Residential conveyancing firms must change their business models to withstand the threat posed by new entrants to the legal market place, delegates at the Law Society’s annual property section conference heard last week.

The Society’s chief executive Des Hudson said the introduction of alternative business structures, the changed regulatory environment and the economic climate meant firms needed to examine their business plan and make a ‘positive choice’ about their future.

He told delegates in London last week that the new ‘competitor players’ will target commoditisable high-volume private client work such as conveyancing.

The entrance of big brands will hasten the change in clients’ expectations of the price, value and service they receive for legal services, Hudson said.

‘Those firms that are out at lunchtime, do not have extended hours services, and have no online service will find things highly problematic,’ he warned.

Hudson said the decline in the volume of property transactions, with fewer than 600,000-a-year for the sixth year running, presented an added challenge.

He advised firms to look at their business plan; find out what their competitors are doing; know who their market is; and understand the value of their client base.

He added that firms should ensure they have a database of clients they can use to direct services and information to them.

‘For example, use your wills register to remind people of tax changes, and do online marketing.’

Hudson said: ‘Survival is optional. Whatever you’re going to do, the first step is to have made a conscious choice.’

Rowan Williams, professional practices partner at City firm Baker Tilly, told conference delegates that residential conveyancing was under threat from new entrants into the market place, while commercial work was safer because of the advisory element to the work.

She predicted that ABSs could have a ‘major impact’ on the legal services world, and warned solicitors not to underestimate it.

She suggested that a big new player, with the money and skill to develop a clever advertising campaign on prime time television, could quickly gain market share.

‘For instance, if Joanna Lumley fronted a campaign for Saga, would the over 50s go to Saga for their conveyancing?’ she asked.

Williams said firms should focus on their strategy and consider what structure and funding options would best help them achieve their aims and be competitive.

Coneyancing firms might consider whether they could benefit from being in an ABS with surveyors, architects, town planners, builders and even furniture removers, she said.

If they are looking to secure external investment, Williams advised firms to be clear about what they wanted to achieve by this, and consider why they would be attractive to an investor.

She said: ‘Keep your strategy in focus. Start with the end in mind.

'Then think what the right business model is to achieve what you want to achieve.’

In related news, the founder of Rightmove has launched a residential conveyancing service, called In-deed.