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For whom the bell tolls

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What are we to make of the news that the SRA is in intensive dialogue with 30 of the top 200 firms in the country amidst concerns about their financial stability?  Firstly, and on a human level, that means that the livelihood of a significant number of members of staff at these firms is at risk. 

But does it tell us something more profound about the legal profession as a whole?  I suppose there are a number of potential conclusions you could draw; the legal profession is facing more threats than simply a tough economic outlook with new entrants to the legal market and significant regulatory change to personal injury claims which is putting a further squeeze on revenues; perhaps law firms have failed to grasp the difficult decisions when required or have continued to operate in the same (old-fashioned) way without making sensible adjustment to reflect the wider conditions.  I suspect there is an element of truth in both of these. 

If the SRA is in intensive dialogue with this number of the top 200 firms, I think it is safe to assume that these problems are at least replicated in the rest of the profession.  There are some further pressure points soon to come; payment of partnership tax at the end of July and renewal of professional indemnity insurance at the end of September.  We have already seen some high profile casualties this year and more will inevitably follow before the end of the year. 

Having said that, it is not all doom and gloom.  There remains a sound future for those firms who exercise good governance in terms of work in progress, debtors and cash and who put their clients at the centre of everything they do.  While there has been premature talk of green shoots in the past, our experience suggests that there are now signs of an upturn.  Whether that upturn comes soon enough for the 30 firms in dialogue with the SRA is another matter.

Posted: 28/06/2013 10:31:26
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