E-conveyancing – what comes next?

In his foreword to the consultation Land Registry's e-Conveyancing Secondary Legislation '“ Part 1, issued in February 2007, Peter Collis, chief land registrar, said: 'E-conveyancing will transform the conveyancing process and change forever the way conveyancers provide conveyancing services to their clients. . . it will transform the way in which Land Registry delivers its current services and will introduce new services to new customer groups.'

He went on to admit that an ambitious and innovative programme of work is in the pipeline. Significant changes lie ahead for conveyancers, many of whom are still in the early stages of getting to grips with the arrival of home information packs, although Land Registry has always emphasised its intention to keep clear water between the two initiatives.

The Chain Matrix prototype trials finished on 29 September in Portsmouth, Fareham and Bristol. The most important point was that firms want an interface with their case management systems to avoid having to update the matrix manually. According to one of the participants, John Blake, conveyancing manager at Coffin Mew LLP: 'Once clients have given authority to partake it is easy to incorporate entering a client on the Chain Matrix as part of the opening procedure but not so easy to remember to update the Matrix on each key event and integration with our case management system will be important . . . we have learnt from our experiences that we have nothing to fear from the system itself which is of obvious benefit to all involved. Land Registry's training is of high quality'.

A Land Registry report on the prototype testing experiences is due and, in early 2008, it will announce how it intends to release future enhancements to Chain Matrix. Other services due to be launched in spring 2008 include:

• Electronic charges in standard form

These will be for use in the volume remortgage market initially. Strict conditions will apply: the charge must be in a standard form agreed by the lender, the conveyancer must be using the new Land Registry access (see below); variable direct debit must be used and the borrower(s) must authorise the conveyancer to sign the charge on their behalf using an electronic signature. This is obviously an important step as it is the first electronic disposition and brings an opportunity to use electronic signatures for the first time.

• Electronic discharges of mortgage (E-DS1)

The E-DS1 will be available alongside Electronic Discharges. Land Registry has announced its intention to withdraw the Electronic Notification of Discharge service and has already closed this service to new customers. This will be a relief to most.

• Enhanced electronic lodgement facilities

This will be of interest to all conveyancers bringing an opportunity to use the new systems to lodge electronic notices and a wide range of other routine applications using documents scanned in as pdf attachments and conveyancers' certificates relating to information held.

Range of features to accompany these services

Network Access Agreements

Firms wishing to use new electronic services will sign a Network Access Agreement (NAA). Three types of NAA will be available: full (for conveyancers and lenders to use) and read-only (for clients and estate agents to use) and signature (for clients who will be using their own electronic signature). There will be one standard full agreement offered to all conveyancing firms. It will not be negotiable and will include a technical manual which will contain specifications and user guidance. The terms of both the NAA and the technical manual will be updated and refined as services are added and experience gained. One particular requirement will be for firms to decide who has access to the system and at what level. The NAA identifies the various levels of access and will range from:

• 'read only' access;
• access which permits information and documents to be submitted; and
• 'commit' access which allows, for example, an instruction to be made to exchange contracts or to instruct the movement of funds electronically when this is available.

Data checking

This will be a service provided by Land Registry and will be an alert or error message of any discrepancies detected in what is lodged. This will be a means of bringing requisitions raised after completion to an earlier stage

An electronic link for SDLT applications

This will be available through Land Registry's systems enabling the stamp duty land tax (SDLT) return to be submitted electronically. Land Registry emphasises the added advantage of being able to use electronic returns that will be partly pre-populated from data already held by Land Registry or taken from other forms created during the process of making the application. In the short term payment will still have to be made to HM Revenue and Customs until such time as the Electronic Funds Transfer (EFT) system is in place to automate the payment process. The procurement process for this is well underway and an announcement is likely in the New Year.

Obtaining access to the system

Land Registry's plans for access to the system will accommodate those with or without case management systems. There will be a Land Registry 'no frills' access over the web for those who wish to use it and more sophisticated means of access for those with case management systems.

Recent market research carried out by Land Registry over this summer has confirmed, unsurprisingly, that firms with case management systems want integrated access and an announcement about the timetable for developing integration is due later this year following discussions with Property Information System Common Exchange Standard and the Legal Software Suppliers Association.

A user agreement and a network access agreement will need to be signed if you wish to make use of any of the services on offer. This will carry with it obligations on the subscriber firm to have both an administrator in place to manage the user community within the firm and ensure that the necessary IT resources are in place and working in accordance with the technical manual requirements.

Those with supervision responsibilities in the practice will have additional responsibilities to supervise use of the system by users within the firm. Perhaps a timely coincidence are the requirements in Rule 5 of the new Code of Conduct introduced on 1 July this year for both enhanced supervision and file review and also for business continuity arrangements addressing the need for contingencies to be addressed in the event of IT systems failure. These are significant requirements which many firms have yet to address. It is one thing stating what the practice should be delivering in an office manual and quite another making sure these arrangements actually operate effectively in a working environment adapting to an electronic way of working and additionally having to tackle the difficulties of hybrid practices which are partly electronic and partly paper-based.

In advance of Central Law Training's (CLT) 'Electronic Conveyancing: Preparation and Planning' Autumn series, undertaken jointly with Land Registry, CLT invited visitors to its website to participate in a conveyancing supervision survey prepared by Simon Bray of the legal management and training consultancy Web4Law.

The results have showed a 77 per cent take up of case management systems by the small sample of firms who participated and an extensive use of functions within those systems to communicate with clients and to conduct an online review of fee earners' diaries.

What is potentially significant is that only 29 per cent of those who had facilities within their case management systems to automatically report key stages being missed to super-visors were using them and of those whose systems allowed automatic escalation of missed key stages to supervisors (and only nine of the 20 case management systems in use allowed for this) only 55 per cent were using them. What conclusions can be drawn from this?

According to Simon Bray: 'These survey results reinforce our view that firms seldom take the fullest possible advantage from their IT investment. The functionality available within the latest versions of case management systems is generally of the highest order, but practices rarely implement the software to its best advantage.

'This is often the result of poor training or lack of access to IT skills '“ areas which conveyancing practices will have to address as the roll out of e-conveyancing gathers pace over the coming months. Conveyancers will need to ensure that they fully understand the capacity of the systems which they have purchased, develop work processes which take advantage of them, and invest in training and IT support to ensure that the benefits that they have bought are fully utilised.

'Although Land Registry is at pains to provide access to their new e-conveyancing services to conveyancers without access to case management tools, there is little doubt that such conveyancers will struggle to compete in a conveyancing environment which is moving inexorably towards electronic delivery processes.'

Next year looks like yet another year of significant change for conveyancers and the pace of change continues unabated. Then 2009 and beyond will bring very significant further electronic services including electronic transfers, contracts and an EFT, along with further functions in the Chain Matrix which will automate completion with registration and trigger financial settlement.

Can you afford to be left behind? When Land Registry starts its marketing campaign in the New Year invitations will be issued initially to the largest users. Land Registry is happy to have volunteers too. Watch out for press announcements in early 2008.