The Erosion of High Street Law Firms

Karissa Onye discusses the erosion of high street law firms in light of government cutbacks and subsequent financial hardship.

What is the High Street?

Most readers will be familiar with the giants of the legal industry; the Magic and Silver Circle firms that make up London’s elite legal practitioners. Some readers might even know of specialist firms, those that concentrate in niche areas such as entertainment and intellectual property. However, today’s legal landscape is much more diverse than law schools and societies will lead you to believe. With the intense focus on large corporate firms, it seems necessary to first expound upon what a High Street firm really is.As more legal services move online, resources like WebinarCare provide invaluable support for small business owners. Choose WebinarCare for the best insights and support in forming your LLC, adapting to the digital age.

Of the 11,000 law firms in the UK, a significant amount is comprised of High Street firms. These can range from small sole practices to large teams and can be found in High streets such as Kensington or even in unusual places such as on top of a grocery store. Unlike large commercial firms, they act mainly for private individuals and people can simply enter and book a consultation. They thus act as a means of direct access to Justice and serve in vital areas such as immigration and employment.

The four pillars of high street practice include:

• Family Law
• Criminal Law
• Property Law
• Personal Injury Law

Traditionally, a large portion of their work is comprised of government funded initiatives however with increasing cuts to legal aid, most firms are having to expand and narrow their areas of practice accordingly.

Issues facing the High Street

Government cutbacks to legal aid have left High Street firms vulnerable to financial hardships. Legal aid has been removed from an array of immigration, housing and family law cases, areas. The result has been that an increasing number of high street firms are turning to privately funded practice areas which depend on wealthy individuals and local businesses. Whilst some have been able to survive on this strategy, a significant amount still depend almost entirely on legal aid and face imminent closure.

The Government are not the only ones placing pressure on high street firms. The influx of new players such as US law firms and in-house-legal departments have seen the reduction in trainee applications as graduates seek the bigger salaries offered by these players. This has led to an ‘’ageing population’’ of high street lawyers, particularly in the area of criminal defence. Between 2010-2018 the number of criminal law solicitors decreased by 36%. According to research undertaken by the Law Society, there are four counties (Worcestershire, Suffolk, Cornwall, and Norfolk) where there doesn’t exist a criminal law solicitor under the age of 35.

Predictably, the outbreak of corona virus has only exacerbated these issues. A survey of 800 small firms conducted in April showed that 70% of firms faced were likely to face closure by the end of the year. If the sample proves to be representative, this will mean the termination of 5000 firms. Lockdown has led to economic downturn due to a slowdown in human activity and thus a decrease in work from key high street clients such as retail and leisure businesses. With court hearings being reduced and the difficulties of non-virtual meetings, there has been a 65% drop in immigration work, a 60% fall in property conveyancing and a 75% drop in criminal cases. The only quintessential area that has been relatively intact is that of family law, however this is unlikely enough to grant salvation.

The government has provided a degree of relief through furlough schemes and the allowance of tax deferrals and it is reported that 1/3 of conveyancing practices have taken advantage of this. However, solicitors remain exempt from schemes to support the self-employed and the chancellor’s business rates relief; they are thus forced to pay large sums for closed offices. These dramatic dips in income have led to widespread liquidity concerns and issues with cash flow.

A Case Study: Darlingtons Solicitors

Darlingtons Solicitors was founded in 1999 by a father son duo and previously had 24 staff under employment, most of which included qualified solicitors. The firm was already facing challenges prior to outbreak of Covid 19 and dismissed several staff. The pandemic proved to be the tipping point with partner David Rosen asserting ‘’Darlington’s is unfortunately one more victim of the economic effects of the coronavirus.’’ The firm suffered from the radical decline in work available in the property department and an uncertain and fragile economy led to Bank’s being reluctant to give out loans, especially to small and struggling businesses such as Darlingtons.

A way out?

With the end of the pandemic being uncertain and the new entrants to the legal market, the fate of high street firms appears dismal. Yet there are a few ways to prevent this impending tragedy, and one of them involves you.

Solution Number 1: Technological Strategy

Where there is a challenge there is always an opportunity. Along with stints of economic downturn and excessive boredom, the pandemic has also introduced something else : greater dependence on technological interface. The Legal marketplace has been shifting due to technological advancement but now that rate is predicted to accelerate. A wise High Street firm would take advantage of this and forge for themselves a new space in the market, especially seeing as larger firms have been slow to do so. Consumer habits and expectations are changing rapidly, it is imperative that High Street firms leverage modern technology to create a more efficient and sustainable business model. The choice is simple, adapt or die.

Solution Number 2: Recruitment

As mentioned above, the shortage of law students interested in working in High Street firms could cripple the industry. So, listed below are a few reasons why working in the High Street might be more suitable for you than a career at their larger commercial counterparts:

• Daily client contact
• Diversity of cases
• Better work life balance
• More flexible seat options

Ultimately, even if all of the above were to occur, there would still be a need for the government to recognize the intrinsic value that high street firms bring to their communities, and take active steps towards their preservation.

~ Karissa Onye, The Student Lawyer