By Paul Rogerson
The number of law firms in England and Wales shut down by the profession's regulator has almost trebled in 2008 compared with the early months of last year, new data show.
So-called 'interventions' - the 'last-resort' measure in which the Solicitors Regulation Authority (SRA) sends in an agent to close a practice, returning papers and cash to their owners - have surged to their highest level for five years.
A spate of insolvencies resulting from a tougher economic climate, together with greater exposure of mortgage fraud (in which solicitors may be implicated) were cited as possible causes of the upturn. In the last six months, there has been a steep increase in the number of interventions resulting from suspected dishonesty.
Sole practitioners have borne the brunt overall, accounting for 80% of interventions this year.
Meanwhile, it remains possible that solicitors may not be charged a contribution to the compensation fund this year after all, despite a predicted rise in claims. Last week, chairman Peter Williamson warned the SRA's board that its recommendation that solicitors holding client money should each be charged £300 would face 'heavy opposition' from the Law Society's Council when it is debated in May, given the healthy state of the fund's cash reserves.
The SRA indicated last month that it had chosen not to reduce the level of contribution, even though the fund reserve stood at £54 million at the end of last year, when the value of outstanding claims stood at just £14 million.
The SRA board acknowledges that its reserve is healthy but wants to give solicitors greater stability and avoid the 'wild' variations of up to 900% in contributions imposed over the last two decades. An amended paper to be submitted to council will retain the £300 recommendation but include the options of a reduced or zero charge.
SRA figures show that there were 20 interventions in the period to 22 February, compared with just seven by the end of February 2007 and 11 in the first two months of 2006.
The SRA stressed that the number of interventions at the start of 2007 was 'exceptionally low' and therefore not a good basis for year-on-year comparison. However, the authority does anticipate a 25% rise in interventions for 2008 as a whole, which it described as 'significant'.
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