More than 1,000 new solicitor firms will be created in 2016, official statistics suggest, a 30% increase on the last two years.
From 1 January to 31 July, 612 new business entities were authorised by the Solicitors Regulation Authority. If that rate is maintained the number will reach well over 1,000 by 31 December – compared with 812 and 807 respectively in 2015 and 2014.
Numbers are up across all firm types. Some 94 alternative business structures (ABSs) were authorised in the first seventh months of 2016 – an annualised increase of a third – with a 40% rise in sole practitioners (116).
The rate of new openings far exceeds law firm closures, which totalled 349 in the year to May. The total number of firms is stable at about 10,500, the same as two years ago.
Sally Azarmi, chair of the Law Society’s Small Firms Division and principal of Azarmi & Company, said the figures were ‘dramatic, but not surprising’.
She added: ‘Conditions are ideal for solicitors to create their own firms and control their own future and working life. We are no longer tied to the traditional way of working, with prohibitive overheads. In my experience, there is increased demand for small firms.’
Tony Roe, principal of Tony Roe Solicitors and a fellow committee member, said: ‘Solicitors set up their own practices for all sorts of reasons. They may have parted company with a bigger firm and then want to create and control a firm that is theirs alone.
‘They may see a gap in the market to go niche. It is always a leap of faith, but there are plenty of resources and professionals that can assist.’
The SRA said the average decision period for new authorisations is 45 days, against a target of 90 days.
Small firms – sole practices and two- to four-partner firms – account for more than 26,000 solicitors and around 85% of all firms by number. SRA figures show that sole practitioners make up over a quarter of all law firms.