The Blind Leading The Blind

Somewhat late to the party, I recently saw a post by a supposed industry "expert" wondering if it was now time for solicitors to increase their fees, and more importantly, asking the question if so, how would this be possible?

I say late to the party because in case its escaped anyone's attention, the property market has just enjoyed it's most prosperous period in years. There's been a shortage of homes, people have been desperate to move, and more importantly, there's been a shortage of the professionals necessary to process the legal work before their clients can move home.

Put simply, in business 101 – demand for legal services has far outstripped supply.

And unfortunately, rather than capitalising on a golden opportunity to raise fees, reinvest in their business, bring in more staff to reduce caseloads per conveyancer, and deliver customer excellence leading to more satisfied client referrals, many law firms hoarded as much work as possible, leaving their staff overloaded and clients frustrated at a lack of contact.

Is it any wonder that many conveyancers then chose to leave the industry? Stressed out, underpaid and more importantly, underappreciated, they decided it wasn't worth it and bailed. I can't say that I blame them.

So for me, I feel it's a little late to be asking if fees should be increased at this late hour as the market appears to now be slowing down and moving towards recession.

What Is It The Experts Aren't Seeing?

Anyone who has been following WiggyWam will know we've been banging the higher fees drum for at least the last four years (and will continue to do so for the foreseeable future), but the truth is, we've had little success finding law firms who want to make more money. And my theory is because they're looking to the wrong people for advice.

Let me be perfectly clear, this is not a blog post having a pop at solicitors – it's merely sharing the things I've seen, having investigated the 'behind-the-scenes' within many law firms. What I've seen during my investigations is nothing short of shocking and one can only surmise that in affect, many solicitors are suffering at the hands of weapons of their own making, and even worse, listening to those supposed experts in industry who have less of a clue than themselves.

Who Do You Listen To?

So what are these observations I've noticed about law firms?

And more importantly, how do they affect estate agents?

Overwhelmingly, the first thing I've realised about most law firms is that they're not run as "proper" businesses. For some reason those practising law seem to think that they can ignore the laws of sales, marketing, and shrewd business administration as they're used to charging out their time via the billable hour, at a high hourly rate.

However, this limited thinking neglects to focus on business overheads or running costs and frequently leads to many law firms operating in the single percentage points of profitability, and often been caught out by things such as significant rises in professional indemnity insurance.

And whilst some will argue it's impossible to foresee such impacts as a rise in professional indemnity insurance, one could argue that the sensible thing to have done would be to have made the business far more profitable earlier on so that it was able to weather the storm when such inevitable challenges come along.

No Sales – No Business

The most shocking thing I've noticed about most law firms is they seem to operate without a traditional sales and marketing department. They tend to rely on referrals from past clients who have used their services previously. However, this frequently misses the opportunity to challenge client expectations on service levels and the fees the law firm wishes to charge.

As a result, clients are left to choose solicitors based on only one factor - which is usually price! Keen to not miss out on business, law firms may then reduce their prices in line with those of their competition, not realising this reduced fee fails to turn a profit within their business. In fact, in the worse examples, the law firm actually supplements the client's fees in man hours…

I recently heard of one law firm doing multi-million pounds of conveyancing but was losing money on every leasehold transaction they did simply because they did not keep track of the amount of time they were spending on each file. Whilst some might laugh at this fact, the truth is, there are many more firms operating in the same way. This is particularly true where firms pay referral fees to agents for conveyancing work. What they wrongly attribute to a cost of marketing their business, is actually their bottom-line profits migrating to other people's bank accounts – not good!

Secondly, by ignoring the rules of marketing in their business, particularly in relation to the online realm, they're putting themselves at a significant disadvantage to every other firm, that's willing to take the reins on an effective online strategy, whether that be to embrace SEO, or even doing such radical things as social media marketing.

The ultimate impact of this is that many law firm owners will spend 20, 30, or even 40 years building a business, thinking they're going to strike it rich when they retire, only to find out that their business is being forced into closure due to rapid PI increases, or is not anywhere near as profitable as they first thought, so it's almost impossible to find a successor practice to take it on, or a buyer who'll pay a premium for it.

Even worse, they can sometimes find themselves shackled to their business long past retirement because no buyer will take it on and it's too expensive to close it down. So they just drift on regardless hoping that one day a miracle will appear to save them.

I saw this recently with one gentleman who couldn't make the right decision about selling his business, and as such, his retirement plans evaporated into the ether whilst his liabilities began to accumulate as his run-off cover became more expensive with every passing year.

The Question Of Fees

In my opinion, it is very difficult for law firms to put their fees up, primarily because they're not good at communicating the value they deliver to their clients for the service they provide. In effect, it's become a commoditised industry and as law firm owners look to the self-appointed experts for answers, they're none the wiser, because all they've known is the same old ways of doing things.

Let's face it when it comes to moving home, all the client cares about is getting their hands on the keys to their new home as quickly as possible. That is the only goal any solicitor involved in conveyancing should have at the front of their mind every single day they show up at their desk.

If this is the only goal a conveyancer should have in mind for their client, aside from keeping them out of trouble, then surely the focus should be on slashing the timescale involved to help their client get there in as safe a manner as possible?

And with this new mindset, comes a shift in operations to facilitate the client reaching their goal at the earliest opportunity. So surely, such a mindset shift would involve pulling together a bunch upfront information about the property in the form of a seller's pack to enable the client to sell sooner once the buyer has been found? Or acting for a buyer, doing everything they can to streamline the process to make it as enjoyable and swift as possible?

Yet frequently, suggestions of this nature encounter many, many objections from dyed-in-the-wool practitioners who seek to find every obstacle possible to prevent shortcuts in timescales, or worse, use the one-in-a-million scenario as some kind of justification for why something won't work before applying that thinking to 100% of their cases.

Nonsense.

This erroneous thinking does not help to serve their clients or their own bottom line either, and only justifies a very self-centred approach for the solicitor rather than focusing on ways of delivering maximum value to their client.

And Just How Does This Impact Estate Agents?

Well simply put, because law firms are not making the money estate agents think they are, then frequently they do not have the financial resources available to employ better or more efficient staff, to process the work as quickly as possible.

Consequently, because of low fee, pricing, and an aversion to sales and marketing, the law firm frequently ends up with high caseloads per conveyancing solicitor with little to no profitability, but a mountain of work to plough through every day. All with little feeling of reward or job satisfaction.

This leads to a lowering of morale within the office, which could potentially be overcome if the firm was more profitable by rewarding staff appropriately for their contribution to the business, or even having some money available for exciting teambuilding activities or days out to build strong cohesion within the team.

So the impact on estate agents is that it destroys their pipeline and leads to the one-in-three fall through situation we've witnessed in recent years, and more importantly, the significant delays in the agents getting paid. Not to mention the impact it has on estate agent's reputations because, through no fault of their own, the sale process dragged on for months and became incredibly stressful for all concerned.

Is There A Better Way?

Collaboration between estate agents and solicitors would certainly help.

Solicitors are not necessarily expert salespeople, but they do have the opportunity to collaborate with expert agents who are good at selling and so could help sell their services to a wider marketplace. Hopefully one can see where this relationship could result in harmony for both parties.

Yet, it's important to bear in mind that many relationships of this type revolve around the payment of referral fees from the solicitor to the estate agent. As I've already mentioned the profit margins on most law firm's work is significantly lower than many people realise (including the law firm owners), so any agents taking referral fees, are effectively shooting themselves in the foot for all the reasons I've outlined above.

So, a switch in mindset to work in harmony with one another by collaborating to achieve greater results for both parties would ultimately lead to a better outcome for all.

With this in mind, perhaps it's time to end the war between both parties and, with respect, for solicitors to come out of their ivory towers and into the real world, where they can collaborate and work with agents for their own benefit as well as that of their clients. After all, the lack of transparency to their process is only hurting their bottom line, their referral network, and their client's satisfaction.

But when agents and solicitors collaborate, particularly through WiggyWam, not only do both parties become more successful, they massively reduce the time spent calling or emailing one another for updates and simply put their focus where it needs to be – getting their mutual clients moved as quickly as possible.

So for those reading this who want a new way of doing things, we'll be delighted to support you and show you how to achieve much higher fees for the work you do whilst getting it all processed in the shortest possible timescale.

If that sounds like a dream come true, then just visit www.wiggywam.co.uk and click the Book Demo button to choose the best time for you and we'll show you exactly what's possible following the WiggyWam way.

We'd love to hear your experience, thoughts and insights on this. Please post in the comments section below.