Increasing numbers of solicitors are said to be handing in their practising certificates to become licensed conveyancers, and enjoy less restrictive rules.

Chris Baker investigates

A licence to convey may not be as exciting as a licence to kill, but some law firms and solicitors are considering whether to throw themselves into it completely by becoming licensed conveyancers.

Licensed conveyancing firms emerged in 1987 following the Administration of Justice Act 1985, which allowed people other than solicitors to offer their services in the market.

The government would appear happy with the results, as the Department for Constitutional Affairs said in its response to its In the Public Interest? consultation that the market did not need any more competition (see [2003] Gazette, 31 July, 3).

However, the Secretary of State for Constitutional Affairs, Lord Falconer, has charged David Clementi with the task of finding 'more efficient ways of liberalising the market for conveyancing services' as part of his broader review of the regulation of the legal profession.

Around 850 licensed con-veyancers across England and Wales are now regulated by the Council for Licensed Conveyancers (CLC).

There are two types of licensed conveyancers: those who offer services direct to the public and those who offer their services through an employer.

Once a conveyancer has worked with an employer for three years or more, he can apply for a licence to work directly with the public.

Around 300 licensed conveyancers have direct access to the public.

The CLC provides training and undertakes qualification exams.

It also handles complaints and, like the Law Society, comes under the remit of the Legal Services Ombudsman.

There are subtle differences between the regulations of the CLC and the Society.

'We have conveyancing inspectors who go in and say: "Show us your fees." We want to see that firms are not breaking our rules and that the work being done is economic and efficient.'

Banks, lenders, estate agents, property developers and law firms have all rolled out licensed conveyancing services.

Utilities giant Npower has launched a seven-day service with on-line transaction tracking, and last year estate agents Connells bought up the conveyancing arm of east Sussex-based law firm Morris Smith.

Called Conveyancing Direct, it is now the largest provider of transactional residential conveyancing.

The CLC says it is receiving a growing number of applications from solicitors to transfer across.

Solicitors are interviewed by the CLC's licence and practice committee before being admitted, and have to give up their practising certificates, although they can remain on the roll.

In effect, they have to close down their solicitors' practices, providing final accountants' reports.

In July, Leeds firm Addleshaw Goddard spun off its volume conveyancing provider, Enact, to be regulated by the CLC, adding the largest remortgaging provider to the ranks of the licensed conveyancer (see [2003] Gazette, 31 July, 6).

After the merger between Addleshaw Booth and Theodore Goddard, it was decided to separate the venture to maintain a sense of distance between the firm's commercial work and its efforts in the residential housing market.

'The business models were diverging and we took a grown-up look and wanted to see how this firm could sponsor more freedom,' says Enact executive chairman Richard Dinning.

'One way to do that was to agree a deal with the management to actually take the firm out of Addleshaw Goddard, which remains a nominal investor in it.'

Enact has found that being a licensed conveyancer offers more freedom.

Unlike the Society, the CLC allows external investment in the practice other than from partners.

'What it has allowed us to do was to bring investment money into the business,' Mr Dinning says.

'That meant we were able to invest in the business going forward and we were also able to motivate some of our key managers - some of them are now directors in the company.' Licensed conveyancers can also form multi-disciplinary partnerships.

The CLC provides the same level of consumer protection and safeguards professional standards to the same level as the Society, Mr Dinning adds.

In fact, the only downside for Enact is the fact that the CLC organises indemnity insurance for which practices have no option but to pay - there is no free market, as there is for solicitors.

'In all other respects, we regard being regulated by the CLC as being freer but still as robust,' Mr Dinning adds.

Traditional conveyancing solicitors view their licensed colleagues with interest, but not with real concern.

Initial fears that they would threaten the sector have proved unfounded, they say.

One, speaking anonymously, says: 'Without wanting to be insulting, I think they're pretty irrelevant.'

Denis Cameron, a partner at Blackpool firm Cameron & Ball and chairman of the Law Society's conveyancing and land law committee, says: 'They have some advantages over solicitors - they can act for both parties, but solicitors can only act for both parties in limited circumstances.'

But he maintains that licensed conveyancers have not made any real impact.

'It depends where you are - I don't come across them very often but they are out there,' he says.

'The rules are more liberal and for some it's seen as being worth losing your professional status for.'

For Mr Cameron, the biggest drawback for solicitors becoming licensed conveyancers is the fact that they will not be able to call themselves solicitors in practice any more once they have handed their practising certificates back.

And then they will not be able to undertake any other legal work.

This loss of cachet would probably put most people off, he adds.

'There are about 20,000 solicitors who deal with residential and commercial residential conveyancing and I cannot imagine them all becoming licensed conveyancers,' Mr Cameron continues.

'But who can say what ten years might bring?'

Ian Lithman, a former chairman of the Sole Practitioners Group, based in central London, agrees.

He has had 'no problem' with licensed conveyancers.

'Their exams are very strenuous and their undertakings are acceptable,' he says.

'The threat that some solicitors perceived - I was not one - to competition has not materialised.'

A further expansion of the market in the future along the lines of the so-called 'Tesco law' would probably not matter, as similar fees are likely to mean that non-law firms offering legal services would hire a mixture of licensed and solicitor conveyancers, Mr Lithman adds.

And the Society admits it has not made any study of the effect licensed conveyancers have had on the market.

'The impact varies from area to area,' Neil Gower, secretary to the land law and conveyancing committee, says.

'We don't have a clear view - in most areas it's been fairly limited.'

Anecdotal evidence suggests both sides can get along quite happily, he adds.

'They are competition for solicitors and we don't have any problems with competition.

Their activity is confined to a pretty small area of practice.'

Some licensed conveyancers claim they can offer a faster service.

But the Society and CLC are in agreement that it all depends on different firms offering different levels of service, such as on-line products.

However, the Society maintains that the market should not be opened any further.

'It's a very competitive market and we have some of the lowest fees in Europe,' Mr Gower says.

'I don't think there's any margin left - I don't think anyone else could compete on price.'

At Enact, Mr Dinning thinks more conveyancers will take the plunge.

Being allowed to lever in external finance enables firms to invest in new technology and offer better products to their clients, he says.

'One of the drivers in the market is investment and one of the reasons why licensed conveyancing is likely to be of more interest is the ability to get external investment for technology, staff and the premises,' he adds.

'You need to invest in the business and finance is available which traditionally is not available to a solicitor who is part-owner.'

Conveyancing may be the biggest single source of work for solicitors in England and Wales, but the market would appear to be stretched to the limit.

Lord Falconer seems to think there is not any pressing need to open it any further.

Even so, when there is a range of options available, it seems solicitors and licensed conveyancers are able to work happily together - and they probably will be in even closer contact if the day comes when members of public can stroll down to their local supermarket to get their conveyancing done after buying the Sunday roast.

LINKS: www.conveyancer.org.uk

Chris Baker is a freelance journalist