The price increase by a software provider has been met with a class action while homebuyers face paying the extra cost.
A sudden price increase by a supplier of software programs to real estate lawyers last month will cost many homebuyers an additional $135 (including taxes) on top of their legal bill.
Here’s why: in order to prepare the extensive documentation necessary to process real estate files, real estate lawyers typically utilize external software providers. Their conveyancing software is integrated into the computer systems of real estate lawyers.
The transaction cost charged by the software providers is added to the lawyer’s bill as an expense, in addition to the lawyer’s own fee.
So even if two lawyers charge identical fees, the total invoice can vary significantly, depending on which external software provider the lawyer uses.
Historically, software fees charged to lawyers by software providers, and then passed on to clients by their lawyers, were in the range of $25 per file. In January, 2020, when Dye & Durham acquired the software programs of DoProcess, the transaction fees jumped from $25 to $129 plus HST. In announcing the price increase at the time, Dye & Durham committed in writing to its lawyer customers that there would be no further price increases for purchase, sale and mortgage files for three years.
Despite the price increase and that commitment, many of the firm’s customers opted to stay with Dye & Durham, and pass the increase on to their clients.
Last month, Dye & Durham again increased its prices, from $129 to $249 plus taxes, with two $20 discounts for law offices processing large volumes of transactions.
There is currently one competitor in the marketplace for real estate law office software. LawyerDoneDeal Corp., helmed by Toronto real estate lawyer Maurizio Romanin, charges $22 for purchase transactions and another $5 for a mortgage, for a total of $30.51 including tax.
This compares with Dye & Durham’s new charges of $281.37 including tax for its Unity software. So, after its price increase last month, and depending on which software a lawyer uses, a homebuyer has the opportunity to save $250 on their lawyer’s bill.
Last week, two Ontario lawyers filed a class action against Dye and Durham, and DoProcessLP, claiming the increase was a violation of its promise to hold fees for three years.
The plaintiffs are Napanee, Ont., firm, Burford Law Professional Corporation, and Tais Davis, a sole practitioner in Toronto. The lawsuit was filed by Toronto litigation firm Charney Lawyers against Dye & Durham Limited and DoProcess LP.
At press time, no defence had been filed and the action had not been certified by a court.
John Robinson, Dye & Durham’s Chief Commercial Officer, provided me with this statement last week:
“We believe Unity is the most advanced real estate conveyancing software in the world … This claim is baseless and meritless and we intend to defend against it vigorously. We, along with thousands of law firms across the country, stand behind Unity, which securely facilitates the most important transaction in most Canadians’ lives.”
Will the clients of Ontario real estate lawyers want to save $250 on their transactions? It’s a conversation clients need to have with their lawyers.