The number of law firms has dipped to its lowest level for many years, official figures show, and is likely to fall still further as more firms unable to obtain professional indemnity insurance (PII) close their doors over the coming weeks.
According to figures from the Solicitors Regulation Authority, there were 10,726 practising firms in England and Wales in September, a month-on-month fall of more than 200 and the smallest number since the regulator began keeping records in August 2009.
The number of sole practitioners fell by more than 100 last month alone, continuing a precipitous decline from 4,215 in August 2009 to just 3,108.
‘Traditional’ partnerships also continue to decline, down 86 month on month to 2,681 and more than 1,000 on August 2009, when their number stood at 3,959. By contrast, the number of incorporated companies has more than doubled since 2009, to 3,198, and there are now 1,600 LLPs, up from 1,088.
The numbers suggest that a long-predicted consolidation in the number of firms has at last begun in earnest. September's figure of 10,726 is down nearly 400 on the same month in 2012.
Experts have speculated that the rising number of incorporated companies is partly explained by new sole practitioners using the LLP or incorporated company vehicle to protect their assets.
The ‘traditional’ partnership is held to be in decline for many reasons, including lack of succession planning and the trend toward non-lawyer firm managers running corporately structured practices.
Yesterday the Gazette revealed that the number of firms at risk of closure after failing to obtain PII stood at 176. This has since fallen to 153.