Originally posted on www.legalfutures.co.uk
As the UK’s first alternative business structure (ABS), Premier Property Lawyers has more claim than most to be a pioneer. As Legal Futures restart their Legal Pioneers series profiling innovative legal services providers, Sam Chadderton talks to Kevin Smith.
Premier Property Lawyers (PPL) is the model for conveyancing firms of the future, says director Kevin Smith – they need to become high volume investment-backed businesses in order to thrive.
He says the Leicester-based practice – the UK’s largest conveyancer, owned by myhomemove – had gone from “strength to strength” in its first full year post-ABS.
Myhomemove enjoyed a “record year” for profits, although exact figures are not yet available, and a rise in total number of completions.
By working with every corporate estate agency group in the UK, its operating profit was up by 35% in 2012 compared to the previous year.
Now, Mr Smith has laid out plans to build on the business’s existing market share of 3% and snap up 10% by 2016.
And he says that in a “weak housing market”, the next wave of competition from private equity-backed new entrants and established brands would see many smaller conveyancing firms go out of business.
He insisted that ABS is the way forward for the conveyancing sector in order to compete with law firms and other players moving into the market.
He says: “You need to be of a certain scale with the capital to invest in systems. Otherwise I don’t see how you can make it profitable. How do you deal with offering more for less and still provide service, where service is more important than it has ever been?
“Conveyancing has become a very competitive market. It was in the build-up to the crash and post 2008 it has become even more so. We believe the people who will win the next stage and become the market leaders are the companies with the capital to invest. We are the busiest we’ve ever been in housing market which is still depressed.”
Investment in technology enabled the business to launch its unique online case tracking system ‘eWay’ in 2010 which enables clients to monitor progress, review and upload documentation and make electronic payments.
Mr Smith, who is also operations director at myhomemove, says they are looking for first-mover advantage and aims to acquire 10% of the market share in the next two to three years.
The business currently employs more than 400 staff, but chief executive Doug Crawford, appointed in 2012, has previously stated the workforce will double in the next three years to meet increasing demand for services.
Mr Smith adds: “I believe the next wave of competition is yet to show its hand. There’s a fragile macro-economic climate and a lack of confidence, coupled with a weak housing market in our space, that has left a lot of investors and consumer brands sitting on the fence.
“It is only a matter of time. But we’ve been building a volume legal services business for 11 years and know how difficult it is.
“Our aim is to grab as much of the market share as possible while we can. My opinion is the competition will come from ABSs and specialists in niche fields. The general practitioner that does a little bit of conveyancing will not survive.”
PPL is the wholly-owned conveyancing arm subsidiary of conveyancing services provider myhomemove, which has had investment from private equity firm Smedvig Capital since 2005 – as the Council for Licensed Conveyancers (CLC) has allowed external capital for several years.
PPL began trading in 2001 and in 2012 it completed transactions in each of the 109 postcode areas in England and Wales. Latest figures show it helped almost 30,000 people to buy, sell or remortgage their homes in 2012.
Mr Smith says that external investment has enabled the firm to compete on a “level playing field” with traditional law firms.
He says: “With our private equity backing, myhomemove has been able to invest significantly in our structures and technology. We’ve automated more of our workflow and processes, innovated around risk and received industry recognition for our electronic documentation exchange portal.
“We are breaking new ground in the conveyancing process. We had been building towards a corporate structure and that has been further implemented post ABS. We have driven forward from there and have made a big investment in people.
“We have launched a training academy in our head office in Leicester where we expect to develop the next wave of customer service-focused conveyancers.
“We are in the service business and are very much a values-based organisation. Whilst we are developing our technology, it is absolutely not a factory style operation. We are investing in people and spend a lot of time working on the culture of the firm.”
Mr Smith argues that the future is bleak for any firm that is either yet to establish its niche or is too slow to react to the changes in the legal landscape.
He says: “I can only assume that the small, ‘one-man’ operations are looking at establishing their own little niche. We’ve set out our stall early on to be a volume player with high units and fantastic customer service.
“Unless you’re going down that route, the only other sustainable strategy is a bespoke specialist service for high net-worth clients.
“That is not the strategy we would be adopting. We believe that the market will consolidate further, with some conveyancing firms going altogether, and others merging. Ultimately you’ve got to offer something to give you a competitive advantage.
“The bigger firms will get bigger and grab more market share. There are problems with panel appointments and increasing pressure from personal indemnity insurance blowing the wind in the direction of consolidation.”