A south coast firm is set to complete its fourth merger in three months, driven by the government’s cuts to legal aid and push for market consolidation.
Bernard Chill & Axtell in Southampton, which became an alternative business structure in June 2013, has also secured an agreement with Barclays Bank to put up concession stalls in some of its local branches.
Managing partner Paul Grant told the Gazette that in the past three months the firm has bought the criminal departments of Portsmouth firm Bramston & Childs, Andover firm Talbot Walker and Lymington firm Abrams Collyer – and is about to complete negotiations with a fourth local firm.
Once the fourth merger is completed, he said the firm will have grown from 11 to 54 solicitors and increased its turnover from £750,000 to be in a position to meet its target of £3.5m this year, operating at margins of 53.3%.
Grant said this has enabled the firm to ‘comfortably absorb’ the first tranche of 8.75% cuts to criminal legal aid fees, introduced in March.
He expects to be able to ‘sustain’ the second tranche of 8.75% when they are introduced next year. ‘We’re an ABS success story. We’re doing everything the government wants firms to do in terms of consolidating the market and providing legal services on a more commercial platform and we are benefiting from economies of scale,’ said Grant.
‘Change is inevitable, but there are ways of making it work.’
Grant said he had started thinking how to restructure since the ‘first threat’ to criminal legal aid providers came with the initial proposals to introduce price-competitive tendering.
Since then, he said, the 60-year-old firm has prepared to put itself in the strongest position possible to cope with fee cuts and compete with other larger providers, such as Co-operative Legal Services.
The Ministry of Justice’s controversial plans to cut fees by 17.5% and introduce two-tier contracting arrangements with a limited number of duty provider contracts are designed to save money and consolidate the market, reducing the number of criminal firms from around 1,600 to 525.
Lawyers and their representative groups have warned that the reforms are unworkable and will do irreparable damage to the criminal justice system, driving hundreds of firms out of business and leading to gaps in the availability of legal advice.