According to the latest Conveyancing Market Tracker from Search Acumen, the fall in firms represents an 11% fall in the number of active property law firms since 10 years ago, when it stood at 4,317.

The report stated that in the first half of this year, property transaction activity was down 22% year-on-year to 466,680, while the average caseload per property law firm has decreased by 19% year-on-year to 61.

It noted that the average caseload figure compares to 94 at its peak in Q1 2022.

Search Acumen said that while property transactions were down, the latest date for June shows that transactions are “steady” and “with increased investment stability and economic confidence that a new government could bring, levels are predicted to end the year on a more positive note”.

The report added that while average caseloads are falling, they are “reaching a point of stability” following the backlog created by the pandemic.

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It found that many property law firms are keen to grow, especially in the commercial real estate market.

The top five property law firms have seen their market share of caseloads fall from 5% to 4% year-on-year, but the report stated that this is 24% down over the decade.

The average transaction volume for the top five property law firms has also fallen 9% over the last 10 years, while other property law firms are on the up.

 

‘An uncomfortable sign that growth is stagnating in real estate’

Andrew Lloyd, managing director at Search Acumen, said: “Lawyers, like other industries, are feeling the pressure to do more with less. Pressure from clients to produce more in the same time frame – to be quicker as well as to serve their firm’s bottom line – is a balancing act where often technology can be used to expedite the process.

“Whilst the fact that caseloads are dropping may feel like a well-earned reprieve for many after the post-pandemic years, it is also an uncomfortable sign that growth is stagnating in real estate.

“Some firms are taking a much larger slice of the pie, knowing that when the heat is on, upping their game is essential. The data reflects this and what we know anecdotally; that the mid-to-large firms are investing in digital transformation and seeing their market share grow as a result.”

Lloyd added that the trough of the commercial real estate cycle may be nearing its end, so property law firms would need to prepare.

He explains: “We know housebuilding has been at historic lows, with high ambitions cemented by a new government to reverse this trend. With housebuilding comes increased investment from both the private and public sectors to support the real estate ecosystem, from retail to social housing. If Labour deliver, we could see a very different picture for transactions this time next year as land deals accelerate.

“What technology can deliver for businesses’ bottom lines here will be essential. The competition from professional service industries to be the firm of choice will increase as Labour’s housing policies bed in, in which the need to transact quickly, with effective and accurate digital tools, will play a leading role in the race against obsolescence.”