After watching his main competitor, Dye & Durham Ltd., DND-T sharply raise its fees twice in the past 18 months, Maurizio Romanin has decided it’s time to hike his prices as well.
Mr. Romanin runs Toronto-based LawyerDoneDeal Corp., which, like D&D, offers conveyancing software used by real estate legal professionals to process transactions. On June 1, the amount LDD charges for using its RealtiWeb software will increase to $32 per residential-property purchase transaction from $22, up 45 per cent. It’s the first time LDD has raised prices since 2018, when the fee rose $2 per file.
“If everybody in your market is charging three times more than you, you’re going to increase your price, aren’t you?” Mr. Romanin said in an interview. “We’re focused on doing reasonable and responsible price increases. You’re not going to see 300-per-cent increases from our side.”
In January, 2021, weeks after D&D bought Canada’s dominant conveyancing software provider, DoProcess LP, it told clients in Ontario it would hike the amount it charges to use the software to $129 per deal, from $25.
That caused an uproar, with legal firms saying it would force the higher costs onto homebuyers. D&D later told customers in other provinces it was hiking prices as well. Then, this January, it told clients it would again increase prices, to between $199 and $249 per transaction. That means DoProcess now charges as much as $227 more per file than LawyerDoneDeal; in late 2020, the difference was just $3.
D&D’s price hikes – part of its acquisition and financial growth strategy, which predates the recent spike in inflation – have caused a backlash, including dozens of complaints to the Competition Bureau of Canada and a class-action lawsuit. Concerns over reduced competition and higher fees have prompted Britain’s Competition and Markets Authority to review D&D’s July, 2021, purchase of legal software provider TM Group (U.K.) Ltd. Similar concerns from Australia’s competition regulator could hamper D&D’s proposed $3.2-billion acquisition of Link Administration Holdings, local media reported this week.
John Robinson, D&D’s chief commercial and people officer, said that despite the hikes his company has “seen a tremendous response from our customers.” The company says the percentage of clients who quit has been in the mid-single digits in key markets in Ontario and B.C.
D&D’s share price has dropped by two-thirds in 2022 amid a broad selloff of tech stocks. But it has continued to generate steady results. On Thursday, D&D reported $122.9-million in revenue and adjusted operating earnings of $66.8-million in the third quarter, both up 78 per cent year-over-year. That beat analyst expectations. CEO Matt Proud said D&D offset the impact of declining real estate deal volumes in April with price increases and stuck to his forecast the company would generate $350-million in operating profits in its fiscal year ending June 30, 2023.
Its price hikes have been a boon for D&D’s smaller rivals. Mr. Romanin said his business has grown 50 per cent – more than 1,000 clients - since early 2021. Harrison Kelly, CEO of London, Ont.-based startup LawLabs Inc., said its Closer real estate transaction processing software – which costs $60 to $75 per file – has picked up 100-plus clients in Ontario, including many “that jumped over when the second price increase [from D&D] went through” this year.
Mr. Robinson said “dozens” of clients who left D&D for alternative providers this year have returned. “We believe we offer the most advanced and feature-rich conveyancing software in the world and are constantly innovating to make it even better and easier to use.”
D&D connected The Globe and Mail to Kiranjeet Sangha, a Brampton, Ont., lawyer who said her firm had switched back to DoProcess – after using LDD for a while – because it had more advanced features and customer service that made the cost worthwhile.
Meanwhile, three LDD customers who recently switched from DoProcess told The Globe they didn’t mind the impending price increase of the smaller company. “It’s insignificant and a minor increase relatively – 10 bucks,” said Toronto lawyer Avi Charney, who switched to RealtiWeb last year. “I’m totally fine with it.”
Tim Garvey, of Garvey & Garvey LLP in Mississauga, also said the increase “is insignificant” compared with D&D’s hikes. “Even if it went up $8 a year for the next five years I wouldn’t really care because it’s way lower.” And Coquitlam, B.C.-based lawyer Michael LeBeau agreed that LDD was “pretty reasonable … and fairly and appropriately priced. I preferred $22 but can deal with $32.”
Spencer Keys, a lawyer in Sechelt, B.C., shared similar views of LDD, but he said a 45-per-cent increase as recently as 2020 wouldn’t have gone over as well. “I don’t want to put it out there that D&D has moved our tolerances, but that’s obviously the case,” he said. Even though he feels RealtiWeb isn’t as good as D&D’s software, “it is a significantly better value for money … We’ve been annoyed enough with D&D that we’re not going back.”
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