Law firms in the South East are faring better than anticipated following the introduction of ‘Tesco Law’, new research suggests.
Thirty-two per cent of legal firms in the South East are at risk of failure in the next 12 months, the same percentage as last year, according to research by R3, the insolvency trade body, using data from Bureau van Dijk’s ‘Fame’ database of UK companies.
Experts from R3’s Southern Committee had expected the figure to increase as a result of the new ‘Tesco law’ coming into play in Spring 2012. However, the research shows that law firms in the South East are managing to ‘hold on’.
The ‘Tesco Law’, more formally known as the Legal Service Act, allows a licenced law firm to offer legal services in conjunction with businesses such as supermarkets, banks, and High Street shops.
James Stares, Chairman of R3’s Southern Committee and Director at Grant Thornton in Southampton, said: “Traditionally a firm would practice a range of different areas of law. With the introduction of ‘Tesco Law’, new specialist firms have begun to emerge and are difficult for High Street firms to compete with, partly because small practices cannot afford the level of branding and marketing that these new firms are able to take advantage of.
“We would have therefore expected to see an increase in the number of businesses at risk of failure but it seems that law firms in the South East have, for now, managed to stay strong.
“Law firms are operating in a challenging environment and the marketplace seems to be getting tougher and tougher. We would urge any firms that are worried about their financial future, to seek professional restructuring advice before it is too late.”
Mark Osgood, from Southampton law firm Moore Blatch said: “The legal services sector has always been a crowded market, but the introduction of ‘Tesco law’ has certainly made it even more competitive. We have been able to address this by focusing on a clear business plan, assisted by external business coaches who are good at providing energy. In particular, we have worked on making the firm a great place to work and on developing strong relationships with other professional practices, with mutual recommendations and referrals.”
