Viewed from Search Acumen’s perspective, as the provider of property data insight and technology, or that of a leading Bryan Cave Leighton Paisner (BCLP) property lawyer, the real estate sector is at an exciting tipping point as a result of digital disruption.
Increasing client expectations around the effective use of technology are forcing lawyers to think outside the box and utilise new services.
If real estate lawyers are to capitalise on the opportunities that technology can provide in delivering the best advice to their clients in an innovative and digestible format, the time to act is now.
Taking stock of the status quo
It is widely acknowledged that real estate transactions in England and Wales take longer to complete than they could and indeed should. This was highlighted by Oxford Saïd’s Future of Real Estate Transactions report earlier this year, to which we both contributed. The report concluded that the most common causes for delay in the process sit within the due diligence phase.
Some of these can be attributed to an over-reliance on traditional word processing programmes (during negotiation and reporting) that do not enable effective collaboration. Others are around our approach to data – how we collate it, how we process it and how we share it. A complex real estate deal produces huge amounts of data. While the technology exists to be able to share and process this information in an accessible and easy-to-use format, through data sites such as HighQ, some law firms continue to execute due diligence work in an inefficient manner.
Building a picture of the property
An important element of due diligence is building a picture of the property. This isn’t just about colouring in a plan but rather piecing together a title that can often be complex and contradictory. Historically, lawyers have had to rely on a Search of the Index Map (SIM) (which is the examination of different title data held by HM Land Registry, or HMLR) to achieve this. In itself, this can be a significant task involving many hours of lawyers sifting through and analysing piles of paper with the inherent risk of mistakes and misalignments, particularly where plans are scanned and printed multiple times. Get this process wrong and you could be faced with a significant delay, subsequent soaring costs and client dissatisfaction.
This is one area where the Search Acumen ForeSite Platform has been used to provide a comprehensive visual of ownership and extent. The portal can highlight not just the relevant titles but also any gaps between them – a key element of any title review.
Putting an end to inefficient paper-based due diligence
It is clear that inefficiencies in a real estate transaction contribute to additional time, costs and stress. But what should firms be doing to improve their processes? How do they ditch the paper and embrace slick automated systems that ease the pain of the process and give them the edge over their competitors?
In the past, the clock would start ticking on a transaction when the courier arrived at the buyer’s law firm with a truck load of boxes. The advent of online data rooms and the HMLR portal has been a game changer for lawyers. It has enabled access to real estate data and ownership structures at a touch of a button, giving an informed view right from the start. It was from this premise that the ForeSite platform was developed.
ForeSite cleverly taps into HMLR’s data to provide property insight in seconds. Useful mapping produces a full picture of a plot and property that is instantly displayed on screen. It offers information on everything from leaseholders to adjoining landowners, as well as environmental information and vital data on anything that could affect development such as public rights of way and ownership rights. This tool allows lawyers to give their clients early insight into potential issues or concerns without significant investment of time or money.
Once accurate data has been compiled, the next stage is to process it, and this is where artificial intelligence (AI) is starting to be used. While it is the lawyer’s job to classify the information and advise on how clients can mitigate against any risks, there is a level of due diligence underpinning this process that is increasingly being met by digital tools.
At BCLP, for example, machine learning platforms are currently being deployed to review and extract information from leases. This is particularly transformative for real estate lawyers working within the constraints of demanding client time frames and/or where there is a particularly large dataset. A carefully procured blend of lawyers and AI tools can enable a review of more documents in less time than was previously thought possible, and where a client may in the past have had to adopt a sampling approach.
In the future there is real opportunity, by embracing AI and data platforms, to change the model of property asset management and due diligence. BCLP is already exploring making key lease data available to clients throughout an asset hold, rather than simply providing the client with a host of pdfs for them to analyse or upload to their own management software. The next step could be for a selling lawyer to present the extracted data and a level of analysis over that directly to the buyer’s lawyer. This would enable them to more readily understand the dynamics of a property and its tenants, how it has been occupied in the past and key lease dates.
Paper is holding back real estate lawyers’ potential
Clients are demanding a higher level of technological sophistication from law firms. Real estate law firms need to embrace digital tools and, in doing so, offer a whole new level of consultancy service. History tells us that those businesses that do not embrace change will ultimately lose out. Digital technology in real estate is not a fad; it is the future. So now is the time to ditch the paper-based approach and explore a new set of opportunities.
About Search Acumen
Search Acumen is a property data insight and technology provider that is unlocking the potential of digitisation to revolutionise the property sector and help commercial property lawyers, conveyancers and solicitors deliver better outcomes for their customers.
PW Perspectives: Autumn 2019
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Forging a paperless future for real estate lawyers