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This summer David Lammy, Under-Secretary of State at the Department of Constitutional Affairs, firmly endorsed the concept and approved the Land Registry’s proposals for the further development of e-conveyancing (see report here), whilst Ed Nally, Law Society President, signed a memorandum of understanding with the Land Registry at the Society’s annual conference in October, stating that e-conveyancing could “…create real opportunities for solicitors to play a key role in the development of a world leading service for homebuyers” (see report here).
The Land Registry has undertaken a huge amount of work, much of it behind the scenes, including:
i) Land Registry Direct, the property professionals access system which has been significantly enhanced with access via the Internet rather than via a very flakey dial up service;
ii) The National Land Information Service - see below; and
iii) Land Register Online – the system for public use with credit card payments. This was, to use the Land Registry’s own words, launched ‘in a blaze of secrecy’ in order to avoid a Public Records Office style fiasco with its website crashing because of user demand within hours of its launch; without publicity there were over 55,000 downloads by members of the public in September 2004 alone.
The total fee income from these three online access systems now exceeds that from the Land Registry’s hugely popular telephone services.
For a slightly increased cost (which can be a factor) the NLIS channel providers promote the system on speed of return of results and increased administration efficiencies. The technological side of the system has been working well for three years now, but Local Authorities have (because of cost) been slow to bring their own systems up to the required level of sophistication to enable them to be interrogated automatically via the NLIS system. The original target of 2005 for complete modernisation now seems unlikely to be met although I understand that there should, during 2005, be a significant increase in the number of authorities that meet the required level.
Further information about the system requirements, suggested benefits and progress of the Local Authorities can be obtained from any of the three licensed channel providers, Searchflow, TransAction Online and TM Search.
One unforseen development in the property search arena is the proliferation of personal search agencies. I believe that this is as a result of conveyancers wishing to simplify the administrative side of the property search process but (either, because the NLIS system is not yet working at its full potential, or because of an inherent reluctance to use the technology) not using NLIS and it is fair to say that some of the agency search companies do make the process very simple using a pad of forms and a fax machine.
To see the real potential for NLIS one needs to broaden one’s perspective; some of the major benefits in efficiency and productivity will only come when the NLIS system is integrated with the conveyancer’s case management system. A number of firms have done this so that their workflow system automatically fires up the NLIS system and transfers relevant data at the appropriate moment; but only a handful have implemented ‘two way’ integration so that information from the electronic search result is copied into the conveyancer’s system, e.g. a list of planning charges could be automatically copied from the result of a Local Search into the Report on Title to the client. There is also talk of, in the future, linking electronically produced Home Information Packs to NLIS so that the packs would be automatically updated if the information in the data provider’s database changed.
This linkage is being effected by the use of an XML standard known as PISCES (Property Information Systems Common Information Exchange Standard) and is developing quickly. Those investing in software in connection with property work would do well to ensure that their suppliers are aware of the standard and, at the least, express an intention that their software will comply.
There remain however some significant issues which require solutions before e-conveyancing can become a reality and the good news is that Land Registry do not intend to rush things. Steve Kelway, Land Registry’s Electronic Services Programme Manager, says that “…it will take as long as it takes…”. Amongst the issues to be resolved are E-signatures, Electronic Funds Transfer, the content of the Chain Matrix and who has access to it. I describe each of these below.
The Land Registration Act 2002 envisages conveyancers signing and executing documents on behalf of their clients. Whether clients or practitioners make the signatures, a secure, reliable and cost effective system is still required and this is something which, to date, we do not have. The Law Society of Scotland, with great foresight, set itself up as an e-signature Certification Authority, but the scheme failed due to lack of demand and the cost.
Late in 2004, Land Registry announced a trial scheme with technological partner Entrust. A document authentication project is due to commence in early 2005, the aim being to provide an e-signature prototype that can be piloted during the deeds phase of the e-lodgement pilot, also due in 2005.
A pilot for the e-lodgement of applications with forms (i.e. non-dispositionary) is due to commence in February 2005; this will be via Land Registry Direct and I understand that it is intended to extend this to NLIS during 2005.
Once this pilot has been successfully completed and e-signatures have been tried, tested and a satisfactory system decided upon, it is then planned to introduce electronic mortgages.
Further consultation, piloting and implementation of various aspects of e-conveyancing will now proceed on a piecemeal basis; the idea of a big bang introduction with a comprehensive pilot in 2005/6 of an ‘all singing all dancing’ system is, because of the complex issues involved, no longer appropriate and this has been recognised by Land Registry.
I understand from Land Registry that consultation on EFT will commence at the same time as the e-lodgement pilot and the e-signatures project, in early 2005, probably using an ‘Agent Bank’. However, if only one bank is used there are potential monopolistic issues which are currently being considered by Land Registry.
The members of the Council of Mortgage Lenders and the so-called Direct Conveyancing firms are very keen to see the introduction of e-conveyancing as soon as possible for obvious reasons. They have already invested substantially in technology and e-conveyancing will assist them in maximising that investment.
Does this mean that traditional ‘high street’ conveyancing practices are doomed? I hope and believe not. Land Registry has been careful to ensure fair representation on focus groups and pilot schemes and to ensure that opinions are sought from all areas of the profession, from the mega ‘factory’ firms to the sole practitioner.
For the smaller firm, re-mortgage work is definitely under threat with an already significant proportion of that work being done by direct conveyancing firms with which the lender has an arrangement. However I believe that there is still room for firms offering a traditional personal service.
There will be clients who will look for, and are prepared to pay for, such a service, perhaps not in the re-mortgage sphere but certainly in the buying and selling of their homes. This is, after all, one of the major transactions, if not the major transaction, in someone’s life.
There will be those who will want to speak to the same person each time when discussing progress, who will not want simply to log into a screen or receive a text message to be updated and who will like to feel that the person to whom they are speaking has some grasp of what is going on and is not simply reading from a screen. These are of course generalisations but they are representative of the reaction of some clients who currently use the services of some of the ‘factory’ conveyancers.
There are firms which are using the technology to change the nature of their market place without sacrificing the way that they do the work. Steve Kelway of the Land Registry tells of recently visiting a firm which, having had a very local conveyancing client base, began to advertise their services on the Internet with an on-line quotation service and rapidly found that they were acting for clients from the M4 corridor (many miles away) who were primarily working within the IT industry and who were already used to using technology to make purchases, order services and generally run their lives and were happy to have their conveyancing done in a similar fashion.
Those solicitors who have served a ‘traditional’ market will, I believe, for the time being, be able to continue to do so, although this kind of market will begin to shrink. They will in due course have to use technology to provide this service, but that should only improve the speed and quality of the service and there is no reason why they should not continue to speak to and even meet with the client as they have always done. There is of course an overhead attached to doing work in this way but there is, as with everything, a price/quality balance, and the key must be to achieve this.
Alastair Rhodes is a solicitor specialising in real property and IT law. A partner in South coast firm White and Bowker, www.wandb.co.uk, he has a particular interest in law firm management, strategy and using technology to assist in delivering services to clients. He lectures to the profession on a number of topics including the practical aspects of using technology in a law firm and on electronic conveyancing.
Email Alastair.Rhodes@wandb.co.uk.
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