Upfront material information – conveyancers wary but it is a significant opportunity, CLC roundtable hears

Upfront material information – conveyancers are wary but it is a significant opportunity, CLC roundtable hears.

Conveyancers are nervous about the shift to upfront material information (MI) but there are reasons to see it as a significant opportunity, an industry roundtable hosted by the Council for Licensed Conveyancers (CLC) has heard.

The event also featured discussion of the potential for artificial intelligence and for a move away from conveyancers holding client money, among other topics.

MI has become a big talking point in the wake of National Trading Standards implementing in full the rules on the information sellers need to provide when they put their property on the market. This raises the question of whether conveyancers can become involved earlier in the process, with Trading Standards advising they should be.

Sally Holdway, CEO of tech company Teal Legal, said:

“We are not there yet but we’re starting to see that shift in where conveyancing starts, to be going from the point of offer to the point that the property is marketed and listed.”

Nicky Heathcote, chair of the Conveyancing Association, identified “nervousness amongst the conveyancing community” about how much this is going to put pressure on their workloads for no additional fee. “We are encouraging our conveyancers to think about what products and services they can provide and what to charge for it.” But there were also worries that upfront information could increase conveyancers’ liability.

Rob Gurney, a former licensed conveyancer and managing director of tech company Ochresoft, said the frustration for lawyers who want to embrace material information is that they are relying on others, such as estate agents and introducers, to advise sellers to instruct them.

Mr. Gurney added:

“The shift needs to be, ‘If we think there is a benefit in the lawyer being instructed at the point of listing, which there clearly is, how do we make that happen?’”

Henry Hadlow, co-founder of Juno, a conveyancing firm regulated by the CLC, said estate agents he worked with were often keen to see the lawyer instructed when the property was listed.

Mr. Hadlow confirmed:

“I agree with the nervousness around upfront information, because the search providers are saying, ‘Here is the information, but you cannot rely on it’, and if it is coming from the estate agent, as a law firm we cannot rely on it.”

Reliability is the core issue. Eponine Pearce, risk manager (property risk) at Nationwide Building Society, said upfront information “could absolutely change the way that we lend and underwrite and the way you apply for mortgages. But until we know it is accurate and we can rely on it, nothing is going to happen”.

This goes to the provenance of data and the push for data standards across the market. Angela Hesketh, the head of market development (UK) at PEXA, pointed to the work of the Open Property Data Association and others in working to create this and build a trust framework so that anyone in the process can rely on the information they receive.

Ms. Hesketh said:

“We are gathering pace with that at the moment.”

Law firms also need to be wary of unregulated providers coming into the market to provide MI services – it is not a reserved legal activity.

Ms. Holdway said:

“It is the greatest opportunity for lawyers to get involved early, but it is also one of the greatest threats.

“We are seeing a bit of a land grab from unregulated providers collating the upfront information, saying, ‘Okay, if we can capture that instruction from day one, then we will have control over where the rest of the transaction flows to’.”

Participants saw the potential for AI to support home-buyers and conveyancers – last year, an ‘advicebot’ passed the Certificate in Mortgage Advice and Practice – but the CLC is in a cautious place with AI, although it does not want to be a blocker to innovation.

Stephen Ward, the CLC’s director of strategy and external relations, told the roundtable:

“The human in the process is still vital, because you just have to validate the outputs – treat it like a newly qualified lawyer.”

Mark Montgomery, chief strategy officer at Simplify, said AI tools would allow the focus of conveyancers to shift onto managing the service, the customer and the relationships, which will require “a big adjustment” for those people “whose identity is steeped in, ‘I am an expert and I like checking stuff’. That role and expertise will continue to be needed but on a narrowing set of activities and cases”.

On the future of client account, Nicky Heathcote suggested that the high rates of interest firms received last year on client money helped some survive the fall in transactions, although Angela Hesketh said many compliance officers at firms would be happy to wave goodbye to the risks inherent with client account.

Stephen Ward said:

“We see so many problems with client accounts and the risk of being a victim of fraud is significant.

“It is much reduced if you use one of these other tools.

“At the moment, we’re not looking to mandate a move away from client accounts but, as tools become more easily accessible, we will be doing more and more to encourage firms to remove those risks from their practices.”

The full write-up of the event can be found here.

Kindly shared by The Council for Licensed Conveyancers (CLC)