De-regulation of conveyancing - Australia

Progressive deregulation of conveyancing services began in New South Wales in the early 1990s. This process gave rise to an increasingly competitive market. Deregulation meant that solicitors were able to advertise their prices, licensed conveyancers could compete with solicitors and it became compulsory for them to disclose their fees.

The Legal Profession Reform Act 1993 (LPRA) was introduced in 1994. In the prelude this legislation, the Law Society of New South Wales asked the Justice Research Center (JRC) to investigate and survey some 1 000 randomly selected small firms (five or fewer principals). They had to examine how they set their fees, how fee disclosure was working in practice, what methods were being used to set these fees and to what extent advertising was used by them. In the first survey, 341 firms responded; when the study was repeated and expanded in 1996, 587 firms responded. This study is useful as it is one of the first in Australia that illustrates how advertising affects this important sector of the legal services market.

Survey findings
The results are certainly interesting. Fee levels were considerably reduced between 1994 and 1996. Clients could shop around for low prices because there was more competition and more discounts were on offer. The overall average professional fees charged by the firms had dropped by 17% - from AU$1116 to AU$925. Small suburban law firms reduced their fees the most - by 23% - followed by small regional law firms , who reduced their fees by 13%. The fees of city law firms, such as those in Sydney, had generally not been affected all that much. Conveyancing work is only a minor part of their practice and the value of the properties involved in their transactions was higher. Also, the conveyancing fees of city law firms are higher than those of suburban and regional law firms.

Change in fee structure
The investigation also showed that there was a strong move away from the old scale of fees towards flat and negotiated fees. In 1994, 67% of firms said that the old scale best described the way they set their fees, whereas 31% said they used a flat or negotiated fee. In 1996 these figures were 28% and 63% respectively - almost a reversal. In both surveys the remainder of the respondents used a combination of methods, such as what seemed fair or according to their own scales. Many respondents missed having some sort of a guideline for price setting.

How useful is advertising?
In 1995, 64% of the firms used advertising. These were mainly suburban and regional firms; the Yellow Pages and local newspapers were their preferred media. Other media included sponsoring sporting events, estate agents, radio and television. Interestingly, firms that had specifically advertised their conveyancing services had lower average professional fees than those who had not. This suggests that advertising is an important element in the conveyancing market. Although 81% of firms felt that advertising had little or no effect on their business, most law firms - 69% in fact - felt that advertising was an appropriate activity for lawyers as it promoted the profession and informed the public.

Full report: Conveyancing Fees in a Competitive Market (1996) - by J Baker

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