The choice of lawyer that a home buyer or seller makes can determine the success or otherwise of their deal.
This is why an independent recommendation is ideal, but the problem is, HOW? Friends and family, an estate agent or broker who recommends purely on recent experience.
Unfortunately for the consumer, many referrers and even supposedly independent comparison websites, have agreements with panel management companies. They manage the referral process and only choose lawyers prepared to allow the public to pay the additional fees. These are then passed to the referrer or comparison site.
So is this a problem for the house buying and selling public?
First problem –legal issue
Fundamentally, yes. Firstly, there is a legal problem.
Under the Bribery Act 2010, anyone who receives any item of value (such as a referral fee) as a means of influencing the actions of an individual, is breaking the law. If a referrer recommends a lawyer only because their company receives a referral fee, knowing they do not provide the best service, they could be found guilty under the Act.
This means a member of the public using such a service could therefore be participating in illegal activity.
Second problem – the customer journey
The first thing an innocent buyer or seller will experience when they have been convinced to use “XYZ legal services” or clicked onto an “independent” comparison website, is they will be bombarded by telephone calls and emails.
Heaven forbid they do not respond to those emails within a very short period of time. Those automated emailers don’t give up. We know this from experience – we are still getting chasing emails a month after we mystery shopped a panel for a competitive quote. The fun doesn’t stop once they have agreed to use one of these companies.
Despite the popular opinion that only large, more technologically advanced companies sign up to these panels, too often it is the desperate, old-fashioned traditional firms that take the panel manager’s shilling. Indeed, in our experience, many of these small companies have ludicrously old-fashioned onboarding techniques. Most of which involve putting paperwork in the post. Ignore any stories of “amazing technological progress underway in the legal sector.
What starts out as a slick online quoting experience, for most, quickly degenerates into a trip down memory lane with dreadful forms that look like they were designed by a 5 year old. Sadly, it is only when the house buyer has filled in all these forms and sent them back in the post, that the truth slowly dawns that they have entered into the pit of despair.
And then it gets worse.
For many panels, not content with charging the consumer with additional fees for the legal service, they go back for a second bite of the cherry, by adding on charges for obtaining legal searches for buyers. We have seen situations where the panel manager instructs the search company to contact the client directly to take payment to buy the searches. Yet another person for the client to speak with. Only when this is complete, does the process actually start, and the true downside of using a panel lawyer reveals itself to the client.
The owner of the law firm, having accepted to pay the bribe demanded by the panel manager, may have their fees fixed by them. These will typically be very low because otherwise, the additional costs that are needed to pay everyone in the chain would make the fees uncompetitive. Low fees mean that the people doing the work must be cheaper and have a high caseload. Which impacts the service that can be provided to the home buyer. This normally translates into slow responses to emails or the non-answering of telephones.
Which is the last thing that a buyer needs in such a stressful process.
The biggest irony of this entire convoluted process is the way that comparison websites or other panel manager-based referrers describe the services they offer. They typically say that “using our choice of highly regarded and top-rated lawyers will help smooth the process”.
In reality, for the public nothing could be further from the truth. Sadly, it is them that end up paying the price.