With the economic downturn lasting longer than had originally been expected, there’s the chance that UK law firms could fall victim to the ongoing tough times. Lawyers in London as well as other regions around the country may be forced to address the sectors of the market that they currently work in and try to adapt to a changing industry.
Industry figures have shown that 160 firms are already under intensive supervision by the Solicitors’ Regulatory Authority (SRA) but are they really vulnerable or is it simply scaremongering?
The harsh reality
There are 11,000 law firms in the UK with many of them working in similar sectors of the industry. As is the case with most businesses, there is a distinct element of competition between these firms to offer the best deal and service to their customers. However, new crackdowns have left some firms struggling as their old methods have had to be stopped or changed.
After the government banned referral fees for personal injury cases, firms working in this sector will most certainly have felt the pinch. Consequently, the SRA had to write to firms working in the personal injury market, along with other sectors to find out just how dire the situation was. On top of that, revenue growth fell for 2012-13 from the previous year for the top 100 law firms, painting a not-so-pretty picture.
Positive approach
Of course, it’s not all doom and gloom. The country has been showing improvements for some time and it seems that the only way is up. Although some firms may be feeling the pressure, only 19 have had to have interventions by the SRA in 2013 so far. That figure is likely to rise but there is the option for firms to arrange buy-outs and mergers to avoid collapsing completely. One firm in Manchester was bought out by its main rival, while the ever-recovering economy may find that the vast majority of firms are able to ride out the storm anyway.
Although the bleak conditions of the economy have lasted longer than many expected, they are showing gradual signs of improvement. It may be slow but if these law firms can hold on, they might just make it out of the other side. While pay freezes have been seen in the public sector, the housing market has shown signs of strong improvement, particularly in London. This could prove to be good news for conveyancing solicitors and contribute to an overall boost for the economy nationwide.
There will, of course, be firms that fall victim to the backlash of the recession but that’s not to say that the majority of them won’t survive. The larger firms are in a strong position to pull through the tough times, while the smaller companies may have their work cut out slightly. With some carefully planned mergers, many of these firms could see themselves become bigger players in the industry, giving them more influence in the long term, once things have fully recovered.
ctaylor85
Latest posts by ctaylor85 (see all)
- Are UK law firms vulnerable to the recession? - August 15, 2013
