Why are we seeing such an increase in the situations where partners in law firms are just giving up their practice and simply closing the doors?

These are predominately partners rather than LLP members but the fundamental issues are equally applicable to members of LLPs as to partnerships.

Many of our high streets in towns and cities are now dominated by 'Charity Shops' as our traditional high street changes because of the numerous businesses that have failed due to supermarkets, online retailing and an inability to innovate and compete with these new entrants.

This is now a serious issue facing the legal profession and only partially to do with the full implementation of the Legal Services Act (which is less than six months away) and the arrival of the new entrants - these were coming in any case!

We are now over three years from the start of the current recession with as yet no real signs of a strong recovery.

For many they have cut costs and staff and then cut again in an attempt to survive but now they are running out of capacity to reduce and also loosing the will to keep on fighting.

It is easy to say, in hindsight, that early attention should have addressed these issues, but after some three years in recession - it may just be too late for some firms.

Even at this stage it is essential to take advice on how to buy, sell, merge or re-structure your practice - get groomed, don’t just chat to your local contacts and hope everything will work out in the end.

With increasing costs, particularly PII premiums, smaller practices have been trying to merge but now this is becoming harder to find a suitable buyer.

The experts and pundits have all been discussing the consolidation of these smaller firms but with no buyers the opportunity to soldier on with no potential exit is becoming even more daunting.

Some firms with high PI premiums are unable to afford the run-off cover therefore are having to slowly wind down their practices in an effort to reduce turnover to be able to afford the cost of the run-off cover!

Why are we seeing such an increase in the abandonment of so many practices?

What obstacles are stopping the consolidation and merger of these practices?

We have seen the successor practice requirements becoming a real burden.

With the successor being liable not only for all PII obligations but also they will have a number of other obligations which are often overlooked.

The successor will need to take control of all the old client files which in many cases will involve decade of old files which will need to be reviewed and then confidentially destroyed.

This can be a real cost and one that may put off a potential buyer; couple that with the potential 'skeleton in the cupboard' problems sometimes experienced then the potential buyers is even more wary.

Obviously there will be a transfer of staff as well.

Whilst we need staff to run our practices a merger will need fewer and so further redundancies will be needed with the costs that that will require - therefore a merger will need further initial financing.

As we have all experienced, the banks, although 'open for business', are being very cautious with their lending policy in particular to law firms.

Any property leases that exist will need to be taken over.

This can be a real issue where the successor practice does not need the space.

The 'old school' lawyer must have been a dream for the unscrupulous photocopier salesmen where we are seeing contracts that have been 'rolled up' (some over as many as 10 years) - this seems a common issue and would become the liability of any successor practice.

For those firms that act on legal aid franchises any overpayments that have been made become a liability of the successor and have stopped potential mergers in their track.

We are astonished by the numerous practices that admit to having had merger talks that have fundamentally failed for the above reasons.

Merging or acquiring a legal practice is not like a normal business needing to find a buyer or merger.

The combination of the effects of the successor practice rules, the need for clients to be always looked after first and the effects of the employees moving all militate against a successful merger.

Will the Law Society allow a change in successor practice rules?

Unlikely but if not then for many a merger will never happen and without this opportunity for an exit strategy, they may feel it’s simpler just to close the doors and go home.

So it should be no surprise that now for many the easiest option is simply to 'shut up shop' and wait for intervention - can the SRA cope with the potential volumes?

Not a great message for the profession.

Viv Williams (pictured) is CEO of the 360 Legal Group and Steve Billot is director of RSM Tenon