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Cheap is not always cheerful

When it comes to quoting for conveyancing, are Solicitors inherently stupid ?

I ask this because first of all, almost anyone in a Solicitors Office might be delegated to provide quotations to prospective clients including the office cat !

The way it seems to work is like this – a prospective client phones a firm of Solicitors and says, “What do you charge for conveyancing ?”.

What should happen at this point is a series of questions and answers starting with “I will need more information !”

Quite often, the response is, “What more information could you possibly want ? It’s a  house !, the response from the prospective client becoming increasingly louder.

At this juncture, firstly, the prospective client should be talking to a Solicitor or experienced Conveyancer and secondly, the Solicitor should seek answers to the following -  Is it Freehold or Leasehold ?; What is the price ?; What is the address of the property ?; Is it registered or unregistered ?; Are there covenants ?; Are there easements ?; etc  etc  etc.

Instead, the office cat or whoever might have taken the call, simply shouts back a price – “We’ll charge £300 plus disbursements plus VAT

The usual response to this is, “Botchit, Shambles & Co down the road have quoted me £250 plus disbursements plus VAT !”

The response invariably then is, “In that case, we’ll charge £200 plus disbursements plus VAT !”.

At this point, it reminds me of that old TV programme “Name That Tune” in which two contestants compete to name a tune with a chosen number of notes after being given a clue.  The winner is the one who can name that tune in the least number of notes and invariably, someone always says, “I’ll name that tune in one !”

I’ll do that job for £200 plus disbursements plus VAT”.

“I’ll do that job for £100 plus disbursements plus VAT”.

“I’ll do that job for FREE !”

The job is yours !”

I comeback to my original question; are Solicitors inherently stupid ?  They have no information about the job that they are proposing to do and they have given little or no consideration to the cost of doing it !

No one in their right mind would sell goods without consideration of the purchase price of the goods they are selling but this is precisely what happens when many Solicitors quote for conveyancing work.  They offer to do the job without any consideration as to whether or not they can do the job properly at that price.  Their only consideration is to get the job at any cost !

Equally surprising in this bidding war is the attitude and approach of the prospective client in which price is the only factor.  It matters not to this prospective client whether the Solicitor has any experience of conveyancing – price is the only factor.  If they could get the job done for FREE they would do so. 

This type of prospective client doesn’t stop to ask how the Solicitor can do the job properly or profitably at the price quoted.  They are simply rubbing their hands with glee at having negotiated such a good deal !

When I bought my first home in 1997, my Solicitor then charged me £400 plus disbursements plus VAT.  The purchase price was £8,750 and the Solicitors fees represented 4.5% of the purchase price.

Even today, some clients expect to get conveyancing services for as little as £200 plus disbursements plus VAT.  Not only is this a 50% reduction in real terms but it takes no account of inflation between 1977 and today.

The average house price today is £226,887 and the expectation of getting conveyancing services for just £200 represents 0.08% !!

A comparative figure based on 4.5% of today’s house prices would see conveyancing services being supplied for £10,209 !

A recent case referred to the Legal Ombudsman demonstrates just this point.  A client complained to the Legal Ombudsman for poor service having instructed a Solicitor to do some conveyancing following a quote he received of just £100 plus disbursements plus VAT.

After investigating the matter, the Legal Ombudsman concluded that in fact the service had been poor and that the Solicitor had not provided what was promised.  The Solicitor was ordered to compensate the client with £50 and so therefore, the Solicitor had effectively done the job of £50 !

What surprises me most about this particular example is not how little was  quoted in the first place but that the Solicitor was not struck-off for stupidity in thinking he could do the job for that price !

The problem of course is one of economics.  There is an over supply of Solicitors doing conveyancing and so the price goes down, but the reality is that the job cannot be done properly for £200.  Solicitor’s practices then employ inexperienced secretaries to deal with the conveyancing and this inevitably leads to professional negligence claims.  Residential Conveyancing is the largest contributor by far of all professional negligence claims notified to indemnity insurers for this very reason.

In the fullness of time, Solicitors firms providing “bucket shop” conveyancing negligently will be driven out of business; that will reduce supply and a laissez faire market price will be established.

Buying your own home is the biggest single item of expense that most people will incur in their lifetimes.  They will spend 25 years paying off the mortgage and yet the only criterion people use for choosing a Solicitor is “price”.

People never buy shoes, clothes or cars based on the sole criterion of “price”.  If that was so, people would never buy Rolls Royce’s or Armani clothes (or, for the ladies, Jimmy Choo shoes !).  And yet with the biggest single expense of their lives, and the prospect of completing the purchase or paying off the mortgage and finding that they do not own the property, people still base their decision on choice of Solicitor on “price”.

It is a well known fact that “ you get what you pay for “ and yet peoples perceptions of Solicitors is that you can get a Rolls Royce job for the price of a Mini until everything goes wrong !

Over the years, I have been instructed by many clients who come to me from other firms.  So often they complain that “I telephoned my solicitor, but he was always busy and never returned my calls”.

Of course he’s busy and doesn’t return your calls ! He’s trying to do 300 jobs at £100 a time !  He simply doesn’t have time to return calls !

In cases such as these, both the client and the Solicitor are being stupid ! the client for thinking that he can get conveyancing for £100 and the Solicitor for thinking that he can do the job properly for £100.

What people fail to understand is that with the provision of any service, particularly legal Services (and this is basic economics) the lower the price, the lower the service !  Jobs are done in haste with insufficient time to do it properly and this leads to mistakes.

In short, they paid for a cheap and shoddy job and that is precisely what they got !

When it comes to conveyancing, “Cheap is not Cheerful” !  Cheap leads to grief, stress, negligence claims, loss and headaches for all concerned !

STEPHEN LOCKWOOD

STEPHEN LOCKWOOD

Stephen served his Articles at Wragge & Co, one of Birmingham's largest and most prestigious corporate law firms, where he was Articled to Sir Patrick Lawrence, the Firm’s Senior Partner.

Over his many years in practice, Stephen has gained considerable experience in a wide variety of disciplines. These have mostly been in the Company and Commercial field but have also included such diverse things as successfully defending a soldier in a Court Martial; obtaining a substantial settlement for a commercial agent in a dispute with his Principal, a blue chip company; and involvement in numerous multi-million pound acquisitions.

His meticulous attention to detail and thorough grasp of his field means clients can be assured that nothing is overlooked and their interests will be thoroughly protected.

Stephen is widely regarded by clients as one of the leading Company and Commercial Solicitors in the West Midlands.

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