Commercial pressure on solicitors to use connected suppliers

Following on from the discussion/expose of estate agent “conditional selling” kicked off by Mtge
Broker Malcolm Davidson of Moneyman Mortgage Brokers on LinkedIn, how about this for an
example of unethical cross selling by IT suppliers in conveyancing …

My firm’s case management and accounts software supplier (S1) has just told us the price of the
firm’s annual licence is increasing from £8,220 to £11,880 – a 44.5% increase.

However, if we agree to buy all our conveyancing searches from an S1 subsidiary, (S2), the annual
fee will remain unchanged at £8,220. The minimum stipulated conveyancing search spend is
£11,520, 80% of this years’ conveyancing search spend.

Drawbacks

anti-competitive – it stops us shopping around for a more competitive supplier, whether on
price or service
exposure to risk of uncontrolled search price increases because we are a captive market
service from S2 is likely to diminish – no competition
reputational damage/breach of SRA principles – if I choose to use S2 it will be because it
reduces my overhead costs by £3,660, not because it is in the best interests of my clients. I will
derive financial benefit; the clients will take the consequences and be none the wiser.

What is it?

Is this a “secret commission” aka a bribe? Or is it just a “good deal”? Does it make a difference
that I am a solicitor? Would it be different if I were a procurement executive for ABC Ltd, and not
a lawyer?

Is S1 no better than Countrywide cross selling its connected businesses through its network of
estate agents employing conditional selling tactics?

Perhaps I am being over scrupulous? Is it in my clients’ bests interests to take the opportunity to
reduce our overheads and keep down costs, helping build up the S2’s business? But what about
the wider impact, competition, and the smaller providers? With financial inducements like this the
competition will go to the wall and then what will be the impact on prices?

Digital and conveyancing

Thinking about the Digital Property Market Steering Group DPMSG, I can’t help predicting digital
providers will crowd in to improve the experience of home buying and will behave just like S1.
Once S1 got a foot in the door it hunted out opportunity. It is now exploiting our dependency
and buying our loyalty to build S2, its other business. In so doing it gets more and more influence
in conveyancing and may come to dominate the market.

Is this practice rife? First time anyone has tried it on me. Who might be interested in this?

Competition

The Competition and Markets Authority required Dye & Durham to sell TM Group in 2022
because after investigation it identified competition concerns:

https://www.gov.uk/government/news/cma-requires-dye-durham-to-sell-tm-group

The CMA ultimately ordered Dye & Durham to sell TM Group, having bought it for £91.5m. Its
press release of 3 August 2022 said:

“The CMA has therefore concluded that the merger would reduce competition and could lead to
less innovation, higher prices and lower quality services in the market. This could mean a worse
deal for people and businesses buying or selling residential and commercial properties in
England and Wales.”

The same could be said about my software supplier’s proposal.