Commoditisation -v- the old-fashioned "family solicitor"

In The Private Patient, the author - P D James - several times includes an assumption that "people of means" will have a permanent solicitor - a family solicitor - who knows their background and previous dealings, and can give a broad range of advice and information.

While this used to be the case - and is a useful means for fictional detectives to find out all about the victim's business - it is becoming less and less true these days. More likely, people choose their lawyer on a task-by-task basis, selecting him or her for particularly relevant skills or specialisation. This is understandable: "horses for courses", as the saying goes

In these times, how is one to choose a good lawyer, accountant, surveyor, etc? I suggest, by personal recommendation - from a family member, friend or other professional adviser (eg: ask your conveyancer to recommend a surveyor; ask your accountant to recommend a commercial lawyer)

Indeed, if you have used one lawyer who specialises in a particular field, they are likely to be ideally placed to recommend you to a lawyer for another type of work. Instead of the lawyer in a large firm feeling obliged to recommend you to colleagues in the same firm, a sole practitioner who specialises in one field, will have no reason to do other than recommend you to the best lawyer available for another type of work, whether they are part of a larger firm or another sole practitioner - as long as the referrer is confident of his or her own value to you in their specialist field

A word of warning: one area where this does not work well is where the referrer is paid by the referree: then they do have a vested interest and their recommendation, while it may still be good, is inevitably slightly tainted. Indeed, some estate agents require their staff to refer buyers and sellers to conveyancers that pay referral fees, whether or not that referral is in the best interests of the buyer or the seller or the transaction as a whole

Adding value

I am told by those who know more about this sort of thing than I do - marketing people, mainly - that the "value dimensions" of a business depend on it displaying one or more of the following -

• product leadership
• operational excellence
• customer intimacy

True or not, it provides food for thought

Product leadership

Hmm ... that's a difficult one for lawyers, dependent as they are on implementing, rather than making, law. However, we do our best - for instance, our advice regarding preventing property theft (ask for a copy in the comments section, if interested) and our guarantee of satisfaction

Operational excellence

Within the constraints of the current conveyancing process, we think we are as efficient and speedy as possible, without doing "make work" to appear busy. In addition, we constantly fine-tune our procedures to improve them - and welcome constructive suggestions for further improvements

Customer intimacy

This, I think, is where we are very different from other firms. Unlike "normal" solicitors, who try to minimise contact with clients, estate agents, etc, we actively encourage visits - without insisting on prior appointments - and telephone calls.

To be fair, without an appointment, a visitor is unlikely to see me (or my assistant solicitor), but they will be seen by Samantha Hayes (my conveyancing manager) or Anne Browne (office/conveyancing manager). In all likelihood, Sam or Anne will be able to deal with any procedural or incidental points; any legal issues would be relayed to a lawyer for attention. Similarly with telephone calls: Sam and Anne will know the up-to-date position on any of the residential conveyancing transactions and can update clients and agents as appropriate

We thinks this gives us an almost-unique approachability - until other firms adopt a similar idea, of course

Suggestions welcome

If you can suggest any other "value dimensions" or ways of improving them, please add as comments below

9 ways to choose a lawyer

Some thoughts on how to choose who should handle your legal work for you - mainly focused on residential conveyancing, but of  relevance to other fields as well:

1. Listen to personal recommendations: If you are moving home, speak to friends and family who have moved home recently. If you have a commercial transaction or need other business-related legal help, speak to your accountant. If you are seeking a divorce lawyer, speak to someone who has been though the ordeal.  Who would they recommend you use - or recommend you avoid?

2. Don’t be bullied into a particular choice. In residential transactions, many corporate estate agents are incentivised to refer to particular firms in order to be paid referral fees - sometimes, their staff are disciplined if they do not make successful referrals. However, this is benefiting only the agent, not the buyer or the seller. Indeed, where a buyer is referred to an inefficient firm for a referral fee, the agent is not acting in his client's (the seller's) interests at all - the agent has allowed his own interests to prevent him fulfilling his duty to his own client.  If an agent suggests using a particular firm, ask, "Why?" then "Do you get a referral fee if we use them?"  Similarly, in other legal work, you have the right to choose your own lawyer on the basis of what suits you best.

3.  Buy local, where you can. For a house move, it is probably sensible to use someone local to your destination: a genuinely local conveyancer will know so much more about your area than a so called “national” firm, simply as a result of being involved in their local community. For other legal work, choose a firm local to you - either at home or at work - so that it is convenient to meet when necessary - this is particularly important for family work, where face-to-face discussions minimise the stress and complexity of what is an already over-stressful time


4. Let's talk!   Linked to this is the question of communication: how and how often do you want to be contacted with progress or non-progress reports? Inevitably, some legal work takes longer than other work, and a daily report of "No response yet" in a court action or negotiation would be over the top, but you might well want a weekly email report.  Or you might want instead to be copied in on correspondence, so that you can see what is happening. In a matter with clearly defined milestones - exchange of contracts and completion in a house move, for instance - you might want a phone call to confirm the position, or you may prefer a text, with more detailed information to follow, if needed. Make sure that the lawyer you plan to choose will (within reason) fit in with the way you want to communicate

5. Do online research. Searching for “Conveyancing Tenterden”, for instance, will throw up various conveyancers who are - or pretend to be - in the relevant area. Visit their websites; check that they are, indeed, where they claim to be, and get a feel for how they work and what they offer. The same applies to other fields of law. It is usually the case that lawyers who are genuinely good in their chosen field(s) will make a lot of relevant information available for free on their websites. Be wary of those who claim expertise but fail to demonstrate it


6. Back up that research by phoning - better still, visiting - the firm(s) you have in mind. You can find out a lot about how approachable and client-focussed a firm is by asking a few relevant questions over the phone - still more by how you are treated on an unannounced visit to their office. If they treat you as a nuisance (or worse), you have been warned!

7. Don't choose minimum cost, but maximum value. If you are not sure you can tell the difference, rely on item 1 above: those who have experienced the process can tell you whether they found the service they received good or bad value for money. As a poorer alternative, check to see if the firm you are considering publishes testimonials from satisfied clients - and, ideally, offers a guarantee of satisfaction

8. Talking of cost ...   The work you want done may be suitable for an agreed fixed fee, instead of being charged on the basis of the time spent by the lawyer - there is always the suspicion that this rewards inefficiency. In effect, most residential conveyancers charge a fixed fee, in that they should not exceed their original estimate without clearing it with you - but watch out for hidden extras: get confirmation that the estimated fee covers all the expected work, and that you will not be charged extra for (say) completing a transaction less than two weeks after exchange of contracts, as some conveyancers do

9 Choose a small firm. I am biased, but I feel that most larger firms treat individual clients as of relatively low value, on the basis that there are plenty of other fish in the sea: the loss of one or two clients will not seriously impact on them. A small firm - or sole practitioner - knows he or she must cherish every client; not only are those clients of relatively higher individual value, but they will talk about their experience: see item 1 above. Further, the staff in a small firm will be more of a family or group of friends than in a large firm, where they are "personnel" or "human resources"; a small firm is therefore likely to be friendlier - amongst themselves and towords outsiders (We keep a supply of biscuits for our postmen ...)   Finally, it is such a struggle for a small firm to fight its way through the regulatory and other processes designed by large organisations with large organisations in mind and no experience of being part of a small organisation, that the small guys must have a very good reason for not joining a big firm and letting it take the strain - that reason is enthusiasm: they tend to love what they do and constanty strive to excel at it.

Quality standards?

Research by the Consumer Panel - which advises the Legal Services Board, the regulator of lawyers - finds that "consumers assume all lawyers are technically competent and are subject to more regulatory controls than is the case. This means that quality considerations do not strongly influence consumers' choice of lawyers and people erroneously consider that all legal services are of proven standard."

Apparently, despite a proliferation of quality badges for lawyers, consumers do not use or want quality marks in legal services.

The LSB's reaction to this seems to be to propose yet another layer of regulation for an already heavily regulated sector.

Seems to me it would be better to educate the public that all lawyers are *not* the same - some are better than others, and it is better to make a choice based on experience or a genuine informed recommendation - rather than taking up the referral from the estate agent who is paid by the lawyer to make that referral

Still, I know I am a voice crying in the wilderness. Why on earth should a regulatory body resist the urge to gather more work to itself? It makes one wonder, though ...

We was wrong!

Despite earlier confident predictions, Home Information Packs have been suspended with immediate effect - see here

Home Information Packs - the latest

Thanks to Rob Hailstone of the Bold Group for this:

What is the Current Position?

HIPs have not been scrapped by the Election result. The law still requires a HIP to be in place to market a property. The penalties for non-compliance still apply.

Grant Shapps (the new Housing Minister), has said he will not condone non-compliance by Estate Agents who fail to order HIPs

Grant Shapps has committed to a full industry consultation before scrapping HIPs

The Coalition Agreement refers to scrapping HIPs in the Environment section suggesting more consideration has been given to this topic

Unless a suspension order for the scrapping of HIPs is announced HIPs will remain in place for the foreseeable future. Legislation to adapt or replace them will take some time to pass in Parliament

What Happens Next?

* The new Parliament will be sworn in next week from 18th May. The first Queen’s Speech setting out the initial legislative programme is expected to be held on 25th May. An Emergency Budget will be presented to the House in the first 50 days of the new Parliament and debates on its contents will dominate the initial period before the Summer recess

* The first parliamentary session will run from the end of May to November 2011 (which is the date of the next Queen’s Speech). This means that the Coalition Government has a longer time than normal to get legislation through the Houses of Parliament. This will allow a larger volume of legislation to be passed, particularly as there is a Parliamentary convention that the Lords will not oppose legislation based on a Manifesto Commitment. Ministers are likely to exploit these two factors to pass the complicated and potentially controversial legislation they believe to be necessary.

* We are unlikely to get significantly more detail on how the pledge to scrap HIPs will be taken forward when the Queen’s Speech is published – if indeed it does form part of the initial legislative package. The Speech itself is often little more than a statement of intent and many of the Bills listed in it may not be published until after the summer recess.

* The Conservatives have pledged a consultation on transition and any successive legal framework. It is unlikely that this will be reversed, especially as David Cameron and Nick Clegg have pledged to restore the public’s faith in politicians.

* The pledge on HIPs is unsurprising – it was a commitment delivered in both Parties’ Election Manifestos. The Agreement provides no additional detail on how this will be achieved or delivered. The inclusion of it in the Environment section rather than under deregulation is perhaps significant. It suggests that there is an understanding that scrapping HIPs cannot be undertaken in isolation. It has also been decoupled from the Great Repeal Bill – which has already been flagged as being a very early Bill to be introduced to Parliament ahead of the summer recess.

* The Conservatives have pledged a consultation on transition and any successive legal framework. As David Cameron and Nick Clegg have pledged to restore the public’s trust in politicians it would be a breach of faith if this was reversed.

Rob Hailstone
The Bold Group
www.theboldgroup.co.uk

Tenterden Pudding Club

Once a month (on the last Friday in each month), various Tenterden-based professionals and business people (solicitors, accountants, estate agents, IFAs, telecom consultants, bank managers, insurance brokers, etc) get together for an informal, single-course lunch and a bit of networking

There is no need to commit to attending (nor to apologise if you cannot attend), but if you are in business in Tenterden and would like to be added to the email reminder list, let me know: send me an email at jn@justinnelson.co.uk

Rush Witt & Wilson return to Tenterden

Rush Witt & Wilson are estate agents with offices in Battle, Rye, Hastings, Bexhill and St Leonards. They did also open an office in Tenterden, but closed it when the economy went down the tubes

In what may be a sign that the economy (or, at least, the local housing market) is improving, I hear they are re-opening their Tenterden office on Saturday 3 April - you can even enter a free draw for a balloon ride, dinner at Richard Phillips at Chapel Down, guided tour of Chapel Down vineyard or a ride on the Kent & East Sussex Railway

Referral fees - are they actively destructive?

We are currently finding the firms that rely heavily on estate agent referrals are incredibly slow - it can take literally weeks to get a draft contract out of them, and on more than one occasion we have offered to draft the contract for them, based on the information in the Home Information Packs

Assuming they are not being lazy or incredibly incompentent (though ... - no, don't go there!) I can only think they are victims of their own successful marketing; in other words, that the referring agents are so keen to get a couple of hundred quid referral fee - guaranteed and, presumably, up front - that they would rather refer the case to someone who does not actually have the resources to handle the work, rather than lose the referral fee

How this can conceivably be in the best interests of their client, the seller, is beyond me. It is also not in the interests of the buyer or the housing market generally

If (and it is a big "If") my limited, recent experience is widespread, and if (another big "If") the reason is as I have surmised, this, surely, provides very strong support for those who wish to ban referral fees, at least where they are being used in such an unsophisticated way as to distort the whole market

Have any other conveyancers had similar experiences?

What does Google have to do with referral fees?

"You don't buy it with ads [or referral fees]. You earn it, and you earn it customer by customer, search for search, answer by answer." - Eric Schmidt of Google on Fox Business News in 2009

Despite that comment, Google chose to advertise during the televising of the Super Bowl on 7 February, so perhaps people's views, or circumstances, or both, change

Until very recently, I was adamantly against paying (or receiving) referral fees for getting (or giving) work opportunities - the only effect seemed to be to increase costs to the consumer (or reduce profits to the service provider). This still seems to me to be the case in respect of residential conveyancing: some agents are keener to earn their £125 referral fee than to ensure that the conveyancing work is handled properly. In my view, this is very short-sighted, but there we are, at present.

However, I have just joined two organisations that are, in effect and in part, referral organisations: Quality Solicitors, to whom I pay an annual subscription for marketing and referrals, and Contact Law, to whom I pay a percentage of my fees on cases referred to me by them. In both cases, this means that I get referred to me transactions that are within my target market for commercial transactions and which I would very probably not get a chance to pitch for otherwise.

In addition, some of the larger local firms are actively courting - and offering to pay for - referrals from me in respect of work I would not handle myself. This is effective marketing for them and I would not refer unless I felt it appropriate for the client. However, while I would welcome an additional income stream, I still feel a residual reluctance to "taint" a referral in this way.

The difference is, perhaps, subtle: I make it clear to prospective clients who are referred that I have an arrangement with the referring organisation, that I pay them a fee (an annual subscription or a percentage of fees charged to the client) and that the client has a choice whether to instruct me or not. Equally, I would not refer a client to a firm I did not think was right for them. I do not think many estate agents do the same; indeed, I know of several who say or imply that the prospective client must use their "panel solicitors" if they are to sell or buy through them, even when they indicate that they already have solicitors they are happy with.

I do have some concerns over my existing arrangements. I discovered, for instance, that a prospective client was recommended to me by her accountant but, when she phoned directory enquiries to get my telephone number, they insisted on putting her through to Quality Solicitors (on a premium rate line) instead. I have raised this with Quality Solicitors, and they have assured me they will stop that practice - which they had not themselves instigated: that was the idea of the particular directory enquiries service.

The public interest argument in favour of referral fees is that it provides a service to the public who do not know what solicitors might cover their particular needs and can go to a service that, in theory, can identify an appropriate solicitor. Unfortunately, greed will inevitably taint the operation: the desire to earn the referral fee is likely to discourage referrers from mentioning that the consumer has any other option. This is where solicitors have to be whiter than white, but they do not have a particularly good track record in that respect.

There is also the argument from fear: if we don't pay referral fees, other organisations will, but that seems to me to be a particularly poor argument.

On the whole, I think solicitors should earn their reputations, including their reputation for independence and integrity, not try to buy them. However, I will give both Quality Solicitors and Contact Law a fair chance. In addition, I will continue to demonstrate to estate agents, accountants, IFAs and other introducers that they can safely recommend me on the basis of the quality of my service and not to get a referral fee; I think that is a better business and professional model - a genuine recommendation, not a bought one

Home Information Packs (again!)

I know I keep banging on about this, but it is my view that a combination of inadequate consultation by government, vested interests in the property industry trying to stifle change and competition on price rather than value resulted in a huge missed opportunity. Home Information Packs, properly prepared, can be of great benefit in streamlining conveyancing, to the benefit of all concerned: buyers, sellers, agents, solicitors.

However, the crucial term is "properly prepared" - HIPs that take no account of the individual property and its idiosyncracies are almost useless - basically a waste of paper. On the other hand, a properly prepared and comprehensive HIP enables the buyer's solicitor to report on a very large part of the transaction at a very early stage, highlighting potential problems and outlining the scope of further investigations that might be needed

With a good HIP, we are usually waiting only for the draft contract and full property information form (both of which could, in my view, be included in the HIP in the same way as for an auction) or the mortgage offer (or both!) before a buyer client can exchange contracts

HIPs have the potential to do almost everything the government claimed for them, but they need to be properly prepared, not prepared on the basis of the cheapest that complies with the regulations.

I have revisited this subject because Rob Hailstone of HIPAG (Home Information Pack Action Group) fame is forming The Bold Group to campaign for "proper HIPs", and so I have been stirred to post again

HIPs "upgraded" from 6 April

Now that HIPs must include a PIQ, there is another hurdle to leap before marketing a property, but we at Nelsons Property Lawyers think we can help

There are different versions of the PIQ for existing homes and for new homes - a new home for these purposes is a home that is being designed or constructed or which has never been occupied. – and different versions for freehold and for leasehold properties.

The forms produced by the government do not have to be used; so long as the same information is collected. This gives those who want to prepare a more comprehensive HIP an opportunity to make the PIQ more useful than the minimal form would be, but the current trend with HIPs is to do as little as possible to comply with the legal requirements, rather than as much as possible to expedite the sale process, so I will not expect anyone to try very hard to improve on the “basic” PIQ.

It should take most sellers less than ten minutes to complete the basic PIQ for freehold properties, but completing even the basic PIQ for leasehold property will be a longer, more daunting process.

The PIQ says, “The Property Misdescriptions Act 1991 (PMA) does not apply where the form has been completed solely by the seller.” There is, therefore, a clear implication that an agent who helps a seller complete the PIQ could be liable for property misdescription if the PIQ contains errors. Accordingly, it would be best for the estate agent to get the seller to complete the PIQ alone, or to get the HIP provider to deal with it or to enlist the assistance of a local solicitor or conveyancer.

Most sellers will, after some initial grumblings, complete the freehold part of the PIQ without too much resistance. However, the leasehold part is another matter completely and I anticipate that many sellers may feel the need to speak to a solicitor or conveyancer - ideally, the solicitor or conveyancer who acted when they bought the property.

Where they cannot (or will not) do that, we will be happy to help. We will spend up to half an hour at our office free of charge, helping a local seller complete the PIQ and guiding them on where they can find any information they are lacking. If more than half an hour is involved, we reserve the right to make a charge (probably £50), but would normally waive this - our aim is to build relationships with local agents and prospective clients, and to help streamline the conveyancing process, rather than to make a profit out of this quasi-legal work.

If you want help in completing the PIQ, please contact Sam (Samantha Robb) or Anne (Anne Browne) at Nelsons Property Lawyers in Tenterden: telephone 01580 767100

Oven-ready chips? Exchange-ready HIPs!

In an earlier post, I commented that the latest "improvements" to HIPs would not in fact make them more useful. What is needed (IMO) is a cultural change, so that sellers, agents and solicitors accepted that, however badly-thought-out (by civil servants and poloticians) HIPs are, the property professionals can make them work and use them to benefit buyers and sellers

If, instead of going for the cheapest HIP - which probably adds alsost nothing to the efficiancy of the conveyancing process - sellers could be persuaded to commission a HIP that would contain everything that a buyer could reasonably want before exchanging contracts, the only things that would prevent immediate exchange of contracts (and certainty) would be (a) the buyer getting a mortgage offer, (b) the buyer selling his or her own home (if needed) and (c) the seller having somewhere to move to

Exchange-ready HIPs would have -

• official search results, not personal ones which are not acceptable to all lenders
• a comprehensive set of property information, not the half-baked pointlessness that is the Property Information Questionnaire
• even a seller's survey by a real surveyor

If done properly, that would cut out delays, removing the opportunities for gazumping and gazundering, and actually achieve the objective the government said it had when it originally introduced HIPs

Will it happen? Only if enough people insist on quality work rather than the cheapest possible price

Tenterden Pudding Club

Not as interesting as the name implies ... the so-called "club" is simply an informal monthly lunchtime meeting of various local business people - mainly solicitors, accountants, estate agents, bank managers, etc

We meet on the last Friday of each month, so the next meeting is on 27 February, at No 75 in Tenterden High Street at 1pm. We usually have a one course meal and a drink, and aim to get away at about 2pm.

If any other local business people would like to join us, there is no need to book in or apologise for absence - just turn up at 1pm - but if you would like to be added to the email reminder list for future meetings, please let me know - I usually confirm the venue about 2 weeks before the next meeting.

Uh-oh! Here comes trouble! (With added acronyms)

6 April 2009 is coming – the date from which house (and flat) sellers must have a complete Home Information Pack (HIP) in place before their property can be marketed

The HIP must contain –

• an index
• an Energy Performance Certificate (EPC) – or, for newbuilds, a Predicted Energy Assessment (PEA) - though marketing can start without these documents 14 days after their request if they are not yet available but are expected to be available within 28 days of the original request
• a Sale Statement
• a Property Information Questionnaire (PIQ)
• for registered properties, official copy registers and title plan; for unregistered properties, a Search of the Index Map (SIM) and an Epitome of Title or Abstract of Title
• for leasehold properties, a copy of the lease, or confirmation that it has been requested and is expected within 28 days
• searches: a local search and a drainage and water search or confirmation that those documents have been ordered and are expected within 28 days

There are two new elements. The first is the requirement to have a HIP in place, not just commissioned, before marketing begins. The other is that the HIP must include a PIQ.

There are different versions of the PIQ for existing homes and for new homes - a new home for these purposes is a home that is being designed or constructed or which has never been occupied. – and different versions for freehold and for leasehold properties.

The forms produced by the government do not have to be used; so long as the same information is collected. This gives those who want to prepare a more comprehensive HIP an opportunity to make the PIQ more useful than the minimal form would be, but the current trend with HIPs is to do as little as possible to comply with the legal requirements, rather than as much as possible to expedite the sale process, so I will not expect anyone to try very hard to improve on the “basic” PIQ.

It should take most sellers less than ten minutes to complete the basic PIQ for freehold properties, but completing even the basic PIQ for leasehold property will be a longer, more daunting process.

The PIQ says, “The Property Misdescriptions Act 1991 (PMA) does not apply where the form has been completed solely by the seller.” There is, therefore, a clear implication that an agent who helps a seller complete the PIQ could be liable for property misdescription if the PIQ contains errors. Accordingly, it would be best for the estate agent to get the seller to complete the PIQ alone, or to get the HIP provider to deal with it or to enlist the assistance of a local solicitor or conveyancer.

Most sellers will, after some initial grumblings, complete the freehold part of the PIQ without too much resistance. However, the leasehold part is another matter completely and I anticipate that many sellers may feel the need to speak to the solicitor or conveyancer who acted when they bought the property. Be prepared for this.

(My thanks to Rob Hailstone, CEO of HIPAG – excellent HIP providers – for his assistance to me in producing this note. Any errors are mine!)

Home Information Packs

Setting to one side (for now) the inept way in which Home Information Packs (HIPs) have been introduced, and assuming (for the sake of this post) that they are, if properly implemented, a Good Thing, the changes that will take effect on 6 April 2009 are likely to have a significant impact for sellers, buyers, estate agents and lawyers. To take a couple of points -

1: The HIP will need to include a Property Information Questionnaire (PIQ). This must contain some information about the property, but it is not clear why the specified information has been selected, and the PIQ will not remove the need for the seller also to supply full, relevant information about the property. It is therefore hard to see how the requirement for a PIQ improves the HIP system. However, it can make the system worse, simply because there will be yet another document needed to complete the HIP and (from 6 April) the agent cannot start marketing the property until the HIP is complete

2: OK, so the PIQ is not difficult to complete, but I anticipate that a lot of sellers will put it to one side, if allowed to, and then complain that the marketing of the property has been delayed! To avoid that, the agent may decide to help the seller complete the PIQ - thereby risking a complaint under the Property Misdescriptions Act if any details are wrong. So, the agent risks delaying the start of marketing or risks a misdescription complaint - what a choice! The solution is (in my biassed view) to pass the responsibility on to the seller's conveyancer: if the seller uses a local conveyancer, the agent can encourage them to pop in to their office to complete the form, minimising the delay and the risk of liability

Or am I wrong? Are HIPs a great improvement, made still better by the PIQ?