Why lawyers can be lucrative partners
by Viv Williams
Lawyers are in pursuit of suitable agency partners, so agents should consider joint ventures to stave off unnecessary competition.
The UK legal profession is experiencing one of the biggest shake-ups in its history.
Since 2001 the ways in which legal services have been bought and sold has come under increasing Government scrutiny and been the subject of several major reports.
These reports have resulted in the Legal Services Bill, which received Royal Assent in October 2007. The Bill promotes increased innovation and competition among law practices and includes a radical proposed move to deregulate legal services, opening ownership of law firms to nonlawyers for the first time.
The move, lovingly referred to within the legal profession as ‘Tesco Law’, because of the expectation that supermarkets and other organisations will use their marketing to compete with the profession, means that such organisations will potentially be able to employ their own legal staff.
Thus high street law firms are braced for stiff competition. Of the 9000 or so law firms currently operating in the UK, it is predicted that some 4000 will disappear under their current branding.
Investment in law firms from external sources means that estate agents could own, or certainly have investment in, legal practices within the next three years.
The Legal Services Act allows for ‘Alternative Business Structures’, which therefore also opens the door for the legal profession to look to potential joint ventures with other professions.
A number of law firms are already recognising the importance of diversification and many are looking to financial services and estate agencies as part of this process. Forward-thinking estate agents should perhaps also be considering the opportunities that lie ahead. Little do I need to tell you that the credit crunch has been having a dramatic effect on everyone involved in the process of buying and selling properties.
Many conveyancing lawyers are indicating a 50% reduction on new instructions in the first four months of 2008, compared with the same period last year. No one is feeling the pain more than estate agents, but I would argue that this should not deter progressive firms in planning for the future. A number of law firms have been involved in estate agency for many years, with varying degrees of success.
Hodsons, the Oxfordshire-based law firm and estate agency, has successfully combined the two disciplines for over 20 years. This is a classic example of how many law firms could diversify in the future, with lawyers opening estate agencies under their own brand.
The Solicitors Property Shop, a nationwide network of independent solicitor estate agents, is a franchised arrangement, which has given law firms their first foothold in the world of estate agency.
Some innovative firms have introduced a comprehensive package, which can include the purchase or sale of a property, inclusive of legal fees. So far, this has not caused much challenge to estate agents as most law firms have not yet invested in employing staff who really understand the estate agency process.
But this is beginning to change, with some lawyers now recruiting qualified estate agents to their team. For example, Parkinson Wright, a Worcesterbased law firm, successfully combines the two specialities. I predict that in time a much larger number of law firms will investigate the opportunities afforded by estate agency, so agents should be looking carefully at the potential of entering into joint ventures now, rather than waiting for law firms to become competition.
The challenge is to identify the perfect match between the estate agency and the law firm. The traditional old-style law practice is unlikely to be a good potential partner, but there are plenty of ambitious and progressive law firms that would be a perfect match in this situation. Agent initiative We are all too well aware of the challenges agents have been facing over the last few months, particularly due to the misguided introduction of home information packs, but having closer links with law firms will assist in the principles of cross-selling services. Joint marketing initiatives are already taking place, so there is no point in agents burying their heads in the sand, thinking these will go away – the trends I have outlined are continuing and gaining momentum.
The emergence of one stop shops, which combine a number of professions is a real phenomenon, so agents should not allow themselves to become the last man standing – they should consider the opportunities the future holds and begin discussions about prospective partnerships sooner rather than later.