Baker Tilly is currently carrying out a survey of UK law firms in order to estimate the depth of the problem. But it already believes that many practices face major difficulties, even if they are not aware of them. A recent survey from R3, the Association of Business Recovery Professionals, recently found that 30 per cent of UK law firms are at risk of failure within the next 12 months.
Cash is king
Rowan Williams, Baker Tilly's head of London and south professional practices group, said: ''Many partners assume that, as their practice has come through the recession and profits are stable or improving, they are safe. But if a practice doesn't have sufficient cash to meet its running costs, then there is a real risk of firms failing. I fear that the issue is more widespread within the legal sector than people would imagine….It’s going to get tougher for law firms, and if they don't identify the red flags early, then the legal sector will indeed face the predicted 'perfect storm' with many becoming insolvent this autumn.’
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