Residential conveyancing solicitors are concerned at a move by Lloyds Banking Group to reduce the number of law firms which it uses for the administration of new mortgages channelled through its subsidiaries.

The group, which is the largest provider of mortgages in the UK due to its ownership of Lloyds TSB, Halifax, Bank of Scotland Cheltenham and Gloucester and Birmingham Midshires, has told the Law Society it plans to stop doing business with solicitors which have had low numbers of home contracts passing through their hands on behalf of the group.

A spokesman for the group said, "We have introduced a volume-based threshold to allow us to be satisfied that firms on our panel do a sufficient number of cases to enable them to keep completely up to date with all changes to our processes and requirements.

"By introducing a specific numerical measure this allows us to apply our criteria fairly and consistently to all firms."

The vetting procedure has begun, however, law firms which are put on the list for removal but are part-way through completion of a conveyancing transaction will be able to finish the contract.

New firms can apply to join the panel of approved conveyancers and will have a year to meet the volume of transactions criteria.

Lloyds said it will make further cuts in numbers later in 2010, using a risk-based model to assess firms on a case-by-case basis.

Law Society spokesman on property matters Paul Marsh said the society was disappointed to learn of the decisions by Lloyds Banking Group but recognised that, like any client, the group was entitled to choose which firms it instructed.

"We will continue to engage with the Council of Mortgage Lenders, Building Societies Association and individual lenders encouraging them to recognise that a "one-size-fits-all" model is not the best way to address lenders' concerns in the current economic climate."

Although busy conveyancing solicitors in cities such as London and Brighton are unlikely to fall foul of the new threshold, there is some concern in legal circles that people living in rural areas or where there is a low turnover of property transactions may suffer from not having a local lawyer available to handle home sales involving Lloyds Banking Group.