Recent analysis has revealed that legal sector insolvencies could be on track to double in 2018 if Q1 trends continue.
According to a review of data from the Insolvency Service, conducted by firm Gibson Hewitt, the first three months of this year saw 20 firms which provided legal services declared as insolvent. This is more than double the total of nine from the corresponding period last year.
Of those which took place in Q1 of this year, the most common reason was voluntary liquidations by administrators at approximately 50%, with a quarter going into administration. 15% were compulsory liquidations and the remaining 10% were company voluntary arrangements.
The analysis also revealed that the number of insolvencies in the sector has been rising on a quarterly basis, with quarters three and four of last year seeing respective totals of 13 and 15 firms declared as insolvent.
Commenting on the review was director of Gibson Hewitt, Lynn Gibson. She said: The three months from January through to March 2018 saw the highest number of insolvencies in the legal sector for some time.
“When comparing this figure to previous years and quarters it quickly becomes clear how significant this recent downturn in the sector is.
“The breakdown in types of insolvency is very telling, with a large number of the options recorded leading to the firms ceasing to exist anymore,” Ms Gibson said.
“The fact that only 10% opted for the flexibility and control of a company voluntary arrangement is surprising, considering their current popularity in other sectors. It may suggest that some firms are waiting too long to act before seeking help.”