Law firms of all sizes are asking banks to provide them with secure pipelines of cash as the economy continues to deteriorate. In the coming weeks, Law Society President Paul Marsh and chief executive Des Hudson are to meet top executives at retail banks as well as the chief executive of the British Bankers Association for crisis talks.

The Law Society estimates that 1,250 firms are in ‘financial intensive care’ with their banks.

However, the latest figures on the number of applications for practising certificates suggest that the recession has not yet reduced the size of the profession.

Major banks told the Gazette this week that firms have recently asked to turn uncommitted lines of credit into committed lines of credit. With uncommitted credit, a firm can borrow what it likes over time but the bank is not obliged to provide a specific sum of money. With a committed line of credit, the bank provides a specific pool of money but sets conditions on how a firm can withdraw from it.

Committed credit usually proves more expensive than uncommitted, but it provides financial security.

Nick Anthony, head of the professionals and public sector services team at Barclays Commercial Banking, which lends to more than 2,000 firms, from four-partner practices to the magic circle, said an increasing number of firms are seeking committed facilities, but warned that these can incur fees if they are set up but not used.

‘What is critical is that firms ensure their bank understands the current and forecast financial position of the firm, and that a combination of term debt, committed facilities and non-committed facilities are structured,’ he said.

Mark Dean, director in the law firm group at Citi Private Bank, which lends to firms at the ‘top end’ of the market, said requests for uncommitted lines of credit to become committed have become ‘most noticeable’ amid a trend of increased lending. ‘Lending margins are going up from all banks,’ he said. ‘Firms are generally between 5% and 20% down on budgets, finding it tough to get fees paid, and as a result are using credit facilities more.’

Meanwhile, the latest bellwether indicator of the strength of the profession showed that the number of applications for practising certificates is up by 2.5% over last year. The Solicitors Regulation Authority (SRA) said it had received 108,866 applications as of Monday this week, compared with 106,217 at the same point last year.

The final figure will be published on 23 December and, even though some applications may not be granted, SRA sources expect the final number to be higher then last year.

Income from the £995 practising certificate makes up the majority of the Law Society’s annual budget. Hudson said that, despite the strong number of applications, it is unlikely the profession will not be further affected by what ‘could be a deep and bitter recession’.