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Law firms closing under pressure

It has been reported that more than 250 law firms have ceased business since the start of the summer, which Liverpool law firm Maxwell Hodge believes is a direct result of the increasing pressures on the legal industry.

The range of pressures vary significantly, from the intense competition from non-law firms, like Claims Management companies, and insurers, who tend instruct their own panel of solicitors. Many smaller law firms are struggling to compete with mergers of firms, that can utilise their substantial market share and benefit from economies of scale and bigger marketing budgets.

Law firms are also having to tighten their belts as a result of increased professional costs, such as their indemnity insurance payments; while finding it more difficult to obtain professional loans from banks.

Claire Banks, Partner and Director of Liverpool law firm, Maxwell Hodge, said: “Though it is a tough time for the legal industry, as with many other industries, it's not all doom and gloom, as the changes are likely to encourage more law professionals to give improved care and attention to their clients, and offer more face-to-face contact for the personable approach.

"The changes together the new legislation coming into play in April next year - like the ban on referral fees - pose an opportunity for law firms to reinvent themselves as leaner, more focussed businesses, concentrating on the specific needs of the client."

Private legal sectors feeling the most pressure include conveyancing, wills and family law, due to consumers struggling to sell their homes and to find the finances. The commercial sector is another area where funds are tight, as businesses are trying to save money in the short term by avoiding legal expenses where possible.

The data showing the decline in law firms operating was published by the Solicitors Regulation Authority this month. It showed that a total of 11,115 firms were operating on 1 September, down from a record 11,369 firms at the end of May. This is the first time since the economic downturn that law firm numbers have fallen for three consecutive months.

Claire is pleased to report that in these difficult times Maxwell Hodge is expanding their services. “We underwent a management restructure a number of years ago. This helped us to focus on and prepare for the challenges ahead. Excellent service for our clients is paramount. We have always invested in the right people to do the work for our clients, together with a personal and dedicated service. Making the public aware of the services that we offer has been vital through our strong marketing team.”

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