A key theme was the role of technology in reducing risk. Stephen Ward of the CLC highlighted the success of the first digital mortgage payment, which not only improved security but provided unforeseen transparency benefits. He pointed out, however, that despite CLC’s endorsement, adoption of digital solutions like Third-Party Managed Accounts (TPMAs) remains low. This prompted discussions on what hinders uptake and how technology could play a larger role.

Insurance challenges and regulatory collaboration

Also under discussion was the rising cost of Professional Indemnity Insurance (PII) for firms which is driven by increased risks and limited competition in the market. Richard Orpin from the Legal Services Board emphasised the need for collaboration between legal and financial services regulators to protect client funds and reduce costs. He suggested TPMAs as a viable solution, as they could also alleviate pressure on compensation funds, typically required in cases of fraud or malpractice. He also called for transparency from firms when communicating with insurers, as well as the promotion of TPMAs to lower premiums and minimise risk exposure.

The CLC’s Stephen Ward added that the insurance market is seeing a cyclical shift with the entrance of new insurers, potentially easing PII costs in the short term. Nonetheless, regulatory bodies continue to grapple with the fragility of the insurance market, particularly as a recent survey showed that 38% of insurers had considered exiting the solicitor’s indemnity market due to high-profile cases, such as the Discovery Land v. Axis case.

Risk landscape: malpractice, cybersecurity, and social engineering

Unsurprisingly, conveyancers face an evolving risk landscape, with significant malpractice cases and rising instances of cybersecurity breaches. The panel discussed notable cases, including Axiom Ince, where £64 million of client funds went missing. This event led to increased interventions by the Solicitors Regulation Authority (SRA) and sparked a Consumer Protection Review to address client fund management more broadly.

Cybersecurity remains a top concern, with phishing attacks being especially prevalent. David Jabbari of Muve noted that these attacks often exploit vulnerabilities in client email security, underscoring the need for secure client communications.

Rob Gurney from the Landmark Information Group suggested moving client communications off email as a security measure, while Sarah Charlton of Eaton-Evans warned that criminals are becoming increasingly sophisticated, using AI-powered social engineering tactics to deceive even tech-savvy firms. Education and enhanced client relationships were recommended as mitigative strategies, with suggestions to educate clients about cyber risks and strengthen firm-client relationships, potentially through face-to-face meetings.

Mitigating risks through technology and client relationships

When it came to risk mitigation education, certifications, and technology adoption emerged as crucial elements. Sarah Charlton advocated for small to medium-sized firms to adopt the Cyber Essentials certification, which could strengthen basic defences against common cyberattacks. Shieldpay’s Scott Newby emphasised that fraud is constantly evolving and argued that TPMAs, while not foolproof, offer controls that can mitigate risk, especially as Shieldpay continuously updates its platform to comply with regulatory standards.

Blockchain technology was also discussed as a future possibility for conveyancing, though attendees agreed that such advancements are likely several years away. Meanwhile, TPMAs are increasingly seen as a promising tool for improving security and efficiency in fund management.

Revenue models and regulatory implications

TPMAs offer security benefits but could impact firms’ revenues, particularly as interest rates have made holding client funds a profitable practice for some firms. Claire Van Der Zant from Shieldpay argued that while some firms may rely on interest income, this is unsustainable in the long run. The SRA’s Chris Handford highlighted that the SRA is considering changes, noting that relying on client fund interest could lead to malpractice, especially in challenging economic conditions. The panel broadly agreed that interest-based revenue models are risky, with some firms even resorting to using client money to cover payroll. Sarah Charlton pointed out that inconsistent accounting practices mean that annual audits may not always detect such issues, further complicating regulatory oversight.

Charting a path forward

As the roundtable concluded, panellists reflected on the need for a structured, long-term approach to tackling these challenges. Chris Williams of Novus proposed a phased strategy, focusing initially on investigating and educating, followed by wider technology adoption, and eventually reimagining the entire client money management process. This approach would allow firms to adapt gradually while preparing for a digitally transformed future. Panellists agreed that as risks evolve, staying current with cybersecurity practices and regulatory changes will be essential.

The roundtable highlighted the need for a cohesive, tech-driven strategy to ensure client fund security in conveyancing. While TPMAs, blockchain, and AI were all discussed as viable future solutions, regulatory bodies and firms alike emphasised that education, technology adoption, and effective regulation will be the driving forces for safer, more efficient client money management.

Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers