How Digital Data is Redefining the Real Estate Business For Lawyers
Guest Post by Andrew Lloyd, Managing Director, Search Acumen
Much of the due diligence performed by commercial real estate legal teams today doesn’t look very different to the work done by lawyers at the turn of the last century. Much of it is still administrative, paper-based and slow. While some areas of the legal profession have moved with the times, real estate due diligence has made only baby steps.
Title searches can still take weeks to complete in some cases where legal pitfalls have to be carefully researched and mapped out by hand to avoid complications further down the line.
While the rise of digitisation advances, real estate specialists still face far too long waiting times as councils try to source the correct data, while junior team members can be found literally piecing a map of a development together with sticky tape and colouring pens when it comes to Title ownership data.
These practices are reflective of the time it takes to complete the laborious tasks necessary as part of a commercial real estate transaction. But where there are challenges, there are opportunities for growth – and for real estate law firms facing the due diligence ‘time suck’, these opportunities lie in the steady data-enrichment of their industry.
Fuelling the future with digital data sets
More law firms are leveraging the release of public and private datasets online as the key to unlocking a more efficient real estate due diligence process. The proliferation of big data is allowing some firms to access administrative paperwork in a format that can be instantly manipulated and assessed. Searches happen at the click of a button, and whole developments are visualised on a screen in seconds.
This enrichment is largely driven by the Government and its Local Authorities, as the Ministry of Housing, Communities and Local Government (MHCLG) and HM Land Registry (HMLR) push forward with the release of increasingly large amounts of land and property data.
Already, 25 million titles with more than 28 million data points are available from HMLR’s National Polygon Service (NPS), while more than three million title records of freehold and leasehold property can be accessed from its Corporate and Commercial Ownership Data and Overseas Ownership Data.
According to HMLR’s five-year business strategy that is just the start as many more datasets will be unlocked in the coming years. For example, earlier this year we were able to access 95% of the data on Public Rights of Way for the first time.
For a law firm working on a large development, being able to see exactly where a developer cannot legally build upon with a few clicks of a button is an indicative example of what’s happening to real estate law tech today.
We’re expecting the release of many more HM Land Registry datasets in the coming months and years, including whole datasets that detail leaseholds, easements, restrictions and charges related to land and property in England and Wales.
The increased availability of data enables lawyers to skip over much of the heavy lifting. But vast amounts of data alone are not going to help anyone. In order to unlock it and carve out a clear road to the future, we must leverage the right kinds of technology.
“vast amounts of data alone are not going to help anyone”
Digital data paves the way to blockchain technology
One of the biggest impacts on the commercial property transaction process in the next years is undoubtedly the application of blockchain technology. Based on a recent trial by the Instant Property Network (IPN) using Distributed Ledger Technology (DLT) – the technology underlying blockchain – we can confidently say that it will speed up property transactions many times over and save millions in the process.
But everyone in the chain, including the lawyer, will require access and the skills to manipulate fully digital datasets. PDF scans and sheets of paper are not blockchain-compatible.
Blockchain allows for better transparency and therefore communication and collaboration between different parties along the transaction chain, solving many headaches for real estate lawyers. But to make that a reality all of the data along the transaction chain has to be digitised. That means forward-looking real estate lawyers must harness the public and private property and land data that is available to them now and begin to implement it into their day-to-day business.
Transitioning from due diligence to true value add
As automation and data-rich solutions increasingly diminish the need to spend hours on due diligence and laborious admin tasks, lawyers will have more time to focus on the role in the property transaction process they trained for: that of the consultant.
With the proliferation of huge digital datasets, due diligence can become automated, and senior lawyers can tap into data at hand to offer more insight and begin taking a bigger role in the property transaction process earlier on.
Ultimately the industry players will have to adapt if they are to avoid being left behind. The good news is that the spirit of innovators will always be rewarded.
This was a guest post written for Artificial Lawyer.