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The jury is still out on the future of the legal industry - news article image

The jury is still out on the future of the legal industry

1 Feb 2017

2 minute read

According to a recent study of over 6,000 UK law firms, 2056 or 34% of those law firms were struggling financially. In fact, these firms were struggling to such a degree that they could be at risk of failing within the next few years. The UK average for firms meeting the same criteria reached just 25% - a figure which could worry law firms.

An example of those firms struggling financially is King & Wood Mallesons (KWM). Just recently, the City-based law firm’s UK division was put into administration.

Although it’s very unlikely that all 2,000 plus of these firms will go into administration, how many will fail in the next few years remains to be seen.

This uncertainty is likely to have been driven by the significant changes within the industry. Namely, notable rises in court and tribunal fees which have led to potential clients not seeking help as they would have done previously. Such rises have been met with government cuts in legal aid. The legal market has also seen an increase in competition due to the introduction of Alternative Business Structures. Such changes have led to non-lawyers being able to both own and invest in law firms.

Despite these findings, alternative research suggests that law firms may have found increased financial stability within recent years, with businesses who are at risk of administration falling by 8.3% year-on-year.

Those involved in the legal sector seem more inclined to agree with the latter research, suggesting that the industry is in fact alive and well, and not at risk of financial danger. The Law Society of England and Wales suggest that only ‘2 or 3%’ of law firms fail in a given year.

It would appear that the jury is still out on the future of the legal industry. However, if you are affected by any of these issues then do get in touch. Shaw Gibbs have supported several law firms within the past few years – either the whole firm or individual partners – and each of those that we have helped have ‘survived’.

The jury is still out on the future of the legal industry - news article image

Author:

Clive Everitt

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