More than 500 firms are expected to open next year as lawyers leave larger practices to go it alone, a business adviser specialising in the legal profession has said. Hazlewoods says the barriers to setting up a business are falling, as technology costs tumble and serviced offices become more acceptable to potential clients.
Last year 523 applications were made to the Solicitors Regulation Authority for a licence to open a firm, slightly up on 2017 figures and representing 5% of the 10,399 firms registered with the regulator.
Hazlewoods said a continued buoyant market is encouraging 'entrepreneurial' partners to take a risk and set up their own practice. Some firms are taking advantage of deregulation to take advantage of external investors as shareholders.
Meanwhile barriers to entry are also falling. Technology costs are tumbling, serviced offices are becoming more acceptable to potential clients, and administrative functions, such as cashiering, telephones, typing and document production, are being outsourced, enabling the firm to concentrate on generating new work.
Many lawyers are also setting up niche practices to build up a following in high-margin areas of work, such as employee benefits, group litigation or other areas of disputes.
Andy Harris, Hazlewoods partner, said: 'At the moment the legal profession is developing into quite a hotbed of entrepreneurship and innovation. New law firms are experimenting with new business models, looking to fill gaps that exist in the market, and they're making more use of technology to give them a competitive edge.'