The next level

Technology isn’t, of course, technical. Like a swan the best technology should ensure the user experience is as serene as possible while the underlying development scurries away computing, facilitating and driving reaction.

Technology is reactive. It is usually a response to a need (even a need we often don’t realise we wanted or required) and at its most basic technology responds to user or data interfacing.

Technology has historically provided solutions but, now, thanks to the ability to transfer data in compact form and thanks to the ability to engage in real time online, technology is able to drive process. This enlightenment coincides (perhaps unfortunately for the profession) with the race for alternative business structures (ABSs) under the Legal Services Act, which means that the pressure to advance is snowballing more than ever, and, in doing so, exposes the reticence of the profession to embrace it. Edward Goldsmith, in his role as chair of the Conveyancing Association, believes that law firms will almost certainly have to change the way they operate if they are to compete with newcomers to the legal services market. When Goldsmith calls for change I believe he is referring to technology, procedure and attitude.

The attitude is also highlighted by Jon Busby of Epoq commenting in Solicitors Journal: “Solicitors seem to think legal services can be ring-fenced from the change that is going on everywhere else in the world.” (Solicitors Journal 155/41, 1 November 2011). This is a rather dramatic conclusion: after all, solicitors are also consumers of technology and no doubt will abuse the plethora of online shopping channels in the lead up to Christmas. Nevertheless, Busby is right to point out that we, as a profession, appear to find it difficult to transfer the benefits we so patently enjoy in our day-to-day lives to our professional practice. And yet conveyancing needs to push these boundaries.

So, are technology and conveyancing firms unlikely bedfellows (I suspect not) or is the real issue that technology needs to have a purpose to ensure engagement? Should the real advance in technology be from within rather than speculative developments? Perhaps. Do firms see new products as pre-requisites to their practice or tweaks and mere puff? Are, and should, conveyancers be concerned with what is happening elsewhere in the legal environment? Absolutely.

Brought to a halt

The Land Registry decided recently to halt the development of electronic transfers (e-transfers) following a consultation. This follows (not hot on the heels I grant you) the abandonment of the chain matrix. Both of these technological advancements would have greatly improved conveyancing and, while the consultation responses were measured and well argued against the development, my principal concern was the number of responses. According to the Land Registry’s Landnet 26 (October 2011): “Forty-three responses were received from conveyancers, lenders, financial institutions, regulatory and representative bodies and other property professionals.”

Does this constitute a useful quorum? Is this indicative of why large, ground-breaking technological improvements are so difficult to embed? Are current technology providers simply tinkering with the edges?

Comparison can be made with the adoption of the Law Society’s Conveyancing Quality Scheme. By the end of September, around 1,300 firms had applied for CQS accreditation. Based on the Land Registry data for September there are in excess of 4,700 firms submitting Land Registry applications, meaning that only 27 per cent of these firms had applied for CQS.

CQS, or perhaps more the protocol around which CQS works, is a technology by procedure. It advances conveyancing – assuming there is a buy in; assuming there is an element of either compulsion or shepherding. It seems that CQS has neither for the time being. This doesn’t make it bad technology, it just makes it immature in a mature market.

If we look again at the feedback received by the Land Registry in relation to e-transfers, they state, “a majority of the respondees indicated they were not yet persuaded that e-transfers were desirable or achievable… Significant concern was also expressed that the process for creating and applying an electronic signature was too complicated. The consultation also confirmed that customers did not feel that the e-charge solution met their needs.” This response appears rather vague: it feels like businesses batted the proposal back because they just didn’t like it. It didn’t fit in with their own views as to how the market ought to develop. Yet, technology providers are left here with a quandary, because do the law firms themselves know what is needed so that they can provide that guidance? If not, then we will continue with piecemeal improvements: some adopted, some not. The legal technology market will be disparate and dispersed, a collection of solutions from a host of providers: matching its market, perhaps.

Adopting external drivers

Yet the drive to improve technology must surely follow the same commercial drivers within the law firms? These drivers must also be influenced by consumers and my new ABS entrants who don’t have the legacy of experience carried by lawyers.

It is now felt that law firms will need to think of innovative ways to increase margins. The survivors will be those that do something to protect themselves from these risks and those that can prove to lenders that core to their processes are both the lenders’ and the client’s interests. Technology can provide this. I see both sides of the coin. I am in private practice, but I also helped to consult and develop the conveyancer/lender platform, JET Convey, supported by the Council of Mortgage Lenders.

Some technological advances are hi-tech, some capture a wonderful user experience, others are simply ‘why has nobody done that before’ concepts. All are as viable as each other, but the marketplace doesn’t sustain them all. Lawyers have to be careful, however, that they understand what is available and give good reasoning for adoption, or otherwise. The feedback to the Land Registry consultation was a case in point: the delivery of electronic signatures is securing loan and credit facilities at a frightening rate in financial services who are no more or less concerned by fraud than we (after all, they will often be carrying the loss directly).

The changing shape of conveyancing

Adoption by compulsion may well be the only route for technology – compulsion by market forces, by leading lights, by consumers or by representative bodies. Technology isn’t the sole side of conveyancing to which firms will have to front up; procedure, as mentioned with the protocol, will also change. Some of this procedural change will be driven from technology but some will come from a concerted external effort to meet consumer needs.

I believe that with technology there also comes a commercial realism in delivery of the conveyancing transaction. Ultimately, the client will highlight that they are as concerned about the day they move as the environmental impact of a landfill site. If the latter can be managed, then the former becomes absolutely critical to the home move experience.

I look to the US market as evidence of the changes that might be reflected here and these are much more wholesale then the adoption of a new case management module; yet the way that technology is supporting process has, perversely, made the opportunity a reality and the subject of current and formal consultation.

In a summary provided by Countrywide Legal Indemnities, it was pointed out that: “Title Insurance met with a good deal of hostility in the UK, from both the legal profession and the existing legal indemnity underwriters, and it was very strongly argued that Title Insurance was simply not necessary in the UK market. The main thrust of the argument against Title Insurance was that in the UK there are two major lines of recourse for a property owner if things do go wrong:

1. There is a state-backed guarantee to title once title is registered at Land Registry.

2. If the solicitor has made a mistake or misrepresentation, then there is recourse against their professional indemnity insurance.”

The assumptions made here, however, are changing. The Land Registry, in spite of being a profitable department, is the subject of a feasibility study into its future and this must inevitably include the spectre of private ownership. All of a sudden, consumers may value an insurance wrapper to support their ownership and, with this, the prospect of the US model doesn’t appear so far away.

Is this, however, a transferable model? The fundamental benefit from having a government-run system is the tenet that the consumer has a guarantee to title. If a private organisation took this forward, such a guarantee – if offered – would surely have to be tempered by insurance. Would we feel secure in our homes as a result?

The lenders’ current concerns on fraud, also supported by the FSA’s thematic review, Prudential Risk and Retail Conduct Risk Outlooks, are evidence that key influencers and stakeholders beyond lawyers want a change. This may result in the very compulsion I mentioned earlier: and if there is compulsion then I fear lawyers will have to accept it.

Simon Stell succinctly summarised this recently in Solicitors Journal: “Change will not happen overnight – but it will happen.” (155/41, 1 November 2011.) Technology providers will have to embrace this change and provide more wholesale solutions rather than tinkering around the edges because, when conveyancing changes for good, we may all be caught short.