A 60% increase in the number of UK law firms merging has been seen over the last four years; according to analysis released by accountancy firm Wilkins Kennedy. The findings revealed a huge increase in the number of UK based law firms who are merging with competitors to become partners within the legal sector. This comes as more financial strain is put on individual firms with the drop in legal aid support and further red-tape on no-win, no-fee claims.
Within the analysis it is reported that 234 mergers have taken place over the last year. With a 60% increase on the same number four years ago it is now clearer than ever before what effect the current economic climate is having on individual law firms around the UK.
But why are so many firms merging with competitors? While the law industry is both highly lucrative and stable many firms have seen a nose dive in the number of clients being offered legal aid by the government; this is causing many clients not to be able to financially follow through a case. By partnering with other firms alike it offer two distinct advantages; a combination of skills and client base and also the ability to develop upon each other’s operating methods.
One cause for such a boom in mergers is also down to the lending of banks, as noted in The Law Society Gazette, many banks are no longer willing to lend to firms with the recent news that 30 of the top 200 firms are facing financial difficulty across the UK.
However, this report is not to say the UK legal sector is suffering from severe difficulties staying afloat but is simply highlighting changes operations within the sector which is also expected to create over 600,000 new jobs over the next ten years.
Ashton Hudson, Online Marketing Executive