Welsh lawyers are unhappy with their government’s efforts to encourage English firms to expand into the country, a new study has found.

Interviews with firms of all sizes in Wales found disquiet at the Welsh government’s attempt to encourage national firms into Cardiff to generate competition.

Research carried out by Bangor University Law School on behalf of the government found Wales has the highest percentage of firms undertaking less lucrative areas of work, such as legal aid and residential conveyancing.

In addition to threats to their income from government reforms of the legal sector, local firms are now worried about attempts to encourage national firms to set up on their turf.

‘There seems to be resistance to the idea of internationalisation amongst the local large-firm profession,’ said the report.

‘This may not be in their best long-term interests if Cardiff’s aspirations to become a major legal centre are to be realised.’

Researchers found concern among large Welsh firms that expensively trained staff would leave for higher salaries at incoming national competitors.

‘The policy of encouraging national firms to open offices in Cardiff raises sensitive issues amongst the local profession,’ added the report.

‘Present [government] policy is perceived, rightly or wrongly, as creating more competition in a marketplace which is already saturated.’

Firms told researchers that the government should revisit the eligibility criteria for grants available to domestic firms.

They also want the government to encourage more national businesses to move to south Wales and to give more support generally to businesses in Wales. If a formula could be found for stimulating more business growth, then the larger south Wales firms could compete for that business.

But as well as protection and assistance from the government, researchers found the Welsh legal sector must change to meet market challenges.

In the report’s introduction, Professor Dermot Cahill, head of the law school, said the research had showed law firms and chambers need to develop more specialisations to make up for diminishing traditional areas of work.

Despite Wales boasting several quality law schools turning out graduates with expertise in areas such as banking law, maritime law and international commercial law, few employment opportunities existed in the country in these areas.

‘The Welsh government can play its part by reviewing the appropriateness of the supports it currently has on offer for practice expansion and development,’ said Prof Cahill.

‘Existing supports are not meeting the development needs of law firms. Law firms and chambers should be looked on as a distinct SME [small and medium-sized enterprise] sector, with support tailored towards those seeking to develop high growth potential in new areas of practice.’

By the end of last month, 3,788 solicitors had practising certificates in Wales, of which 2,811 were in private practice. A further 91 solicitors had PCs but were not in private practice.

Wales has a total of 487 private practice firms employing solicitors along with five sets of chambers in Cardiff and two in Swansea.

According to the Higher Education Funding Council for Wales, 3,435 students were studying law at Welsh universities in 2011/12, with Cardiff University accounting for 945 of those places.

Every solicitor interviewed saw alternative business structures as a threat, but large and medium-sized firms had no plans to consider ABS status as an option in the immediate future.