The Law Society, the Legal Services Board and the Ministry of Justice have published the results of a research project into the supply of legal services by solicitors’ firms.
The report is entitled “A time of change: solicitors’ firms in England and Wales” and follows one of the largest ever surveys into the activities of solicitors’ firms.
2,007 firms were surveyed about how they were performing, in the context of recession, market changes, regulatory developments and legal aid reforms.
29% of firms reported their most common problem as compliance with regulations, 23% responding to competition, 23% adapting to changes in legal aid and 21% in securing finance.
Of those reporting problems in securing finance, just over half have experienced problems obtaining bank finance and the remainder with equity funding 42 per cent of firms reported a decrease in turnover in the past three years, whilst 32 per cent reported an increase and 27 per cent reported no change.
A number of firms indicated a desire to withdraw from legal aid work with 31 per cent of firms considering withdrawing from one or more areas of legal aid in the next three years, particularly those working in family law.
19 per cent of firms in the sample were new within the past three years, 50 per cent of which were single solicitor firms.
Commenting on the research, Des Hudson, the Law Society chief executive said: “Solicitor-led firms are the single largest group of suppliers of legal services. Understanding how these firms structure themselves and deliver services is vital to understanding the market as whole.
“This research provides valuable insight into the challenging issues facing our members and a crucial foundation for monitoring change over time and for assessing the impacts of and response to liberalisation of the legal services market and changes to legal aid funding.”
Chris Kenny, LSB chief executive said: “’We are really pleased to have been able to partner with the Ministry of Justice and the Law Society to undertake this research.
"The findings provide knowledge about solicitors firms that didn’t previously exist and helps to fill gaps that had previously been filled by assumption and anecdote.
“The results of the survey confirms the diversity of firms in terms of their financial performance, the very different things they do for very different consumers, and the fact that many firms mix up different market segments, all of which tests the assumption that all firms face the same challenges.
"It also shows that a significant proportion of these firms are performing well, despite tough economic conditions.
“The findings also outline the reality that competition exists in legal services, with some firms doing better than others across all the different market segments — just like in most other sectors.”