Lawyers Weekly, in partnership with InfoTrack, assembled a roundtable of property lawyers and tech experts to discuss the latest developments in transaction technology and the future of contracting.

PANEL MEMBERS

CM: Claire Martin, head of property, Kreisson Lawyers

ET: Eugene Tan, senior associate, Clayton Utz

DJ: David Jones, head of real estate, Baker & McKenzie

MM: Mark Morgan, partner, Colin Biggers & Paisley

JA: John Ahern, CEO, InfoTrack

PT: Phillip Tarrant, managing editor, Lawyers Weekly

PT: Welcome everyone. Our objective today is to discuss transaction technology. A lot of this conversation will be about residential property but it will address commercial property as well.

What is your overall view of the property markets? How does technology fit into the picture?

DJ: It’s a pretty active space, there’s a lot of development work going on. Like all firms, we have a lot of technology placed at the front end to make our own internal processes efficient to be able to compete with the mid-tier firms and the specialist conveyancers.

But we don’t necessarily have that technology at the back end. Because property is something that people like to touch, feel and hold, a lot of the work at the back end of that is people wanting to see something physical as well.

A lot of our foreign buyers particularly like to have a piece of paper. They like to come and have a signing ceremony, whether it’s for an apartment or an office building. That is something that is always in the back of our mind, as we began to offer these things to clients.

We quite often do electronic exchanges in the commercial space with hard copies to follow, which is one step there, but you will always have clients who want to come and view, sign and take photos. It is something tangible, which really goes hand in hand with property.

MM: Because we act for a lot of large developers, we end up doing a lot of conveyancing.

For example, in the Sydney office, in the last 12 months, we did about 3,000 conveyances and of those about 700 were e-contracts. That is why transaction technology is interesting for us, to say the least, and also very frustrating because we see all of the faults that have been built into the system.

We are obviously concerned about the sustained attack on overseas investors at the moment. Sadly, it’s based on fiscal concerns rather than concerns about overseas people investing, from what I can see.

It appears that the next attack is going to come from the NSW state government with an extra levy on a stamp duty and higher land taxes, just as they’re doing in Queensland and Victoria.

PT: In your view, are law firms embracing the ability to be better by embracing technology? Is there a big appetite?

JA: In off-the-plan work, we’ve certainly noticed a massive appetite for tools in the last 12 to 18 months that could provide a greater level of transparency between the developer, the firm and the consumer/client and any investors.

There is a consumer demand for transparency and knowing what stage of the process their transaction is at.

A lot of firms are also asking how to provide that level of transparency to developers. If the client has a multi-stage development underway with 1,200 lots, I want to provide them a portal where they can come in and not have to call 14 times a day or ship out Excel spreadsheets to see where they are in the process from end-to-end.

I’ve got these tools for the major firms and then I’ve got these tools for the smaller conveyancers and we leverage the technology wherever possible but it is hard to meet those demands.

From a consumption point of view, the major accounts just want something now.

The smaller conveyancers, however, want the transparency. But there is an adoption hurdle, firstly in training and secondly because they are precedent-based people who want to know that this has been done before; how enforceable it is.

We spend a lot of time with partners, educating them on electronic signatures, who we have spoken to and what documents that we have support.

CM: It’s risk management. All it comes down to is: ‘Where can I get into trouble? What have you done to protect me from getting into trouble?’

JA: I think that’s the opportunity here. Electronic contracts aren’t about taking a contract that was a manual process and putting it on a computer. There should be some higher value we should aspire to than just going electronic. There are time savings, there is transparency, but there should also be higher levels of security.

PT: Claire, I’m quite interested in your story as the lawyer to conduct the first entirely paperless transaction. How did that work?

CM: I love the idea of online shopping, I love Uber, I order my daughter’s lunch on an app. Everything digital makes my life easier.

I know Colin Biggers & Paisley have their own platform and Gadens is another firm that has developed their own infrastructure. My firm was an existing InfoTrack client, so it wasn’t going to cost us anything to be able to access the same sort of outcome – that made it easier to convince my boss to do this.

I decided to sell my own investment and use it as the guinea pig. However, even that wasn’t easy because despite being able to choose my agent, I had to convince her not to print the contract.

I signed my contract when I was down at Manly Oval watching the footy. The purchasers signed a few hours later at different times and then on Monday, once the deposit had shown up in the trust account, we exchanged.

Other hurdles to overcome to make it entirely paperless included a section 109 certificate from Strata. They said they would only take payment by cheque, but eventually sent me a tax invoice for me via BPay.

Next was getting settlement to go through on PEXA. St George were the lenders for the purchasers and they only began taking bookings for external transactions on the 6 June, and we settled on the 9 June. Behind the scenes we were talking to the head of PEXA of St George because they kept rejecting it or withdrawing from the workspace as a result of poor internal communication at St George. PEXA helped us and when they hit a dead end I would just push it a bit further.

PT: In a perfect world, if there were three things that you could improve to facilitate the easy integration of transaction technology, what would they be?

MM: The three things would be: government recognition that people actually use e-commerce; number two would be the Law Societies reminding lawyers that people now use emails; and, number three, that state governments impose an obligation on authorities who issue required documents [for property transactions] to make them available online.

JA: I’m with Mark. We have a lot of technology invested in returning those documents back in four to seven days. Our clients order them electronically and our firm provides them all online. We have a processing centre that goes out to the councils, even if we have to turn up in person with cheques and to get documents.

We are still issuing cheques and receiving certificate results in the physical mail. We have two big boxes of mail coming in with stamps that are fed into high-volume scanners. And every month we spend time, going out to councils asking if they will accept EFT because that will reduce the response time of that document by four days.

Even in cases where councils are sending us emails back, we have to request that they stop sending physical certificate as well because it takes time to open up mail only to realise that we don’t need that anymore.

CM: The Northern Beaches council is a good example. When Pittwater launched e-certificates, you could get them within 15 minutes. In Manly, you can fax or email a payment but you still get the certificate in hard copy.

MM: To fix this problem, all the state government has to say is that in three months’ time, unless councils make these documents available online, they have to issue them for free.

These councils get $150 for each certificate; it is a major income source for them. They are totally dependent on it in many respects and yet they won’t provide any service by making them available online. I think there are 20 councils that you can apply online to.

PT: Eugene, what sort of work are you doing at the moment and, within your firm, are you doing a lot of conveyancing work?

ET: Traditionally, it’s not the sort of space where the large tiers are able to compete or want to really participate at the market, but the increase of Chinese money coming in has driven it.

We’ve found really strong relationships with new market entrants and them wanting us to provide an end-to-end service for development stage and all the way through to sales for mums and dads. We help them with the development, start-up, staging phase.

Then they might transition out to other places like the infrastructure teams who do the high-volume conveyancing.

In an interesting twist, we’ve actually built a volume conveyancing practice in the past three months. We’ve invested heavily in our own technology, rather than taking off-the-shelf products.

It may be because we do have infrastructure in place, unlike the experience in a smaller firm where you’re more agile. There is a feeling that an off-the-shelf product can’t integrate sufficiently into our billing and file management systems, for example.

So at Clayton Utz we have built our own platform at extraordinary cost, just like Gadens and Colin Biggers & Paisley have invested over the years. There’s definitely a client push to service that end of the market.

Of course, being able to provide continuity of service is always a consideration. Previously, it’s been a balancing act to see how much it will cost to service that need, versus how much will we bring in from it.

It was once thought that this investment was just too expensive and we can’t compete but now with leveraging technology, even with a high start-up cost, there is the thinking that we can get into that space. It is probably not something that we are looking to expand into strategically, but in order to satisfy clients and for end-to-end servicing.

MM: It’s very difficult to make money out of it. It’s almost impossible to make a profit because the cost pressure and downward price pressure is so strong. From our point of view, we use it as a client relationship and retention mechanism.

PT: Can a larger firm, doing a lot of high-volume work, add value to the experience, versus a small suburban operation, which just concentrates on conveyancing work?

MM: There’s a major difference, which is the reporting requirements back to the client. We need to give very sophisticated reporting back to clients because they’re dealing with such large numbers like 1,000 at a time. If you’re dealing one by one, you don’t really have any reporting other than, ‘we’ve exchanged contracts, we’ve had certain inquiries, we’ve now settled.’

But in our case, it’s also a case of saying, ‘this number of people have this grade fit-out, this number of people have been given special deals with deposits, this number of people have been given special deals with settlements, etc’.

PT: David, in terms of property transactions and technology, what has your firm got in the commercial space?

DJ: InfoTrack has been a really big partner across the industry. It’s driven a lot of technological change, just in our firm itself, because it is a system that integrates with our billing and invoicing and it increases efficiencies.

Technology is a big part of what we do and, as a global firm, whatever technology we implement, generally has to be applicable across 70 or 80 offices. It can sometimes be quite difficult to make that work properly, but it has really come a long way in five to 10 years. We wouldn’t be able to do our job without the levels of technology that we have now.

The one feedback you get from clients, whether they be commercial or residential, is that they want the firm to be more responsive, they want the ability to see where projects are up to and be able to check in and see what’s happening without additional cost. Clients want to have access to their own ‘data rooms’.

A lot of our buyers are pension funds or high-net-worth individuals and families from offshore. If they’re going to do a due diligence on a property out here, they’re going to come and look at it but most of their team will be based in Asia.

You’ve got to have fast access to electronic data and if you want to get a whole suite of searches on a property, you need to be able to get them within 24 to 48 hours. Most of the commercial work these days is a competitive tender with really short time frames.

You will get a call on a Monday requesting a full report by Friday. Without those sorts of systems and technology, it’s not possible because you can’t go to councils and obtain 149s workout planning without getting them online.

JA: We can’t provide a platform which is down, because lawyers need everything and they need it now. Documents, like for example council certificates, will be ordered with high priority because it is really urgent.

DJ: The point about firms not traditionally being software developers is a good one. Bakers have a big software development team based in Asia because we need to have some of the purpose-built type stuff. Firms have got to gradually work out that balance between what they’re good at doing, what they need to do in-house and what to get an outside company to do for them. Most firms don’t quite understand where that is yet. It is something that the industry will grapple with. Until they get that right, we won’t get everyone adopting it because people will view it as too hard or make the obvious assumption that the external provider can’t integrate with our billing because we’re too big and too complicated.

The reality is that a lot of them can, but it took us a couple of years internally, just working in the property group with InfoTrack, before we could convince other partners of the firm that it was efficient and worked well for everyone everywhere else.

PT: Who is driving greater use of technology within firms? Is it the partners or younger associates?

DJ: It is a mix. You need a champion of that technology internally.

You need 100 people like Claire to do an online transaction like that, and gradually it becomes the industry standard.

CM: In countries where it has been available for more than a decade, it’s 95 per cent now being used, such as Canada and New Zealand.

JA: I think there’s an opportunity here as we become more electronic, whether it be in commercial or residential conveyancing. From the vendor-purchaser side, this transaction is far simpler if we improve the efficiencies, create contracts faster, facilitate faster exchange or commercial developers get more developers and get more transparency throughout the entire process.

Consumers should be able to decide that they are willing to pay a little bit more to check in as many times as they like and follow the process without having to call 14 times a day. The opportunity here is to sell that value.

CM: I have a client who is buying her first property and every time she rings up she tells me ‘I have never done this before’. I then tell her what is going to happen and the next steps, and I’ll say, ‘OK, now read up, learn about the next part’. If clients are educated as to what the system is and what’s coming next and what stage they are up to, it seems to ease the stress a bit.

PT: And what does the future look like in regards to technology within your firm?

MM: I think the paperless office is a potential reality and I would give it three years.

DJ: I think it’s an industry-wide three- to five-year program to get everyone functioning on a paperless, electronic level. At the moment, we have individuals or small practice groups embracing those systems but that’s something they have cobbled together themselves.

ET: I see the future of property transactions being much more integrated and across all the different stakeholders.

Project managers, developers and the law firms will all play a much more integrated role, rather than a bespoke professional service being offered by the law firm which then feeds back into a process. It’s going to be much more collaborative and there is going to have to be a lot more interchange between the stakeholders.

CM: The technology is going to allow more flexible work-life balance. Just the fact that you can work remotely and at all hours of the day, you’re opening up the property industry to the world.

PT: What would you say to lawyers to help them think in a way that will help them go paperless in three to five years?

MM: Learn this from now or drown tomorrow. I don’t think lawyers can see the wave coming and this wave is a tsunami. If lawyers don’t develop these systems themselves, they’ll be developed by 18-year-olds coming up with simple programs.

JA: Try it. Demand that it should be more secure. It should provide increased levels of efficiency but it’s not about the technology. It’s about providing a better experience to your client whether they’re a large developer in commercial conveyancing or a person buying their first home. All you have to do is investigate it, try it once and then drive it through the firm.

DJ: The future is not about talking about the paperless office and electronic signatures. It’s about efficiencies and making a tradition exchange occur faster and more efficiently than it would otherwise occur. I think it’s the way the message is presented that has to change so that people do try it and give it a go.

My wife runs a two-partner work from home practice and some of their technology is more advanced because they are more agile and they can be innovative.

They can turn a conveyance around faster than a lot of bigger firms can. That’s because they’ve been able to experiment with a few different things and see how it works. Getting people to try it definitely is the key.