Number of law firms dips to new low

Topics: Law firm & practice management

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The number of law firms has dipped to its lowest level for many years, official figures show, and is likely to fall still further as more firms unable to obtain professional indemnity insurance (PII) close their doors over the coming weeks.

According to figures from the Solicitors Regulation Authority, there were 10,726 practising firms in England and Wales in September, a month-on-month fall of more than 200 and the smallest number since the regulator began keeping records in August 2009.

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The number of sole practitioners fell by more than 100 last month alone, continuing a precipitous decline from 4,215 in August 2009 to just 3,108.

‘Traditional’ partnerships also continue to decline, down 86 month on month to 2,681 and more than 1,000 on August 2009, when their number stood at 3,959. By contrast, the number of incorporated companies has more than doubled since 2009, to 3,198, and there are now 1,600 LLPs, up from 1,088.

The numbers suggest that a long-predicted consolidation in the number of firms has at last begun in earnest. September's figure of 10,726 is down nearly 400 on the same month in 2012.

Experts have speculated that the rising number of incorporated companies is partly explained by new sole practitioners using the LLP or incorporated company vehicle to protect their assets.

The ‘traditional’ partnership is held to be in decline for many reasons, including lack of succession planning and the trend toward non-lawyer firm managers running corporately structured practices.

Yesterday the Gazette revealed that the number of firms at risk of closure after failing to obtain PII stood at 176. This has since fallen to 153.

Readers' comments (15)

  • Notwithstanding any decline in numbers consequent on reductions in Legal Aid or through any inability to obtain PI insurance this number is likely to continue to fall as consolidation takes a hold. Once the benefits of IT innovation are better understood (and become cheaper) aggregation is likely to accelerate. From the lawyers viewpoint economies of scale will be a driving force whereas the clients not only will demand more for less but brand loyalty will take over from individual relationships much as it already has with the supply of other professional services. Few firms doesn't have to mean few lawyers.

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  • Tell me why I'm not surprised!

    But don't assume the fall reflects nice smooth take overs and amalgamations. Some firms have just had to go out of business, and plenty of those which have do not have a bad claims record, they just face unacceptable hikes in their PII cover. Just look at Lyn yesterday who had her PII premium doubled. It is a complete disgrace for which The Law Society and SRA are jointly and severally liable. You should hang your heads in shame. Just for one moment think about the professional and personal misery you have caused with your ill thought out PII tinkering. Tescolaw need do nothing, you are doing their dirty work for them.

    It's high time someone cleaned out the augean stable which is 113 Chancery Lane. Now that's an idea, the river Fleet runs quite close by so let's divert that.....

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  • My God - I do not believe it - what with the Law Society being SO supportive an' all

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  • Why aren't those running the Law Society not now collecting unemployment benefit?

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  • Those running the Law Society are indeed 99% to blame for this sorry state but what can the average solicitor do to correct things?

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  • We are talking about calling a meeting to discuss initially the PII topic. Please see blogs of earlier this week and Frank Maher especially valuable contributions.

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  • Calling a meeting to discuss? To discuss what? How you are minded to consider another meeting to decide how to frame the discussion? Get this horse whisperer outta here, can't you see the creature's flown and the stable is empty?

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  • Frank, can you please call the meeting? Clearly Fred Parkinson is throwing down the gauntlet, but is not prepared to do anything himself. I think we shall find a lot of members who fall into that category.

    Your agenda looks fine to me. But how about a draft resolution to kick around the place and an invitation to amend? Do you go along with my suggestion earlier today that we start with a modest change to the rules to allow us to charge 20% of any bill as a 'disbursement' for payment for PPI cover? We might just get that through pretty quickly, whereas an amendment to the Indemnity Rules could well take a lot longer and there is quite an amount of disagreement as to the form such a change should take.

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  • Sorry, Frank, it was at 1.44 p m on the "Looming PII Deadline could sink 176 firms". David.

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  • No, Frank, it's here at 1.19 pm above. These things do not go up quite as you would expect, nor even where you might expect.. David.

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