Farming is in decline.

UK farm incomes have dropped 75% in the last two years, and the media has been full of stories about farmers earning next to nothing for the crops and livestock they produced.

The Government has launched a £150 million emergency aid package and a survey by the National Farmers' Union (NFU), which represents 135,000 members, showed that 64% of farmers have had to borrow extra money to keep going in 'the worst agricultural depression since the 1930s'.This has had an impact on some law firms acting for the NFU, which has cropped its legal panel from 69 to nine firms.

But the manager of legal and professional services at the union, Alison Carr, denies this was a cost-cutting exercise, and says it was to do with service improvement.Ms Carr says: 'There were more firms than we could manage, and the new panel and the NFU will be working closely to provide a more integrated service to members.

The review is directed at sharing training and information to derive a better and consistent service throughout the country.' Of the chosen panel members, she says: 'We were pleased with their level of competence, and service, and spent a long time doing the reviews.'The Tenant Farmers Association also has a panel of professionals which includes about 10 law firms.

Spokesman George Dunn says: 'The panel system works extremely well.

They help us when we are developing new policy, looking at legal test cases, and we direct our members to them when they have specific problems that we cannot resolve.'The special nature of the relationship between farmers and their professional advisers means confidence between them is essential.

Sole practitioner and secretary of the Agricultural Law Association (ALA), Eleanor Pinfold, sees confidence as crucial, saying: 'The farmer needs to trust his legal professional before he will commit himself for more than one transaction.

If your work is good they will stay with you.' Commenting on the NFU panel change, in a personal capacity, Ms Pinfold adds: 'If they are going to advise farmers on an areas basis, one firm for each area, there is a potential conflict of interest, where one farmer is in dispute with another in the same area.'It is difficult to assess the importance of panel work to farm specialists, since many are reticent about it.

Some are so imbued in agricultural law, that they will get work anyway, and for others the volume of work it generated was not huge.

Some would not want to rely on panel work because a large client might lay down conditions that do not coincide with the ethos of a firm, and such reliance gives the client a lot of clout.Bristol-based Burges Salmon was formerly on the NFU panel.

Andrew Densham, the firm's joint senior partner and author of Scammell and Densham: Law of Agricultural Holdings (Butterworths), says: 'The NFU panel is not looking for our sort of operation.

We are glad to be all things to all men, like to act for either side and do not wish to be labelled.

I am chary about retainers.'Nigel Davis, chairman of the ALA and a partner at Roythornes in Nottingham, a firm on the NFU panel, says: 'Some good firms did not get onto the panel.

However, others, over the last few years, saw agricultural law as a growth area, and there was a proliferation of firms claiming agricultural expertise throughout the country, which they could not back up.' He adds: 'There are 12 to 15 good agricultural firms in England and Wales.'Agricultural work is varied and sometimes complex.

A recent growth area has been judicial review of ministerial action.

This might be against the Ministry of Agriculture, Fisheries and Food or the Intervention Board, an executive agency of MAFF, in relation to quotas and subsidies that impact on a farmer's economic viability.

Richard Vidal, an in-house lawyer at the NFU, says a huge proportion of case law in the European Court concerns agriculture.

He adds that one reason for rationalising the panel was 'to ensure we had the correct level of specialist expertise'.

He adds: 'Where there is a dispute affecting numerous farmers, we need to be able to have a lead firm to negotiate, and where that fails, then to co-ordinate multi-party actions.'Other areas of work for the panel includes disputes about the quality of agricultural products, water and waste difficulties, landlord and tenant issues and torts such as nuisance.

Planning is an important area, for example, where a farmer wants to extend his business, or to diversify, and use buildings for purposes allied to farming but which might be challenged as being industrial use.

There are also criminal law issues, such as farmers being prosecuted for sending unfit animals to market, and health and safety or pollution cases.

Employment issues, such as the minimum wage, the working time directive and higher unfair dismissal compensation, have had an impact on farmers.There is no shortage of work for well-established practitioners, although its nature may have changed.

Timothy Cartmell of leading north-west firm Cartmell Shepherd in Cumbria, says: 'The current recession in farming has not had a direct impact on the amount of work coming into this office.' Nigel Davis of Roythornes notes that there is 'a fair amount of work, but farmers do not have money to spend on getting advice proactively'.

He says: 'It is more reactive, to sort out problems.'Christopher Jessel, a partner at Farrer & Co and a leader in this sector in London, says: 'Lawyers' incomes are shifting.

There is more environmental work, and a move from old traditional areas to new regulation-led ones.'Simon Kirkup, a partner at Dickinson Dees in Newcastle upon Tyne, observes: 'People are still buying and selling farms, and a big area, as far as new work is concerned, is restructuring of farming businesses.

Poorer farmers are opting out or being bought out, and bigger more efficient farms are increasing.'Brachers is considered to be the leading practitioner in the south-east, with a particular expertise in environmental matters.

Partner Douglas Horner sees the impact of the crisis in farming on law firms as immediate, primarily because of a reduction in the number of businesses owing to lack of profitability.

He says: 'If you have reduced businesses, there are fewer deals with which solicitors are concerned, and there is less volume of work in this market.'While work is generated by structural changes, such as land transfers, tax and trust work, this cannot compensate for the overall loss of market, he adds.

As a result, fewer firms have sufficient critical mass of agricultural work to maintain the specialist skills, and this comes at a time when the need for such skills is greater because of increasing regulation, complexity of quotas and subsidies, environmental legislation, and employment issues.William Barr, a partner specialising in non-contentious matters at Mills & Reeve in Norwich, notes a growth in work related to the food industry, such as GM foods and arrangements for the supply of food.

Consumers are more concerned with the provenance of food, and supermarkets have become more precise in their requirements as they seek to tighten contractual liability.

Also, some farmers are branding their own produce, which raises other legal issues.Mr Densham at Burges Salmon, a leading player in the field of agricultural holdings and EU law, explains that rent reviews would previously have involved increases, but now tenants seek reductions.

The rent review could 'become a catalyst for lancing the boil', as lawyers be come involved, he maintains.Banks are tending to restructure businesses to avoid insolvency, which involved lawyers drafting agreements.

Although farming was in the doldrums, agricultural land values were increasing, but land sales are often linked to development.

Where money cannot be made from farming, non-farm use of the land grows, and diversification schemes are on the increase.

The drop in conventional landlord and tenant disputes is being countered by an increase in family break-ups, in terms of family farming partnerships and divorce.Welsh agriculture, which is dominated by the livestock industry, has been particularly badly hit by BSE and the crisis in sheep farming, explains Christopher Rodgers, Professor of Law at the University of Wales and a consultant to law firm Margraves in Powys.

Falling incomes mean falling rents, but there is a strong demand for land and institutional clients have no trouble leasing on new-style tenancies.Farmers are taking on land for economies of scale, so the volume of work has not changed, but there are subtle changes in the type of work as clients sell small parcels of land to generate capital for lost income.

He predicts: 'Long-term changes in the common agricultural policy regime are likely to have more effect on land prices than the current recession.'The future for agricultural legal practice looks set to mirror the changes in the industry itself; as traditional farms are squeezed, the amount of traditional work they provide for lawyers is likely to keep falling.

But as environmental and regulation-led pressures on farmers increase, there is a future for forward-thinking practices able to adapt to the new regime.