Small law firms are playing a crucial role in providing advice to vulnerable people struggling with stressful legal issues during these difficult times – yet cashflow pressures and reduced fee income has put many at risk of collapse, the Law Society of England and Wales has warned.
New research shows that 71% of high-street firms believe they may have to close their doors in the next six months as result of the crisis.*
Mark Evans, Chair of TLS Wales Committee, said:
“The shock to the legal services sector has been severe and risks creating significant legal advice deserts across Wales – which would have significant effect on access to justice.
“The Welsh Government – alongside the UK Government – has put a range of support packages in place so far. However, many Welsh solicitors fall outside of the criteria for this support and have been left in a precarious position.”
Simon Davies, President of The Law Society, added:
“Although a firm may be open for business, this does not mean it is business as usual. Residential property transactions have ground to a halt. Reduction in court hearings has massively impacted on the amount of work available – while social distancing and the lack of face-to-face meetings is causing difficulty delivering in other areas, such as the execution of wills.
“Elsewhere, small firms have suffered from the decline in overall activity – particularly from service industries such as retail, leisure and hospitality. The fate of the high-street firm is thus intrinsically bound to that of other small businesses.”
Crucially, he added, there must be also be support package in place for those legal practitioners who are paid via dividends.
“Under the current schemes such people will only be able to receive a minimal amount of support, possibly no more than £575 per month. This could be solved by extending support to sole practitioners operating via a professional service company.”
Evans concluded:
“High-street firms are central to local communities and it is vital they survive the crisis to help get the Welsh economy back on its feet and ensure everyone – regardless of geographical location is able to access justice.”
The news comes as the UK Government’s Bounce Back Scheme applications go live. Applicants should head to their business bank provider website for details.
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* The survey was sent to the 7,958 small firms, including sole practitioners. The results are based on the 774 responses received (10% of small firms). They are defined in this survey and generally as those with 4 or fewer partners.
