No Move, No Fee

Staying with Solicitors charges, I recently came across a potential Client rejecting a conveyancing quote simply because the firm in question did not offer a "no move, no fee" service. I must confess that at the time I thought the firm was right. Conveyancers are already doing more work for less, without having to underwrite the housing market, especially in the current downturn. Why should Solicitors take the hit (again)? However, having thought about it and done some research, now I am not too sure.

I think it is fair to say that most Clients these days expect their Estate Agent to offer "no sale, no fee", so why should Solicitors be any different? After all, Agents stand to lose their marketing spend, not to mention their time and resources. The difference, of course, is the potential return. To compensate them for taking such risks, Agents invariably charge a commission based on a percentage of the sale price. True, advertising can be expensive and both the volume and frequency of work may be less, but, nevertheless, I figure that the Agents' mark up is more than comparable with the Solicitors' fixed fee, especially for higher value properties, which no doubt make up for the cheaper ones. The flip side, of course, is that most law firms get paid regardless of the outcome. Furthermore, their disbursements are also paid by the Client. So, in summary, it seems to be all about a risk/reward analysis. Agents risk getting nothing and insure against this eventuality, whereas most Solicitors prefer a certain, lesser amount.

However, the tide seems to be turning. Plenty of volume Conveyancers are now offering "no completion, no fee", without seemingly impacting on price, although the small print of such schemes and, and in some instances, the associated insurance policy, may not be quite what they seem. More importantly, High Street firms are now getting in on the act, sometimes charging no more than usual and waiving their fees (but not disbursements) in full if the transaction falls through. Other schemes charge more, in a similar vein to the Agents, either in the form of an upfront additional payment, or higher overall charges. The point is that Solicitors realise the benefits to both parties. The Client secures piece of mind and the firm gets the potential business in an increasingly competitive marketplace flooded with IT savvy "legal tourists". Factor in the possibility of cross-selling other legal services and the business model seems to make sense if the apparent uptake is anything to go by. The exact terms will undoubtedly depend on the circumstances, but the scheme will, at least initially, be one of your unique selling points differentiating yourself from most, if not all, of your local competitors. Don't get left behind. Trailblaze and let the rest follow.

How Can Solicitors Compete?

In a previous post, I suggested that most High Street conveyancing Solicitors simply cannot compete on price and should not even attempt to do so. So, how else can such firms survive in the ever changing legal marketplace? Here are just a few ideas:

1. Identify both your existing and "wish list" Clients and, in each case, determine the type/s of service they (not you) actually want and what they are willing to pay (not how much you want to charge). Unless and until you have performed this exercise, you are simply fumbling around in the dark, unable to reach your target audience with any degree of precision. It is impossible to "be all things to all people". Armed with such information, why not offer different levels of service to different Client types?

2. Differentiate your practice. What is your unique selling proposition? Why should potential Clients choose your firm over its competitors, especially if you are more expensive? How can you justify higher charges? What additional benefits do you provide and why are they important? You could, for example, emphasise that you are:

2.1 Partner led;

2.2 Qualified;

2.3 Experienced;

2.4 Regulated; and/or

2.5 Local.

Furthermore, you offer:

2.6 A personal service; and

2.7 The protection afforded by both professional indemnity insurance and the Solicitors Compensation Fund.

You may also have embraced IT.

Perhaps, you visit Clients at home or in hospital.

3. Now you know your target audience and distinguishing features, promote your own brand, rather than someone else's. Take advantage of the new opportunities created by social media and social networking.

4. Consider offering a truly fixed price, irrespective of whether it is a sale or purchase, freehold or leasehold, with or without a mortgage etc. First, research the types and values of properties in your target area. Next calculate your average fee. Practice/case management systems should help in both respects. Finally, ensure that the average fee remains competitive for the most common type/s of transactions and that the estimated loss of income related to low value transactions will at least be met by the potential increased number of higher value matters.

5. Arrange the Energy Performance Certificate and then refund its cost (about £50) if you deal with the conveyancing. A group of local firms could join together for advertising and marketing purposes and still offer Clients freedom of choice between local, quality firms. Such a proposition could also alert unsuspecting potential Clients to the alternative being advanced by third parties.

6. Offer a free Will or a discount against other legal services, especially those not provided by your competitors. Provided you meet/manage Clients' expectations, this should, over the medium to long term, produce dividends, cultivating brand loyalty. Clients will, in time, regard you as their "family Solicitor" and recommend you to others.

7. Offer Clients a referral fee or other financial incentive for all new instructions introduced by them.

Of course, with the exceptions of 4. and 5., all of these ideas are of general application.

"Conveyancing Factories": Can Solicitors Compete?

In short, the answer is, in my view, no, and law firms should not even try. Here's why.

With any type of service, quality and price are undoubtedly the main drivers influencing customers'/clients' choices. Most people believe the old adage that "you get what you pay for". Nevertheless, many buyers and sellers of property, not to mention those remortgaging their homes and/or transferring ownership, are perfectly happy to instruct the cheapest firm, wherever they may be located and regardless of the service offered. It is the end result that matters most, not how (and if!) they get there. Conveyancing is, despite the personal attachment, not to mention the financial importance of the transaction, viewed no differently to the weekly shop. Price is king.

At the other end of the spectrum, are those that desire a bespoke, personal, local service and are, if necessary, prepared to pay for the privilege. For them, the "experience" or "journey" is key.

Finally, there are those somewhere in the middle, who are simply after the best compromise that they can get. Their expectation is that both price and quality of service will be "average"; a sort of halfway house.

So, should Solicitors try to compete on price? I believe the answer, for the vast majority of High Street practices, is no, at least not entirely. Such firms are unlikely to ever reap the economies of scale enjoyed by the out of town, high volume/bulk conveyancers. For this reason, being the cheapest is simply unattainable. No matter what they do, their competitors, especially with the proposed introduction of alternative business structures (i.e. "Tesco law"), will undercut them, possibly even offering conveyancing as a loss leader to grow their brand. Even in the current market, a Google search for "cheap conveyancing solicitors" lists numerous firms offering fees "from £89" and this ignores the cost of advertising and marketing and referral fees. In any case, it is your bottom line and reputation that counts. More work does not necessarily mean higher profits at the best of times, and reducing fees is hardly going to help! The adverse consequences attaching to a loss of goodwill should not be underestimated either.

It does not follow, however, that you should not give Clients the service they actually want (not what you think they want) and adjust your pricing structure accordingly. I have commented elsewhere on how this might otherwise be achieved and will revisit this conundrum in future posts, but here are just a few ideas. You could, for example, offer different levels of service to different Client types. Another possibility, depending on the types and values of properties in your target area, could be to offer the same fixed fee, irrespective of whether it is a sale or a purchase, freehold or leasehold and with or without a mortgage etc. Simply calculate your average conveyancing fee, which case/practice management systems should readily support, and give the comfort of clear, straightforward and transparent pricing.