3000 law firms at risk of closure or merger
As many as 3,000 of the 10,000 law firms currently practising in the UK are at risk of closure or merger over the next few years as the conveyancing bubble bursts and a post-pandemic recession sets in.
This is according to research carried out by Viv Williams Consulting, which surveyed 210 law firms and found that 35% were considering closing or disposing of their firm.
Almost half (45%) were looking at options to restructure or redevelop their business, and only 20% expected to remain unchanged by the pandemic.
Three quarters of the firms surveyed carried out conveyancing work, so are likely to suffer a loss of income when the stamp duty holiday ends in March 2021.
Repayments are also due on coronavirus business support loans in Q2 2021. Many firms used these loans to pay for their professional indemnity insurance, which increased by between 30% and 50% in 2020.
The survey also found that more than 60% of firms had furloughed staff and 45% had permanently laid off back office staff. The loss of staff and the difficulties of remote working during the pandemic have meant that firms are struggling to keep their businesses functioning normally. Cash flow has become a significant problem as staff shortages prevent firms from ensuring that bills are paid promptly. Resources are entirely taken up with day to day management and firms have not been able to take long term strategic decisions.
The existing problems faced by law firms are likely to be worsened by the whiplash reforms in April 2021 and a further sharp increase in professional indemnity insurance premiums. Contact us here.
Read more about the survey at: http://bit.ly/39dsm3D