5th August 2020
By Andrew Gregory, Leonard Curtis Legal
Analysis just published shows a surge in collapsed firms in March, then the rate slowed in the first few months of lockdown amid the Government’s £multi-billion support package.
But now, as the economy begins to reopen and support is reduced, many firms are becoming unviable due to high levels of debts and poor sales – making it hard for them to carry on in the longer term. Law firms are not always the exception either.
We are already working with an increasing number of practice partners and their accountant advisers to help find solutions to financial distress before it’s exacerbated further, and options become increasingly limited. And, the issues are pressing.
Legal sector employees
In a recent poll by the Managing Partners’ Forum, around half of law firm leaders in the UK said that they expect to reduce staff headcount over the coming year. Also emerging in the figures are expectations of revenue declines and requirements for less office space.
When you consider that there are currently some 150,00 practising solicitors in England and Wales alone, these numbers are significant. 22% of us are employed as in-house counsel, with the remainder working in some 10,500 law firms.
The majority are employed in 8,000 SME practices (employing around 110,000) and over 2,000 are self-employed. The larger firms, of course, account for the greatest number of employees, but it seems that none are exempt from the economic downtown that Covid-19 has created.
As a result of the coronavirus commercial crisis, redundancies are being announced – whether that’s ‘Top 50 Firms’ starting their consultations or smaller players. In fact, some experts predict a collapse of some of the UK’s largest law firms in what is set to be a “bloodbath” for the legal industry.
Here at Leonard Curtis Legal, we place real focus on rescue and recovery rather than insolvency, so we’d like to think that it won’t come to that.
Engaging with professional advisers
Fortunately, more and more partners in law firms are now starting to ask their professional advisers for help and at an early stage. And if they’re not yet, we hope they soon will be.
Accountants tend to be their first port of call, but often the assistance required in these unprecedented times is specialist and non-core – requiring a wider multi-disciplinary approach that’s best able to support all areas of the business.
By approaching us, law firm partners and their accountants gain invaluable access to a much wider range of specialist solutions – including corporate restructuring, personal debt advice, equity and debt finance raising for SMEs, cashflow optimisation, property solutions and legal services. This puts all clients in the very safest of hands.
Our legal sector specialist expertise
We’re specialists in the legal services sector which, in the past 20 years, has seen significant growth. However, it’s also seen change and for some, many challenges have presented risks for the business. In some cases, these risks have also extended to the individuals behind these firms.
But we understand the fast-paced changes to the regulatory environment. As an owner-managed business ourselves – Leonard Curtis Business Solutions Group employs over 240 people across 19 regional offices – we have the same challenges. However we also have the expertise to navigate – and support our clients – through what can sometimes be tough times, and out the other side.
Having Directors who have previously held senior management positions within large law firms is a real attraction for our clients, as it means we have a thorough understanding of how companies – whatever their scale and scope – operate and the pressures they face. As a result, our client portfolio includes law firms, solicitors, barristers, advisers to the sector, banks, specialist funders to and investors in the sector.
How we work
Upon appointment and case review, we provide Group-wide advice on the financial overview, WIP, debtors and client engagements. We also undertake reviews on the structure of the firm – LLP, company, sole practitioner and ABS, for example, all require a tailored approach.
Leonard Curtis Legal also enjoys strong relationships with key stakeholders, banks, litigation funders and other lenders, which means we have access to the most appropriate solutions for each firm. We most certainly don’t adopt a ‘one size fits all’ approach here.
And we don’t just work with established firms experiencing any level of financial distress. We also provide consultancy advice for start-ups through to medium to large law firms. We have strong credentials in securing investment for new entrants into the market, as well as researching – and then integrating – law firm mergers and acquisitions.
For further information, contact Andrew Gregory on Andrew.Gregory@leonardcurtislegal.co.uk or visit www.leonardcurtislegal.co.uk.