The Legal Services Act will come into effect by October. This will mean that legal services will not have to be provided solely by law firms. It has been known as the "Tesco Law" as observers have predicted that Tesco will move into the market having made inroads into insurance, estate agency, and banking already. There are already companies waiting in the wings which is putting pressure on solicitors. The proliferation of comparison based sites has put further pressure on margins as customers look for the cheapest services and lawyers fear losing out on work.
In addition, by October each of the 10,000 or so law firms in England and Wales will have to renew their mandatory professional indemnity insurance. It appears that the premiums for cover have increased as there is not much competition in the legal insurance market.
The economic slow down has meant that some of the bread and butter work such as conveyancing has been drying up. In addition, the further cuts to legal aid that are being proposed means even less work out there.
Some lenders are even culling the firms they already approve to carry out mortgage work, making it almost impossible to act for a house buyer if the law firm is not on the lenders panel.
Be prepared is the watch word in all this but if your law firm is already feeling under pressure then you need to
know your options.
These may be the following, A CVA if you are a LLP, A Partnership Voluntary Arrangement or PVA if you are a partnership. Or the firm can have multiple simultaneous IVA's for partners
Our firm did the first CVA for an LLP Law firm in 2008. Read the case study on this.
Blogged by Robert Moore