Changes in legal market put 28% of West law firms on danger list

June 19, 2013

More than a quarter of West law firms are at risk of failure in the next 12 months, according to an alarming new report.

But the research by R3, the insolvency trade body, shows that the West’s expected failure rate of 28% over the next year is lower than the national average of 31%.

The report also reveals that while the tough market conditions are not getting easier for West law firms, they are not getting any worse – this summer’s at-risk figure for the region is the same as last year.

The region’s legal sector has witnessed a spate of mergers and acquisitions over the past year as firms look to control costs to compete more effectively with new entrants to the market. So-called Tesco Law is making it easier for non-legal businesses to offer low-cost alternatives in areas such as conveyancing and will writing.

At the same time larger players are having to seek tie-ups to boost earnings in an increasingly-competitive markets such as corporate, commercial and property.

Chair of the R3’s South West and Wales region Joanne Rumley, a partner at law firm Bond Dickinson, itself the result of a recent merger, said: “The legal services sector remains a very crowded market and firms which don’t adapt and aren’t competitive are likely to struggle.

“Careful planning and cashflow management can go a long way to help give businesses an edge, as can prioritising considered investment in new technology and branding and marketing activities when funds do become available.

“In addition, practices need to carefully identify what sets them apart and need to be strategic in developing their business proposition. These are elements which can especially help smaller firms to contend with their larger competitors.

“We would urge any firms that are worried about their financial future, to seek professional restructuring advice before it is too late.”

The statistics on the number of likely failures are taken from Bureau van Dijk’s Fame database.

Look out for WestBusinessNews’ exclusive legal review in its September/October edition.

This feature will explain why the West has become so attractive to law firms. It looks at whether the region’s legal sector can carry on growing and asks if the current merger mania will continue. Based on exclusive in-depth research, this feature will give the first authoritative overview of a fast-expanding sector and identify the region’s legal game-changers.

For more information contact Anita Jaynes at

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