24 June 2013

Financial storm to hit UK law firms hard

Unprecedented pressure on UK law firms has caused the Solicitors' Regulatory Authority to place hundreds of firms under supervision as they prepare for more financial hardship this year.

By James Barnes

Storm building for UK law firms

The regulator’s executive director, Samantha Barrass, told the Financial Times that multitude of problems faced by law firms amounted to a ‘perfect storm’ of financial pressure.

Key indicators

‘The numbers failing are worse than we expected for reasons such as the downturn which has lasted longer than is normally the case,’ she said. ‘We are writing to all those firms which are involved in certain sectors of the market which are under pressure and asking them for certain key indicators.’
The UK’s 11,000 law firms are currently being battered by legal aid cuts, banning of personal injury referral fees, growing reluctance of banks to lend and on-going economic woe.
According to the report, 160 firms are now under intensive SRA supervision, with eight said to be of ‘real concern’.
The regulator is writing to a further 2,000 firms to ask for financial information in order to identify any further steps it needs to take.

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