Solicitors did not exactly sign up for the deal in droves, but enough saw a way of easing their clients' frustrations to help the company cruise to a turnover of more than pounds 1m by the time the bubble burst in the late Eighties.
Sales have slumped to about pounds 300,000, but the new management of Legal & Professional Indemnity (LPI) insists that the recession is only slightly to blame. The problem has been more a lack of product focus and attention to marketing, says Grant Whiskin, who was earlier this year installed as general manager of the company by its new owner, Lombard General Insurance.
Although he accepts that the housing market is in many ways the opposite of how it was when LPI started out, he maintains that the products introduced in the mid-Eighties are applicable to current conditions.
First, the search service can prove valuable when there are local rushes. Moreover, the scarcity of buyers means that sellers are increasingly anxious not to lose would-be purchasers through "technical hitches". They are, says Mr Whiskin, "prepared to pay pounds 40 to guarantee a sale".
Second, the deposit guarantee scheme - essentially a low-cost alternative to bridging finance, a service that was much acclaimed when it was introduced in 1986 - can help buyers with equity locked into their existing properties as well as the first-time buyers without a deposit for whom it was originally designed. Moreover, the recently published scheme to assist tenants to buy their homes provides a further market. Mr Whiskin and Andrew Laing, Lombard's managing director, believe that such situations should provide plenty of business for these and related products.
LPI is not the only player in the market (Sun Alliance, Norwich Union and Royal are among the insurers offering legal indemnities) but the company is like many in financial services in believing that it can make up recent setbacks by concentrating on service. In particular, it is investing in information technology so that it can market more effectively. For instance, if the computer suggests that a "pocket of activity" is developing, it can alert solicitors in the area.
Likewise, it is seeking to build on its policy of employing only legally trained staff (chiefly members of the Institute of Legal Executives), to create stronger relationships with solicitors. In the past, LPI has dealt with more than 5,000 solicitors, but obtained the bulk of its business from just 300. Mr Whiskin says it will be spending time on dealing with that.
With each month already producing better figures than the last, he is hoping that turnover will be back up to pounds 400,000 by the end of the year, with a doubling of that by the end of next year. Even a housing market in the doldrums is seeing 1.25 million purchases a year, says Mr Whiskin in response to suggestions that this might be a little optimistic. If you consider that this is about half the peak figure of 2.5 million transactions, then it is not difficult to see the potential if the housing market should unexpectedly return to life.Reuse content