Globe and Mail article
Dye & Durham fee hikes spark price increases by real estate software rivals
After watching his main competitor, Dye & Durham Ltd., 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, a 45 per cent increase. It’s the first time LDD has raised prices in four years, 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, as legal firms said it would force higher costs on homebuyers, who ultimately bear the cost, along with soaring property prices in recent years. D&D later told customers in other provinces it was hiking prices as well. Then in January 2022 Dye & Durham did it again, telling clients it would increase prices to between $199 and $249 per transaction. That means DoProcess now charges as much as $227 more per file than LawyerDoneDeal; the difference was $3 in late 2020.
D&D’s price hikes – part of its aggressive acquisition and financial growth strategy that predates the recent rise 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 UK legal software provider TM Group (U.K.) Ltd. Similar concerns from Australia’s competition regulator could hamper D&D’s proposed $3.5-billion acquisition of Link Administration Holdings, local media reported this week.
D&D’s stock price has dropped by more than two-thirds in 2022 amid a broad selloff of technology stocks. The company is set to report earnings late Thursday.
John Robinson, D&D’s chief commercial and people officer, said despite the hikes his company has “seen a tremendous response from our customers” and that “churn,” or the percentage of clients who quit, “has been in the single digits.”
But the price hikes have been a boon for Dye & Durham’s smaller competitors. Mr. Romanin said his business has grown by 50 per cent, or more than 1,000 clients, since D&D started hiking prices.
Meanwhile, Harrison Kelly, co-founder and 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 “a strong base of lawyers and clerks that jumped over when the second price increase [from D&D] went through” this year. Other newcomers offering conveyancing software include Quintalink, which charges $49.99 plus tax per file, and RealEstateLawyers.ca, which offers use of its iClose software bundled as part of its service.
So how do LDD customers who fled D&D feel that they’re now paying more for the new service? D&D claims “dozens” of clients who left for alternative providers this year have returned. But three LDD customers interviewed by the Globe and Mail said they didn’t mind the impending price increase at all. “It’s insignificant and a minor increase relatively – ten bucks,” said Toronto lawyer Avi Charney, who switched to RealtiWeb last year. “I’m totally fine with it.”
Tim Garvey, with Garvey & Garvey LLP in Mississauga, said the increase “is insignificant” compared to 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.”
But while Spencer Keys, a lawyer in Sechelt, B.C. shared similar views, he acknowledged that a 45 per cent increase as recently as 2020 wouldn’t have gone over nearly 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 doesn’t feel RealtiWeb is as good a product as D&D’s Unity software, “it is a significantly better value for money…We’ve been annoyed enough with D&D that we’re not going back to them.”