying and selling process has never been lifted. But as we will at that time, but it was keen to see BUY explain, the identified need for more the take up of e-conveyancing and comprehensive up-front information the innovative use of technology. on the property for sale has not gone away and industry is now looking at Based on an average cost of new ways of providing it. conveyancing to a buyer of £750, and to a seller of £550, the OFT estimated Also in 2010, what was then the that the conveyancing market value in Office of Fair Trading (OFT) published 2007 was around £2.08bn, falling to a market study of home-buying £1.17bn in 2008 following the global and selling services. This found a economic crisis. It expected it to fall market dominated by traditional again for 2009, to about £1.05bn. estate agents with weak competition Even if it were double that today – CLC research indicates between them on price, and and Law Society research indicates it recommended updating legislation to has not moved much – it would still that the ABSs it regulates encourage new business models and represent well under 10% of the legal – which tend to be allow new entrants into the market. profession’s income; some 50 years larger practices – have ago, around half of its turnover came from conveyancing. embraced technology and innovation with significantly more enthusiasm than non-ABSs.

08 Council for Licensed Conveyancers www.clc-uk.org

A few years ago, we looked back at the experience of the CLC community through the credit crunch, when from 2007 to 2008 transaction numbers fell by two- thirds. We saw a similar fall in the turnover of CLC firms. But CLC firms recovered, in terms of turnover, sooner and faster than the overall property market. So it seems that, coming out of that crisis, CLC- regulated firms secured a bigger market share for themselves. And we are again seeing steady growth in their market share despite the challenges of the global and domestic economies and the political uncertainties that abound.

Where are we Search Acumen’s Q2 2019 The conveyancing market Conveyancing Market Tracker found The legal market for conveyancing in 2020? that quarterly conveyancing volumes remains highly fragmented, although dropped below 230,000 cases for it is – very slowly – consolidating. Though transactions the first time in two years (228,994), have picked up a little 10% lower than Q1 and 20% lower Earlier in 2019, Search Acumen than the same period three years research found that the number in recent years, to earlier – before the EU referendum – of active conveyancing law firms around 1.1m a year, when the number of transactions dropped below the 4,000 mark for was 286,485. the first time (3,961) – having been the market seems around 4,800 in 2011 – while the to have settled at a Aside from Brexit, there are longer hold the largest practices have on the plateau, with no sign term demographic reasons for this market was strengthening. The data – the average age of the population for Q2 2019 showed that the top 200 of a return to is increasing and older people tend conveyancing firms controlled more pre-recession levels. to move less often, while about half of the market (39.7%) than ever of the population increase in recent before, compared to 31.9% eight years is as a result of net immigration years earlier. and, at least in the short-term, immigrants are less likely to become Consolidation is happening among homeowners. big and small firms alike: last year Palamon Capital Partners acquired And then there are shorter- My Home Move – owner of CLC- term financial issues, with many regulated Premier Property Lawyers homeowners choosing instead to and Advantage Property Lawyers – to extend rather than move, driven no create what is the by far the largest doubt by the high levels of stamp conveyancing business in the country duty, the disappearance of 100% in combination with its existing mortgages, and stricter mortgage investment, the Simplify Group, eligibility criteria. which owns other CLC-regulated property firms DC Law and JS Law.

Regulating Property And Probate Lawyers 09 CLC Conveyancing whitepaper

Then in August, private equity As this paper explores, new company Inflexion acquired two technology as well as access to more Process of the biggest volume providers: and more reliable data may have a Stockport-based O’Neill Patient – more profound effect on consumer pinch-points consistently one of the five biggest behaviour, but the starting point conveyancing firms when judged of enabling consumers to have an According to a survey by Land Registry applications – and informed choice in their decision as by Which? in 2015, Stoke firm Grindeys, which is in the to which lawyer they appoint should people find buying top 20. already have begun to drive some changes against the background of a or selling a house This activity comes against the wider evolution of consumer attitudes more stressful than background of the Competition and towards service providers of all kinds. Markets Authority’s (CMA) report arranging care for an on legal services in late 2016 that Regulators are now starting to elderly relative, having identified conveyancing as an area of explore what quality indicators may a child, changing jobs law where consumers were receiving look like in relation to legal services, inappropriate advice and poor quality thus raising the potential for further or getting married. of service in certain circumstances – it contributions to consumer choices. has long been the case that around With it generally estimated to take a quarter of complaints made to around 14 weeks to get from offer the Legal Ombudsman are from to completion, the lengthy period conveyancing clients. creates even more stress and worry as fears about failures in the Subsequently the frontline legal process increase stress. regulators introduced new transparency requirements, mandating cost and Research by the Department for service information that regulated legal Business, Energy and Industrial Strategy in 2017 found that, service businesses needed to provide We’re fiddling around at with the aim of ensuring customers for 38% of buyers and 41% were better able to make an informed the edges at the moment of sellers, the time taken from choice of provider. While it is too soon – there’s no appetite offer to exchange of contracts took longer than they expected. to know how consumer behaviour may to review the actual change, early indications are positive: Those experiencing delays the CLC’s 2019 Annual Regulatory process itself. There’s tended to hold the other party’s Return found that 27% of the firms we some good stuff going on conveyancer responsible, with regulate said customers have started around leasehold, more nearly half (47%) of buyers to shop around more in the last year blaming the seller’s lawyer, and when choosing a legal services provider. upfront information and 58% of sellers blaming the reservation agreements, buyer’s lawyer. but ultimately we want a transformation of the conveyancing process. Eddie Goldsmith

10 Council for Licensed Conveyancers www.clc-uk.org

Whether the process was longer than expectations (%)1

23 Buyers Much longer 25 Sellers 36 A little longer 32

About as long 39 as expected 38

1 A little shorter 4

1 Much shorter 1

Why buyers and sellers found the process complicated

Buyers % Sellers %

Issues with solicitors/conveyancers 24 31 Took too long 20 19 Issues with seller/buyer 19 23 Lack of communication 9 15 Issues with estate agent 7 15

Inevitably, when transactions take this length of time, there is more capacity for things to go wrong, and the government estimates that between a quarter and a third of purchases fall through, at an average cost to a party of around £700.

1. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/ file/653581/buying-selling_homes-research.pdf

Regulating Property And Probate Lawyers 11 CLC Conveyancing whitepaper

The role of technology Providers whose main market There has, unsurprisingly, been a big segment was residential conveyancing focus on the use of technology, with were among those most likely to the MHCLG saying in 2018 that; undertake any or all of the activities. This is probably because of the tighter “conveyancers should margins and strong consumer focus be encouraged to move shared by those firms. towards using a digital It is also positive for conveyancers platform that allows them that alongside a thriving proptech to communicate more and legaltech market, HM Land easily and have a chain Registry is taking a lead. Its stated goal is to become the world’s leading BUY view, and [we] will be land registry for speed, simplicity and working with industry to an open approach to data. Key to this make this happen.” is digitising services that will make the process of buying and selling Signs of changes It also pledged to work with the property easier. In an initiative led by the Ministry industry and other public sector To enable this, in 2017 it launched of Housing, Communities and Local bodies to encourage the development Digital Street, a research and Government (MHCLG), reservation of digital signatures, improve the ID development project exploring how agreements are set to be tested to verification process and promote the land registration might work in 2030. combat this problem. Both seller adoption of e-conveyancing. and buyer sign one after an offer Mike Harlow, acting chief executive is accepted, with possible financial There are something like 400 of HM Land Registry at the time of consequences if one later pulls out proptech companies in the UK, of speaking, explains: of the transaction, depending on which nearly 60% are focused on “The important thing for us is to the reason. residential, according to Unissu, which tracks proptech solutions from make sure that what we do tomorrow helps the industry develop. The MHCLG believes the agreement around the world. If we do tomorrow what we have will encourage sellers to sort out done for the past 157 years, we will early on (ideally before marketing As in most sectors, there are sharp be a drag anchor on the economy the property) problems that might differences in technology take-up because we will still be asking otherwise come up later in the between different businesses. CLC conveyancers to submit what looks transaction, as they could lose research indicates that the alternative like paper applications in an money if the buyer pulls out as a business structures (ABSs) it regulates electronic form. result of them. – which tend to be larger practices – have embraced technology and “So, we are keen to understand Reservation agreements might innovation with significantly more what the future looks like. What can prove more attractive when another enthusiasm than non-ABSs. we do to enable that to happen? proposition is in place – the provision Because we are a monopoly, we have of more reliable information about This is consistent with wider findings to understand what our role is in properties for sale during the by the Legal Services Board, published enabling the market place to be the marketing stage. This will mean in late 2018. Of the six “innovation best that it can be.” buyers can make an offer with greater activities” it measured – ranging from confidence that the due diligence will low-level to radical innovation – larger not throw up unexpected obstacles. providers were far more likely to undertake them than small providers. “Indeed, as the number of employees doubles, the probability of innovation increases by nearly a quarter,” it said.

12 Council for Licensed Conveyancers www.clc-uk.org

He finds it “extraordinary” that you By last October, HM Land Registry But that research found new delivery can stand in someone’s kitchen, shake celebrated registration of the 1,000th models were “embryonic”. It said: “The hands and agree to buy a property digital mortgage deed. It said adoption of technology (most notably without even knowing how the seller some customers have been able to mobile) is key here and is forcing would answer “some really basic complete the remortgage process service providers across all sectors to questions which might completely in three days, 18 days less than the invest in the digital experience.” deter you from buying the property. average for a paper transaction. You haven’t even seen the public HM Land Registry said it planned It quoted the business development information which is readily available to expand the service to all home director at a large conveyancing firm to help make your buying decision.” owners in the future. on how this might impact law firms: “Consumers are no longer comparing This is why HM Land Registry In April 2019, HM Land Registry their digital experience with what has developed its digital local also successfully tested a prototype others are doing in their service sector land charges service. Under the blockchain involving the digital (for example, HSBC v Barclays), but Infrastructure Act 2015, responsibility transfer of property ownership are ranking one service provider for the 316 local authority registers is as a means of speeding up the against the best regardless of sectors being transferred to the Land Registry conveyancing process. However, it (for example, HSBC v Amazon). in a phased approach, beginning in was simply a “proof of concept” to summer 2018. ensure the registry was up to speed “Legal services are increasingly being with the potential of distributed judged against a range of other Says Mike Harlow: ledger technology. While blockchain digital service providers that are much “We are doing what we can do as is used for land registration in at least more advanced, and this will become a public sector organisation and one other jurisdiction, it is not clear increasingly problematic for law firms.” Land Registry to make data properly that the technology is necessary for digital and properly available in all of these purposes. A number of lawtech providers the ways that people might want to are developing mobile solutions consume it and repackage it and sell Conveyancing is particularly responsive specifically for business-to-consumer it or present it.” to lawtech and automation, because law firms, but this is still not a it is extremely cost competitive and mainstream experience for customers Its other recent priorities have been conveyancers are anxious to meet as law firms remain reluctant to invest how smart contracts can enable increasing client expectations around in technology, the report found, interactions with the land register; the the customer experience. even when consumer behaviour and benefits, and possible applications, expectation is more advanced than of distributed ledger technology The Law Society’s Lawtech Adoption what is currently being offered by (blockchain) for land registration and Research, published last year, said: most law firms. conveyancing; and how identity can “Automation and digital solutions be checked once and shared securely are slowly filtering through, “However, the research suggests across the buying and selling process. particularly where law firms are that self-service law with minimal beginning to deliver more services interaction with lawyers is not that There have already been significant online. Conveyancing volumes in far away. One B2C law firm executive milestones. In April 2018, the the larger, more commoditised and said: ‘We would like to become a first digital mortgage deed was industrialised providers allow for self-service law provider enabling signed and entered into the land process automation that can drive individuals to do conveyancing via an register, with applicants using the down the cost to serve. Examples app on their phone, with notifications, Government’s Verify system to prove here include Land Registry integration payment through Android or Apple their identities. tools, production of welcome packs, Pay. There would be no need to call up and some mobile app services or log on to portals. Providing direct sharing information such as project access via a phone will get things milestones or automated notifications enacted much faster.’” with the client.”

Regulating Property And Probate Lawyers 13 CLC Conveyancing whitepaper

The Home Buying and Selling Group “So you could look at a property Upfront is a stakeholder body set up to assist on a property portal with a ‘Lender MHCLG in developing and testing approved’ banner across it that will information improvements to the home buying make it clear that this is a title that is and selling process as identified acceptable to the major high street While Home by the department through its call lenders,” she forecast. Similarly, Information Packs are for evidence. HM Land Registry is working with a thing of the past, the Nationwide Building Society, which The upfront information sub-group has wants to access Local Land Charge idea behind them – created Buying and Selling Property data instantly to inform its decisions that buyers should have Information (BASPI) – which has been in principle on mortgage and described as intended to deliver “one remortgage applications. access to a lot more source of truth” about a property. information about the She adds: property at the start of As Beth Rudolf, director of delivery Because we would like to see it the process – is once at the Conveyancing Association available in digital format, it could be and one of those involved in the signed digitally and supported by again the focus of development of BASPI, puts it “What biometric identity verification for the much work. we really want is information that is seller to establish that they own that completed at the beginning of the identity and that it is the identity of transaction before the property goes the registered proprietor? How far on the market so that the buyer can would this go in terms of eradicating make an informed choice.” seller impersonation fraud and reducing claims, which in turn would This will be completed at the point reduce conveyancers’ insurance of marketing and pre-populated with premiums that have currently reached “authoritative” data that is available an eye-watering high this year electronically. Around a third of the thanks to several big claims? That required data is currently available is all possible and would create a that way and the seller will be able significant improvement across the simply to confirm whether it is entire process for all stakeholders.” correct or if anything has changed. The form will also be intelligent, for The key to the next stage of progress, example recognising that certain however, will be a data standard searches are appropriate for the that enables all of the parties’ property’s postcode. different systems to talk to each other. Agreeing data standards and It will be accessible to the buyer a scheme of the data with agreed prior to the offer as well as lenders, fields and metatags is also part of the and sent to all parties with the group’s work. memorandum of sale. This will include the valuer, reducing or eliminating Lawtech firms are already looking the need for post-valuation enquiries at digitising BASPI and investigating that currently do so much to lengthen how it could be integrated into transaction times. their systems.

Ms Rudolf also suggests that lenders should have access to all the information out there on a property to identify whether that property is suitable for their own lending policies.

14 Council for Licensed Conveyancers www.clc-uk.org

The Forces of change The UK in 2030 – the wider context

Brexit makes it hard to predict where the UK economy will be in 10 years’ time, although a report last year from Standard Chartered predicted that the UK Consumer behaviour Smart homes Certainly, consumer behaviour will Connected homes are already will have fallen out of have changed significantly by then becoming the norm for many, the world’s 10 biggest as Generation Z (anyone born since whether through virtual assistants like economies by 2030, 1996) matures. Global management Alexa, smart meters or doorbells with as Asian countries’ consultancy AT Kearney’s Global cameras that allow you to see who is Future Consumer Study predicts that, outside your house from wherever in GDP rises. while older generations will have the world you may be. This trend will affluence, younger ones will have only accelerate. The most recent UK population figure influence, driven by personal values – is 66.4m in 2018, according to the rather than the value inherent in A 2017 report by smart home Office for National Statistics, and it is the product or service they are technology company Andrew Lucas projected to pass 70m by mid-2029. consuming – and hyper-connectivity, International foresaw that, by 2030, This represents a slowing down of “where markets can be moved such technology will have become a growth as people live longer and have through the amplified power of an standard feature in houses: fewer children. individual voice.” “Technology-focused new builds will “The ways in which people live create homes that are both extremely It will in future be trust, influence are also changing with cohabiting environmentally friendly and more and personalisation – rather than families the fastest-growing family resistant to environmental threats affluence, advertising and scale – that type and more young adults living such as floods and fires.” drive the market, the study says. with their parents,” it added. Artificial intelligence will play a Euromonitor’s Households in 2030 major role in the house of 2030, report says single-person households According to a PwC forecast in 2018, with predictive algorithms, inference will see faster growth than any this slow-down in population growth engines and deep-learning networks other household type globally, a means that, if the Government could helping smart home technology trend driven by younger singles achieve its pre-election target of to contextualise its surroundings. exchanging relationships for careers building 300,000 new homes a year “Facial and voice recognition could and education, as well as the growing in England, this should exceed the immediately recognise various widowed and divorced elderly group. increase in housing demand from members of the household and It will also be a more urbanised projected population growth and provide informed responses to open- world, with more people living in should therefore start to make up the ended questions, as well as alter flats. “Countries such as China, Brazil backlog from past under-supply. settings and trigger systems to create and the UK will see surging growth in an ideal living environment without apartments through to 2030,” it says. the need for any human interaction.”

Regulating Property And Probate Lawyers 15 CLC Conveyancing whitepaper

A 2016 report by the NHBC In 2016, Shelter produced a report Foundation, The Connected Home, entitled The future of house and looked ahead to developments home: Scenarios for 2030. It like self-diagnosing and reporting details a housing crisis that has mechanical and electrical systems, developed from declining volumes of such as boilers, heat pumps and building, increasing prices, reducing mechanical ventilation units that will affordability, and a dramatic shift diagnose their own faults, schedule in tenure. routine maintenance actions and request appropriate action from a It went on to lay out four scenarios central service company. This takes (not predictions) detailing possible us towards the idea of properties futures for housing and the home, having and automatically updating depending on different institutional their own logbooks, which we and political decisions, and different consider further below. values about the purpose of the home. In summary, these were: Access to internet-enabled tools at • Growing Local: Housing is a property and the data they hold, devolved to cities and regions. will need to be considered as part of Homes are more connected to the transaction in future too. Work Housing trends shared spaces, but provision is will need to be done to ensure that The UK experienced the largest fall geographically uneven. necessary data is preserved while in home ownership of any country the privacy of both seller and buyer • Bricks and Mortar: A large scale in the EU since the financial crisis. is protected. national housebuilding programme According to data compiled by is the backbone of an economic Bloomberg Economics in 2018, the regeneration plan. Housing is proportion of people owning their regarded as a right, but for cost own home collapsed from 73% in reasons most new houses are 2007 to 63% in 2016. And as many compact, flexible and modular. younger people see themselves as priced out of the housing market, it • Rent Radicals: The generational may be that Britain’s love-affair with impacts of expensive rented being a property-owning democracy housing, and its high public costs, has waned. leads to intervention in the housing Reliable, trusted data will market. There is a fairer market, be the cornerstone of the Or it may come in different ways. One but attitudes to housing and home idea that has been floated is collective tend to the functional. digital property market home purchasing schemes. and will be integral to the • Ragged Edges: Home ownership is promoted in the face of falling A Which? report Consumers in 2030 – e-conveyancing process. numbers of homes bought through albeit published in the pre-Brexit days a mortgage. The home remains a of 2013 – suggested that the increase nest egg – but is, increasingly, also in life expectancy over the coming a ‘cocoon’ – a place of retreat years would decrease the value of and security. many people’s estates, as savings are used to top up pensions, or are eaten up paying for care. Which? suggested that a scheme that allows online ‘teams’ of home-buyers to take out low-interest loans and support one another to make repayments, would be an attractive solution.

16 Council for Licensed Conveyancers www.clc-uk.org

Shelter said: “Taking this set of What does this all mean scenarios as a whole, it for conveyancing? is clear that although our housing problems In a study of the Australian conveyancing are deeply rooted, market, the consultancy firm Deloitte identified they are not inevitable. two “critical uncertainties” through which Things can get better, different futures could be imagined. but that depends on the choices that we decide The degree to which The visibility of conveyancing as to make as a society.” conveyancing is digitally enabled a distinct or embedded service: versus digitally led: how fast actors the extent to which customers take up continued digitisation, move and the industry move toward This all has to be seen against towards automation and integrate purchasing conveyancing as a the backdrop of ever-rising house new technologies into the industry separate, standalone service, or prices, although according to such that conveyancing becomes a to which it becomes horizontally KPMG’s Outlook for UK housing digitally enabled service delivered integrated into other elements of prices report in September last by people, or a digitally led service the property transaction process – year, the market has been “stuck requiring less human input. This will such as real estate sales or banking in the slow lane since 2016”, with be dependent on investment cost, and mortgage broking. This will be annual house price growth slowing customer demand, Government dependent on customer preferences, to 0.9% in June 2019, from a rate regulation or the industry working industry business models, cost and of 8.2% three years earlier. together to establish new standards. competition.

At the time of writing, the impact [The future of the Australian of Brexit is the great unknown conveyancing industry 2025 and and makes predicting house prices 2030, Deloitte 2018] in 2030 difficult – although if longer-term trends re-establish themselves, then prices could increase by more than 50% by then.

Regulating Property And Probate Lawyers 17 CLC Conveyancing whitepaper

Future 1 A 2018 KPMG analysis into the benefits of e-conveyancing in Conveyancing will Australia found that the electronic PEXA be a fully electronic platform not only reduces the process by 2030 potential risks associated with human error during a conveyancing This seems less a hypothetical and transaction, but also delivers time and more of a racing certainty. cost savings.

It is instructive to look at Australia. It PEXA has already handled more than has led the world on e-conveyancing, two million transactions. The Deloitte creating PEXA (Property Exchange report predicted that, by 2022, the Australia). The system provides an majority of transactions would be online secure ‘workspace’ which conducted electronically. allows each participant in the transaction to talk to each other. All Eddie Goldsmith, a founder, former the documents are created within the chairman and now executive workspace, signed and lodged online member of the UK’s Conveyancing This means conveyancers use PEXA to Association, explains that, at the time liaise with their client’s bank, conduct PEXA was introduced, conveyancers title searches, lodge documents and in Australia were still undertaking transfer funds – paying any duties, personal completions. Now, it is taxes and other disbursements along way ahead of England and Wales, the way – and ultimately register the and conveyancers are still involved transaction with the appropriate state – evidence that end-to-end digital land registry. conveyancing is not their death knell.

PEXA is the result of a concerted “We’re fiddling around at the edges political effort that began in 2008 at the moment – there’s no appetite that saw various states gradually to review the actual process itself,” adopt an e-conveyancing law. The he argues. “There’s some good stuff first full online transaction was carried going on around leasehold, more out in New South Wales in 2014 and upfront information and reservation that state continues to lead the way, agreements, but ultimately we with all property transactions in the want a transformation of the state moving online last July. conveyancing process.”

Paul Denny, a conveyancer who For him, that future is similar to took part in that first transaction, Australia, where a home buyer will go said: “When we don’t do a PEXA to an estate agent, find a property, settlement now, it’s a real hassle. put down a holding deposit and Looking back to the old method, agree a completion date for 60 or in retrospect, it’s so archaic. Now 90 days hence, leaving the office that people are on board, it’d be knowing they are going to buy it. extremely difficult to go back to the “The current levels of uncertainty are way it used to be done.” not acceptable,” he argues.

18 Council for Licensed Conveyancers www.clc-uk.org

The UK is heading in the same Issues identified by the direction as PEXA – especially as CLC for discussion: the Land Registry intends to have all land in England and Wales As conveyancing becomes ever more registered by 2030 – but neither as automated, what are the implications quickly nor in such a focused way. for how the consumer is protected? In its 2018 response to the call for Will digital conveyancing demand evidence, MHCLG predicted that a new regulatory approach or will progress towards e-conveyancing principals of legal businesses remain would be made “via a large number accountable for the output of the of small increments rather than a technology they either develop single panacea.” themselves or buy-in?

It continued: “We do not think While it is possible to envision a that mandating a move to time when technology could replace e-conveyancing through legislation the conveyancer, will clients ever would be helpful at this point, be prepared to have a purchase as although we acknowledge that this significant as a property transaction has been successful in countries proceed without the involvement of such as Australia. However, we do a qualified lawyer to advise them and want progress to continue to be ensure their interests are protected? made, so we will be setting up a technology working group to help Technology also has the theoretical There have been attempts in the past drive through changes. potential to enable ‘unbundled’ to use technology to improve the conveyancing, with the consumer home-buying process, such as the “Amongst the first items this group taking on more of the process for Land Registry’s Chain Matrix system will look at is digital signatures themselves. This raises a number of back in 2007. However, none has yet and ID verification. We are also issues that will need to be tackled come to fruition, perhaps because investigating routes to market for for it to become a reality. How will they were ahead of their time. What innovative digital solutions.” the conveyancer’s responsibility are the barriers to success and why to other parties (such as lenders) may the next decade be different? Whether e-conveyancing is mandated be protected? Will consumers or not, the trend for conveyancing to understand and be willing to take The Government have previously become increasingly concentrated in on additional risk and who becomes ruled out mandating changes, specialist firms is likely to continue. liable if things go wrong? Will the but is this incremental market-led Whether it is owing to the rise in insurance market develop products approach the right way? Should professional indemnity insurance that will enable conveyancers and e-conveyancing be mandated? It premiums, the need to invest in consumers to share risks? would undoubtedly have a huge technology or specialist requirements impact on the market, with the long to combat fraud, we can expect the Just because it may be possible for tail of ‘part-time’ conveyancers less trend will be away from generalist this to happen, will it actually be likely to have the ability to cope legal businesses undertaking a a positive for consumers and how with this. But if progress is too slow, modest number of conveyancing will it affect the profitability of when should Government move from transactions each year. conveyancing practices? These are encouragement to compulsion? challenging questions that we do not attempt to address in this paper.

Regulating Property And Probate Lawyers 19 CLC Conveyancing whitepaper

Professor Nick Hopkins

Under the model of electronic conveyancing envisaged by the Land Registration Act 2002, all aspects of a transaction, from the provision of information to the registration of dispositions, would occur electronically. This would close the registration gap: an interest would be registered at the same moment that it was created, with completion and registration occurring simultaneously. The registrar would have oversight of transactions on an electronic network – though ‘chain management’ – although they would still be conducted by a conveyancer as the ‘chain manager’.

The Act does not implement this The review found that it was not vision directly. Rather, it contains practicable to move directly from rule-making powers, intended to a paper-based system to electronic allow the provision for electronic conveyancing based on simultaneous conveyancing to be based on completion and registration because technological developments. These the technology does not exist “in a include the power to ‘switch off’ form that is sufficiently cost-effective, paper-based conveyancing, but only widespread and integrated with other once simultaneous completion and aspects of the conveyancing process”. registration is possible. Rather, says Professor Nick Hopkins, The Act was drafted in the the Law Commissioner in charge expectation that electronic of the project, for electronic conveyancing would develop conveyancing to become a reality, relatively quickly, but it has not the legal framework needs to be happened that fast. amended to allow development to occur flexibly and incrementally. “Our In July 2018, the Law Commission consultation found a lot of support completed an update of the Act. for what Act was trying to achieve The project was not designed to – particularly closing the registration fundamentally reformulate the gap – but that it was necessary to legislation, but to improve specific take steps rather than a giant leap.” aspects of its operation within the existing legal framework.

20 Council for Licensed Conveyancers www.clc-uk.org

Under the commission’s proposals, Looking longer term, Professor the Act would still allow for Hopkins is intrigued by the simultaneous completion and implications of increasing data about registration once the technology properties. “There are currently allowed, however. a limited number of repositories for information about land, of It also said that some of the benefits which the land register is the most of electronic conveyancing might significant. If other living databases only be achievable once it became around land arose, that could raise compulsory: “For example, the general questions about the sort of benefits that can be obtained through information we want to have on the chain management might fall away register. What about those pieces of if any part of the chain is being information that would be useful to conducted through a paper-based capture but do not have the same conveyance. Moreover, once electronic status as what is on the register, conveyancing has been adopted by such as the land’s environmental the vast majority of users, it may footprint, school catchment area or become inefficient and expensive to bin emptying days?” operate a parallel paper system.” The commission’s final report But Professor Hopkins says he was recommended other technical struck during the review by how the reforms to iron out the kinks in the system “works when it facilitates law and help prevent fraud. The rather than prescribes”. At the same Government’s preliminary response in time, he acknowledges that the move January 2019 was that many of the towards electronic conveyancing recommendations were “likely to be The system works when needs someone driving it, but the acceptable in principle”, but its final it facilitates rather than review was confined to considering response has still to be published. prescribes. what the Act itself should provide for.

A review of the home-buying and selling process – the Law Commission’s most recent consultation on its work programme did see “a number of people” call for this. He says: “We would be very happy to look at it. Under the protocol with the government, we can only look at an area if Government agrees that the Law Commission should conduct a review and the relevant minister indicates that there is a serious prospect of reform. If they did so, I think there would be a lot of support within the Law Commission.”

Regulating Property And Probate Lawyers 21 CLC Conveyancing whitepaper

Future 2 Alongside these property-specific developments is open banking, a Money and financial secure way to give financial services information will providers access to individuals’ move around financial information. This could quickly and securely significantly assist lenders in speeding up the mortgage process. Fraudsters have successfully targeted the property market, attracted by The Open Banking API is a secure way the large sums of money that are on to give providers access to individuals’ the move. This has encouraged new financial information, enabling solutions and third-party managed customers to aggregate and integrate account (TPMA) providers are at the their products and services from forefront. The rules of both the CLC different financial institutions. It has and the SRA allow for the possibilities been used by Thirdfort to undertake they offer. source of funds checks. The system aims to improve the speed and rigour TPMAs use a single central client of identity checks by removing the account to handle transactions need for firms to inspect physical on behalf of buyers, sellers and passports and documents. mortgage lenders – they take place simultaneously, rather than Better tools should streamline the sequentially as now. This has the process and provide greater certainty potential both to improve the client to all parties involved. As the Thirdfort experience and, crucially, reduce the product shows, new applications can risk of fraud. aim to use data to seamlessly protect vendors, prevent fraud and enable In 2018, one of these providers, property lawyers to fulfil their anti- Shieldpay, completed the UK’s first money laundering obligations. fully digital mortgage settlement with Barclays and MyHomeMove, and the Issues identified by the support of the CLC as the latter’s CLC for discussion: regulator. Shieldpay provided a digital escrow facility to take charge of the As new risks emerge, is the regulatory purchase money, pay the seller; in system ready to ensure that those time it will be able to pay both the risks are managed effectively through stamp duty and HM Land Registry regulation by legal and financial fees for the property. Other TPMA or specialist regulators? escrow providers are also developing products for the conveyancing As new solutions emerge, there are marketing – Thirdfort is the other multiple regulators with a potential notable start-up in this market. interest in property transactions, including legal, financial and In Australia, PEXA has launched an information. Should legal regulators app which provides a guaranteed take the lead in developing common secure communication channel for standards for providers or is this a bank account details to be shared financial regulation matter? between practitioners and their clients.

22 Council for Licensed Conveyancers www.clc-uk.org

Future 3 Artificial intelligence could also Blockchain and distributed change the work of lawyers, It’s all about ledger technologies analysing the data and producing the data exception reports to flag up the areas Blockchain could be a key to this on which lawyers need to focus. future. Once there is a common Kris Clark, chief innovation officer standard – one blockchain for land Reliable, trusted data will be the and head of AI strategy at Landmark – the possibilities open up. The Land cornerstone of the digital property Information Group, says: “Our goal Registry is almost certainly where this market and will be integral to the is to ensure that the next generation change would originate. e-conveyancing process. In 2017, of data products and services the Government established the have less friction, fewer manual But it is not alone. Last year, start-up Geospatial Commission, which aims interventions, and surface the company Instant Property Network to maximise the value of information right level of information upfront – which is also involved in the relevant to location – geospatial data. to support legal professionals in Digital Street project – ran its own It is working with six core partners, streamlining conveyancing. worldwide trial involving international including HM Land Registry, Ordnance law firms and banks, and found the Survey and the Coal Authority. “There should be less waiting for time taken to transact properties information, less reliance on reading could be cut from over three months When combined with the BASPI and interpretation, and more time to less than three weeks. discussed earlier, it all leads into the for fee-earners to focus on delivering idea of property logbooks, which is excellent customer experience The trial, which was facilitated by a hot topic in the Home Buying and to clients.” enterprise blockchain software firm Selling Group. Rather than going R3, ran transactions using test data through an arduous process of Law firms sit on a wealth of data through a new distributed ledger to aggregating all the data needed to and know-how, and with the right simulate residential property sales transfer a property and then leaving tools to analyse and interrogate this over a five-day period. It was unusual it in a dead file, it would be far better data, they could move away from the because the platform being tested to keep the information accessible so administrative side of the work to did not store data but integrated that it can be downloaded when the the pure advisory – which is why they participants’ own technology. property is next put on the market qualified in the first place. and updated as necessary. IPN said the trial “showcased how Interrogating and analysing data will duplications and costly reconciliation As data flows more freely, with serve to maximise the value of the processes could be removed from live data streams and blockchain, advice offered to clients, changing the buy/sell process, with the first the logbook can become dynamic, the conversations taking place with transaction taking less than an hour updating automatically, and even be clients. Instead of simply pointing out to complete.” connected directly to the property a risk, the lawyer could put it into through the Internet of Things. In context, for example saying that the Tara Waters, a partner at City of other words, a real-world property risk is one shared by two-thirds of the London law firm Ashurst, which was could have an accurate digital twin. properties in the area and has proved one of those involved in the trial, says: not to be a problem. Indeed, Andrew Lloyd, managing “The IPN trial has demonstrated director of Search Acumen, suggests the efficiency of enabling multiple This is a future where lawyers need that live data and blockchain could parties to work on a single property to start acting as data scientists by render the entire search process transaction using a shared technology recognising and capturing the value redundant: “It could be that, within platform. The addition of distributed that they have in theirs and their a decade, property searches as we ledger technology to residential clients’ data. Married with contract know them cease to exist. Instead, conveyancing enhances transparency, analytics, natural language processing incorporating several streams of live trust and certainty in a process that and machine learning, law firms could data will allow lawyers to call on the for many can seem opaque, inefficient generate powerful, useable data. most up-to-date data sets needed in and outside of their control. the due diligence process all by simply searching an address or title number.”

Regulating Property And Probate Lawyers 23 CLC Conveyancing whitepaper

But there are plenty of enthusiasts Issues identified by the too. Search Acumen took part in CLC for discussion: the trial and Andrew Lloyd says: “DLT essentially allows many parties The centrality of data to the future to remotely access the same digital raises big issues that are already live documents. A distributed ledger is in other sectors. If the data becomes able to ‘cut out the middleman’ who the single source of truth, then what would traditionally have been the needs to change to ensure all parties conduit that sends the document from can trust the data? Who will validate one party to another when each stage the information and who becomes of a property transaction is completed. responsible if that data is incorrect or something goes wrong? “With DLT, the network can function without a central administrator. It To enable data to flow across the allows accounts and documents to system and to allow interoperability, only be visible to those that need to there needs to be agreed standards for see specific records, rather than every the data itself. Should the standards item held within the ledger. be developed by consensus or is there a role for Government or others? “Take for example a mortgage provider, estate agent and As providers begin to develop conveyancer involved in a transaction. different standards and seek to DLT would make it possible for impose their approach, is there a mortgage provider and conveyancer risk that they effectively become “We believe that the success of the to have shared ownership of two non-statutory regulators mandating IPN trial represents an important first documents that the estate agent isn’t change without any oversight and step towards the digitisation of the privy to, while the conveyancer and imposing additional burdens on wider real estate sector. To have so estate agent can view and edit three businesses? There are already many many stakeholders participating is a others the mortgage provider can’t. similar pressures on conveyancers testament to the transformative value All of them would also be able to have from other players who set rules for that distributed ledger technology their own data points only they can engagement in the process. can bring to the sector.” see. This way, the conveyancer has overview of the process without being Can insurance play a role in providing There are, of course, a significant dependent on the other parties.” a backstop if things go wrong number of hurdles to overcome Where blockchain may help, Mike for consumers or is the potential with a system of this nature, such as Harlow of the Land Registry suggests, detriment such that we need dealing with local law requirements. is delivering “the single source of different safeguards? Plus there is huge hype around truth for all parties rather than blockchain and distributed ledger everyone shuffling the information Improving the UK’s standing in the technology (DLT) that inevitably around each other and somebody World Bank’s Ease of Doing Business makes some people sceptical. missing something.” index2 has previously been of concern to Government. A low ranking on the With the development of chain views ease of property transfer drags down as well, there is an increasing focus on our overall rating. Would changes such collaboration in the home buying and as BASPI and the other work of the selling process, but there are concerns Home Buying and Selling Group have that smaller law firms will not adopt a material impact on how easy it is to the technology required to drive this – move and so increase our performance through inertia, unwillingness (because against competitor nations? they do not do enough work to justify the investment) or being unable to afford it. 2 https://www.doingbusiness.org/en/data/ exploreeconomies/united-kingdom#DB_rp

24 Council for Licensed Conveyancers www.clc-uk.org

Future 4 As much of the administrative side But Mike Harlow stresses that this of the role becomes automated, is “an inherently conservative sector The conveyancer’s the focus will be on advisory work of the economy”. He talks about role is going to where the quality of service – as partners he knows in commercial change rated by external quality indicators property law firms that file emails, do along with comparison or feedback not have a case management system Beth Rudolf of the Conveyancing websites – will be decisive in where and don’t even know what electronic Association agrees that the instructions go. signatures are. “They are a long way future is “all about the data.” But off and they have the money to while machine learning, artificial Mike Harlow stresses the importance invest. They just don’t see the need.” intelligence and blockchain should of consumer protection. “We have remove much of the grunt work to recognise that, however much Issues identified by the from the process, “fundamentally the you might want to put on a white CLC for discussion: consumer will still need to receive sheet of paper a really simple system, advice as to what the data means ultimately people have conflicts of What are the new skills conveyancers to them.” interest in the process and they need may need to succeed in this new to be separately represented. So that world? Will the curriculum for She continues: “We will see a gives you a design problem, which trainees need to change and can digitally supported transaction is if you’re trying to design out the ongoing training support those who that is controlled by the consumer. number of contact points, you cannot are already working in conveyancing? Perhaps they will have an app on reduce the number of parties down Will it be the role of regulators to set their smartphone, and once all the beyond a certain number. Somebody competences in this area? data is collated automatically, the somewhere has to protect the consumer will then be able to speak consumer on either side.” How do we ensure users of systems to a conveyancer in whatever way understand why they have to do they wish. I say ‘speak’ – it might Mark Montgomery says: “ something rather than just what they be chatbots, it might be phone calls The conveyancing market is just so have to do? or video calls or face to face – but fragmented. You’ve got six lenders the conveyancer can then explain to accounting for 70% of all lending Do regulators have a role in them the impact of that information and then only about 60 others – facilitating the use of new technology on their intended use and enjoyment whereas there are over 4,000 active within regulated businesses? of the property and the suitability of conveyancing firms most years. that property for their needs.” Amongst those, there are probably only 200 or so that are specialist Mark Montgomery, chief strategy conveyancers with the scale and officer at Simplify, owner of ambition to invest in technology and conveyancing giant Premier Property commit to changing the way that Lawyers and three other top-ten they work. Collectively those 200 conveyancing firms (APL, DC Law & firms only account for about JS Law), agrees that the counselling 40% - the top six account for less aspect of a lawyer’s role will become than 10% of the market. more important as e-conveyancing There should be less takes over. “The more you take online “So we’ve got this massive tail that waiting for information, the less comfortable some consumers the industry needs to somehow will be,” he points out. “Even for less reliance on reading engage in whatever process and digital natives, it’s human nature to and interpretation, and collaboration we can come up with, want some personal professional because without that we can all more time for fee-earners reassurance.” be doing the best we can with all to focus on delivering the technology but if we’re part of excellent customer chains, we have to go at the pace of the slowest.” experience to clients.

Regulating Property And Probate Lawyers 25 CLC Conveyancing whitepaper

Future 5 A bigger picture question is whether “The interesting question is how,” conveyancing will survive as a service says Mark Montgomery, “because The shape of the delivered by separate providers or if you are a large estate agency and conveyancing become part of what an estate you want to buy a big conveyancing market will change agent offers. Consumer expert Mark firm, that firm’s already got some McLaren, who sits on both the Legal value which would be destroyed To go back to Bill Gates, if you look Services Consumer Panel and the by you getting rid of all of their back at the legal market in October board of the Property Ombudsman, natural other business. If the 2011 – when the CLC licensed the says his experience is that “consumers other alternative is to buy a small first ABS – things have changed a lot basically don’t understand the conveyancing firm, they then have since then. conveyancing process.” And, as to learn how to build that into a big previous CLC research has found, firm. At the moment, it’s actually Law firms have floated, accepted they don’t really care. What the easier for those different parts of the private equity, combined with other consumer wants is for the transaction market to collaborate effectively.” professionals – all of the Big Four to happen speedily and with accountants have legal services minimum fuss. Indeed, he speculates that the ABSs – been created by membership technology may actually move some organisations and much more Mark Montgomery says the reason lawyers in the opposite direction: besides. There are now more than why large estate agencies have yet to “With the right support, I could 1,000 ABSs. It may not have been enter conveyancing in a major way see an army of experienced sole the ‘big bang’ of Tesco Law, yet “is because it’s quite difficult, and contractor conveyancers working slowly but surely, the legal market is because the market is very cyclical – from home, dipping in and doing that transforming. By 2030, supported by it’s proven easier, in the past to flex expert conveyancing work through technology opening up new ways of estate agency staff in branches than it some third-party platform, not providing services, this is likely to is to flex conveyancing professionals.” needing to be part of a law firm and have accelerated. commute for an hour to get there. Eddie Goldsmith of the Conveyancing Will it be the big brands though? Association, agrees with this and “The challenge will be around There is some doubt now. David suggests it might also be that lenders whether individual conveyancers Jabbari, the head of conveyancing feel more comfortable with an arm’s- want to take on the personal risk firm Muve, tried to bring ABSs into length panel lawyer who can be sued. of running their own business or the retail mainstream for several do the same thing as a home- years. But he says his thinking has Another consideration for the based employee of an existing firm, changed, because the entry of big corporate estate agents is whether supported by technology for brands into legal services – about the figures stack up better with the remote working.” which he was once “evangelical” – current system where they receive has not materialised and would not referral fees from independent And as new ways of practising arise, now happen. conveyancers or with having control such as the SRA’s freelance solicitors, of the whole process. this becomes ever more feasible. He says legal services do not provide enough financial benefit to those But as the conveyancer’s role Eddie Goldsmith warns that “if we companies with strong brands and becomes more focused on the don’t think our world is changing, high lifetime customer value to risk advisory, consolidation will occur – then we’re deluded”. He continues: a slow conveyancing transaction and the figures on active firms in the “If you’re an optimist here, it gives damaging their long-term relationship market indicates that it already is – you the opportunity to be that person with a customer. and estate agencies will find it easier that you actually qualified to be – to provide legal services using ABSs. which is giving advice. We didn’t qualify to push paper around and if you look at a standard transaction, 80% of it is admin.

26 Council for Licensed Conveyancers www.clc-uk.org

“The greatest threat to all So technology is, of course, a threat conveyancers is a third-party disruptor as well as an opportunity. As Alan coming in and saying we can offer Ainsworth from the Open Banking something better than that – digital Implementation Entity puts it, if the conveyancing is where they will see collection of data is automated, the opportunity,” he asserts. “you’ll find that the business model changes as the current model is He predicts that, in 10 years’ time, disrupted by tech firms that come there will be no more than 1,000 in and automate the whole process, active conveyancing firms as a result meaning the only reason you would of huge consolidation. “If I was a need a lawyer is for more expert, young, resourced conveyancing firm added-value or complex aspects of now, I’d be looking to merge or the transaction.” acquire,” he says. This will be against the background of clients having Issues identified by the greater control of the process, in turn CLC for discussion: reducing the conveyancer’s role. Conveyancing businesses are He envisages several potential futures exposed to many factors out of for conveyancing firms, from the their control, including the overall consolidator and aggregator, to condition of the economy, the state the niche firm specialising in “non- of the housing market, and changes standard” matters and dedicated in attitudes and demographics. As lender firms. we discussed earlier, CLC practices recovered from the credit crunch Mr Goldsmith stresses that there will better than others, but how do we still plenty of non-standard work ensure that firms are able to prepare and clients who want a face-to-face themselves for future disruption? service, but that will cost consumers more money. Will new business models need to emerge and will the existing Longer term, though, he can see the predominate model of the practice rise of what he calls the ‘iConveyancer’ survive? How may legal businesses – software programmes that allow the need to structure to ensure they client to control the process with little can compete and will this entail or no involvement of a lawyer. This different forms of entity and different will require sophisticated AI that is not funding models? available at the moment, as well as have digital end-to-end conveyancing, Disruption in many sectors has I could see an army but it is a viable prospect. been driven by consumers availing of experienced sole themselves of the new technology contractor conveyancers and so driving change. But given that home purchases are a rare working from home, occurrence for most, consumer dipping in and doing that influence may be less powerful and expert conveyancing work less effective in driving change. So, where will the power and influence through some third-party to drive change reside? platform, not needing to be part of a law firm.

Regulating Property And Probate Lawyers 27 CLC Conveyancing whitepaper

Future 6 Stephen Ward stresses that the CLC will continue to see the principals in Regulators will firms as accountable and responsible. need to be flexible “Where we see problems arising to keep up today with the current technology is that problems arise when the One of the major challenges I don’t think that we principals in a firm think that by, facing regulators such as the CLC for example, outsourcing their would ever get into is understanding the underlying accounting, they no longer need systems that will be developed over regulating the tool but to understand what goes on in the next decade, often by third-party what we would be doing the accounting ‘black box’. That’s providers. misconceived because the managers is setting and policing of the law firm are the people who Stephen Ward, the CLC’s director of those standards, perhaps we will strike off if anything goes strategy and external affairs, says the doing some kind of check wrong – not the parties providing regulator’s role will likely be to set the accounting system.” from time to time.” the standards against which licensed conveyancers can judge such systems. Concurrent with the development “I don’t think that we would ever get of this Discussion Paper, Professor into regulating the tool but what we Stephen Mayson of UCL Centre for would be doing is setting and policing Ethics and Law has been carrying those standards, perhaps doing some out the Independent Review of kind of check from time to time.” Legal Services Regulation. While that review’s remit is far wider than the He points to the CLC’s work on third- regulation of property lawyers, his party managed accounts. interim report identified a mismatch between consumer expectations of One risk to consider is the impact regulation and protection, and the of disaggregation and whether, in current structure as established by the making everything as efficient as it 2007 Legal Services Act. can be, you lose the whole point of what you are supposed to be doing. The interim report saw all legal Does the person pressing the button services being regulated, but to send a document to the Land providers subject to different Registry understand the implications? requirements depending on the work they do. It suggested that, among This is the risk with disaggregating other benefits, it would enable the process. The danger of making regulation of lawtech. The report everything as efficient as it possibly added: “The ability to treat lawtech can be is that “you lose the whole as offered by a ‘provider of legal point of what you’re supposed to be services’ could bring all forms of doing”, Mr Harlow cautions. legal technology into the regulatory framework, whether or not it is provided by an individual or entity already subject to regulation.”

28 Council for Licensed Conveyancers www.clc-uk.org

Issues identified by the CLC for discussion:

Will new technology require changes in the way we regulate to ensure public protection? Is an outcomes- focused structure where responsibility ultimately resides in the principals of regulated businesses still the best way to deliver protection?

As the AI ‘black box’ begins to guide legal decisions, will legal regulators need to widen their remit to cover the technology firms developing the systems used by conveyancing practices?

Does the potential for regulators to have access to the technology being used in firms allow for more rapid real-time intelligence and compliance monitoring? What should the relationship be between regulators and the technology developers and does this mean that regulators need to become more involved in the development of technology specifications?

As Professor Mayson argues, does the current regulatory structure provide an incomplete and limited framework for legal services regulation that will struggle in the near term and beyond to meet the demands and expectations placed on it? If so, how does the regulatory system need to adapt to ensure it is ready for future changes?

Regulating Property And Probate Lawyers 29 CLC Conveyancing whitepaper

In summary – Moving home in 2030 “People are always looking for the single magic bullet that will totally change everything. There is no single magic bullet.” Temple Grandin

The role of the conveyancer is The number of active conveyancing undoubtedly going to change as law firms will continue to fall as much of the administrative side of consolidators continue to grow, the role becomes automated. The estate agents offer a combined focus will be on advisory work where service, and the investment needed the quality of service – as rated by for the technology prices some small external comparison or feedback firms out. websites – will be decisive in where instructions go. As the role changes, conveyancers will need to invest in training and Technology will radically improve skills acquisition for themselves transparency for consumers about and their staff. Soft skills such as what they are buying and the communication skills, listening skills, progress of their transaction. Because and empathy will become ever of the Internet of Things, properties more important as the ability to will maintain up-to-date logbooks build relationships becomes even with little human intervention. more central.

It might not be clear yet exactly when We finish where we began, with the real impact of the next wave of Bill Gates’ quote: tech will hit, but look at the speed “We always overestimate with which smart phones went from an oddity to being ubiquitous. the change that will occur Not only that, but the voice-calling in the next two years element is less and less important and underestimate the as people adopt messaging apps and use the phone as a platform for change that will occur in navigation, shopping, social media the next ten.” and so much more. The challenge for all of us is to be ready to benefit from He then went on to say: those innovations when they come. ? “Don’t let yourself be 2030 Conveyancers will bank both time lulled into inaction.” and cost savings, to be reinvested in improving the quality of service, upgrading technology and ensuring cyber security.

30 Council for Licensed Conveyancers www.clc-uk.org

The greatest threat to all conveyancers is a third-party disruptor coming in and saying we can offer something better than that – digital conveyancing is where they will see the opportunity.

Regulating Property And Probate Lawyers 31 Contact us For enquiries, please use the details below.

We are open Mon-Fri, 8am-5pm.

Contact Centre Tel: 020 3859 0904 Email: [email protected] DX 42615 Cheapside www.clc-uk.org

Postal address: Council for Licensed Conveyancers WeWork 131 Finsbury Pavement London EC2A 1NT