In Part 1 of this article, we started sharing some thoughts on developing an effective strategy for retaining membership on lenders’ panels. Here is the conclusion of the article.
Understand lenders’ objectives
In order to develop and execute an effective strategy to retain membership of key lenders’ panels, it is important to understand the broad objectives of lenders with regard to their panels. A starting point is to recognise that although lenders share generic objectives their individual approaches are dictated by their specific objectives underpinned by their respective risk appetite. It seems to me that lenders can broadly be segmented according to their objectives as follows:
a) Lenders that aim to maintain as open/wide and/or as large a panel as possible in order to enable adequate consumer choice subject to legal firms achieving a minimum risk profile and such lenders have the capacity to manage such panels effectively;
b) Lenders that aim to maintain as open/wide and/or as large a panel as possible in order to enable adequate consumer choice particularly in their key geographic operational areas subject to legal firms achieving a minimum risk profile although such lenders lack the capacity to manage the size of panels as the lenders identified in (a) above;
c) Lenders that aim to maintain as limited a panel as possible in accordance with their limited capacity to manage panels effectively subject to legal firms achieving a minimum risk profile;
d) Lenders that aim to maintain a small panel in order to develop closer, more integrated and much deeper strategic relationships with a few legal firms subject to them achieving a minimum risk profile and their capability to meet demanding service level agreements.
I recognise that attending forums and/or events where lenders share their plans and objectives is usually challenging for a number of conveyancing firms. However, I wonder whether it is a coincidence that the firms that regularly attend conferences and training events also seem to have a good track record in maintaining their places on the majority of lenders panels. It seems to me that many of such firms that I have met repeatedly at a number of events seems to suggest that they understand what lenders need and have successfully adapted and aligned their respective propositions.
Whilst the cost of attending events is prohibitive for some firms, it is advisable that firms take more proactive steps to understand lenders’ objectives through information published in the public domain including relevant trade press, trade bodies and relevant professional bodies. Reviewing such information with a mindset to understand rather than to criticise or condemn would provide a useful perspective to inform the development of a successful strategy to win and retain membership of lenders’ panels.
Assess your brand reputation
In my experience of working with firms that eventually were readmitted to panels, it was clear that the respective lenders initially had a brand perception of those firms, which caused them some concern. The opportunity to present more accurately the brand of those firms resulted in the respective lenders either admitting or readmitting those firms unto their panels. It is not uncommon when firms are refused membership of panels or removed from panels to feel that they have been treated both unfairly and without any justification and the default response is to lodge an appeal immediately without any self reflection on the possible reasons for such a decision.
In my experience, the starting point before a firm submits a panel application or an appeal to secure readmission is to self assess their firm objectively looking through the lens of the in house general counsel at a lender. In other words, a legal firm should assume that if they were appointed by a lender to act as their in house general counsel to select a panel of conveyancing firms would they choose their firm to join the panel particularly if the failure to make the right decision may cost them a contract of over £100,000 in annual revenue.
A robust self-assessment will consider the signals that a firm’s brand may be sending to lenders. Areas to consider include the following:
- Governance – Are the arrangements for governance of the firm clear and do they provide reassurance to relevant stakeholders?
- Data security – Does the firm’s email address (e.g. hotmail type address) send the wrong signal about its information security and the likely approach to information technology?
- Business model – Is the firm’s business model underpinned by a multi channel approach?
- Pricing – Does the firm’s approach to pricing raise alarm bells about its competence and capability to deliver safe legal services consistently? Extremely low and unsustainable prices usually send a signal of desperation rather competitiveness which is an attribute that is highly valued by commercial partners.
- Risk management – Are the firm’s internal controls for identifying and mitigating risks associated to conveyancing sufficiently robust particularly with regard to the holding of client money?
- Approach to service quality – Does the firm adopt a systematic approach to assure the quality of services delivered? Is a cost effective approach adopted to review regularly the quality of work particularly focusing on post completion activities?
- Selection risk – Are the firm’s vetting arrangements for key staff and third parties appropriate particularly the likely adverse implications on the firm arising from the reputation of fee earners/third parties possibly tainted by close association with individuals/firms/third parties with questionable regulatory histories?
- Benchmarking – Is the firm aware where it is positioned relative to the leading conveyancing firms in its key markets (local and/or national) with regard to service quality, customer service and competence?
Enhance and maintain your brand reputation
As each firm is the primary custodian of their brand reputation, it is critical that they take ongoing effort to maintain and enhance their reputation. I recall a conversation that I had with a firm that was reluctant to apply for CQS membership based on the principle that being a solicitor should be adequate for lenders. I suggested that CQS is a sub brand of the solicitor brand and does not devalue the solicitor brand if marketing messages are clear about the promised added value to consumers of CQS membership. However, I suggested that from a lender’s perspective he should consider whether his refusal to seek CQS membership in view of the uptake to date might be perceived as a reluctance to seek external validation because there might be hidden problems at the firm.
Some of the steps that firms can take to maintain and enhance their brand reputation with regard to lenders’ panels should include the following:
- Proactive communications with lenders
- Aspire to develop deep and meaningful relationships with key lenders
- Proactively promote the firm’s brand
- Leverage risk and compliance to protect and strengthen the firm’s brand
➢ Timely provision of key transactional information that may reasonably affect the lender’s decision to lend
➢ Changes in business model/structure/key staff including rationale for proposed changes
• Demonstrating competence in conveyancing
➢ Benchmarking performance with recognised leading firms
➢ Emphasise and demonstrate the firm’s commitment to enhancing competence and capability through training and development
➢ Embed well designed processes to ensure consistency
➢ Focus on building and deepening trust with lenders
➢ Continue to demonstrate empathy and understanding of the legal needs of respective lenders. Being disparaging about lenders particularly on social media does not reflect positively on a firm’s commitment to develop long lasting mutual relationships based on mutual respect
➢ Continuously demonstrate the firm’s compatibility to the legitimate and evolving needs of lenders
➢ Demonstrate willingness to adapt to changing priorities of lenders
➢ Keep abreast of challenges in the house buying and selling market and likely implications for the conveyancing market and the service delivery of the firm
➢ Publish executive summaries of credible independent feedback from conveyancing customers
➢ Receiving positive mentions in the relevant press
➢ Deliver great service on existing conveyancing matters
➢ Demonstrate best practice across all aspects of their firm including good governance arrangements
➢ Ensure that the digital footprint is consistent with the brand of the firm
➢ Share annual risk and compliance reports including mitigating actions particularly where specific conveyancing issues were identified
➢ Share outputs of key engagement with relevant regulators and/or accreditation bodies such as CQS which may be perceived as material to the firm’s brand reputation
Winning and retaining panel membership is going to remain challenging but those legal firms that are intentional in their strategy will overcome the challenges and maintain the platform to serve their consumers (both individual and institutional) safely and profitably.