Conveyancers are facing unprecedented pressure over fees but have largely failed to diversify into other areas, according to research seen exclusively by the Gazette.

The news comes as Spicerhaart, the estate agency which has launched website iSold.com in association with supermarket Tesco, said that it expects the site to become ‘a major force in the distribution of conveyancing and associated legal services’ and would ‘certainly consider’ applying for a formal licence to offer legal services in 2011.

The survey of 117 law firms by search company MDA SearchFlow found that 62% said they were now under more price pressure from clients compared with a year ago. More than a third said their business had been ‘significantly’ affected by the recession, and another 38% said it had been ‘somewhat’ affected. Respondents said they faced growing competition from online conveyancers and panels.

Despite this, 60% of firms had taken no steps to diversify into other areas in the past year. Those that had done so had mostly gone into probate and litigation.

Law Society property spokesman Paul Marsh said he had ‘never known such pressure on fees’ and firms needed to make ‘hard choices’ if they wanted to stay profitable and competitive.

David Kempster, marketing manager at MDA SearchFlow, said: ‘This is the first time we’ve seen high-street firms facing such pressure on price, and is combined with the impact of the recession and reduced sales.’

However, he said conveyancing firms were still insufficiently aware of the potential threat posed by big brands entering the market.

‘What’s come out of this is that it’ll take something significant to change the way solicitors operate,’ he said. ‘Estate agents are fretting about Tesco and Google entering the property selling market, but this does not seem to have transferred to the solicitors’ profession yet.’

Spicerhaart launched online estate agency iSold.com in conjunction with Tesco last week, and will market the service through the tesco.com website. Lucian Pollington, iSold.com director, told the Gazette it would ‘certainly consider’ applying for a formal licence to offer legal services in 2011.

He added: ‘As a pioneering estate agency business, iSold expects to become a major force in the distribution of conveyancing and associated legal services.’

Pollington said iSold.com is working closely with a small number of key partner law firms.

Marsh added: ‘If Tesco decides to offer conveyancing, it will be a watershed for the profession and will make a huge impact on the market.’