High street firms under immediate threat
The Law Society of England and Wales has reiterated warnings that high street firms face collapse as covid-19 adds to cashflow pressures and reduced fee income
New research on soul traders and firms with up to four partners has revealed that 71% of high street firms believe they may have to close their doors in the next six months as result of the crisis.
“The shock to the legal services sector has been sudden and severe”, said Law Society president Simon Davis. “There are widespread concerns over liquidity as firms face a dramatic plunge in income.”
Davis said despite firms being open for business, many practice areas have been decimated by the lockdown rules. Residential property transactions and court hearings have been reduced drastically for example, and while the demand for probate services remains, the execution of wills is difficult.
Firms whose clients are from service industries such as retail, leisure and hospitality have also been hit hard.
“The exclusion of many solicitors from support for the self-employed mean that many are struggling. Someone who has earned £51,000 profit in the preceding year is not guaranteed to do so again and is unlikely to have built up the savings to survive for a protracted period without income,” Davis added.
He called for support packages to be put in place for legal practitioners who are paid via dividends. Arguing that under the current schemes these individuals will only be able to receive a minimal amount of support, possibly no more than £575 per month.
Davis concluded: “Whether in relation to problems with housing, employment or wills - or advising small businesses – small firms are often at the heart of their communities. It is vital they survive the crisis to play a role in getting the economy back on its feet.”