Regional focus : Greater London

Stories of high streets dying usually involve the post office shutting down, the last butcher finding no successor, or the one remaining pub being converted for residential purposes. But high street solicitors in Greater London have not escaped the gloomy trend towards centralised services and the contraction in the number of small businesses serving the local community.

Neeta Desor, one of the two partners at Hayes-based firm Desor & Co, is particularly concerned, as the firm's key expertise, family law, is one of the most vulnerable to the proposed changes in the legal aid regime. 'From 11 high street firms when we started Desor & Co in 1995, there are now only four left in the area. The firm we qualified with, around the corner from us, closed last year.'

Shrinking legal aid purse

Desor remembers the first sign of danger: a lecture given at the town hall by a member of the Legal Services Commission. 'He said that there would be no removal of public funding, just a greater focus on certain areas of law, but everybody knew that this would herald the beginning of a gradual erosion for public funding. Then almost overnight there was no more legal aid for personal injury work.'

Desor has no difficulty in principle with conditional fees, which replaced legal aid in the personal injury field, but says that public funding for PI work did not result in a loss for the government. 'Most of the time damages were recovered; public funding paid for itself and the state's purse was balanced.'

The only area where public funding is available for personal injury claimants is medical negligence. 'But even then,' says Desor, 'work is only awarded to specialists on the panel. It has become a very closed shop.' As a consequence, City firms are, de facto, the only ones taking on publicly funded medical negligence work, which is now out of reach of most high street practices.

Desor & Co's strategy is to build up the non-contentious family 'legal help' side of their practice, which addresses marital issues not related to divorce or ancillary relief. They are the only one to offer the service in Hayes. But it is divorce work that provides the income, and if the 'legal help' doesn't generate the expected flow of work on the divorce side, the firm could find itself in a very precarious situation requiring a thorough review of its strategy.

Carter impact

Things could get even worse for family practitioners if Lord Carter's reforms are implemented as they stand. According to Desor: 'A family law partner in a Greater London firm with 15 years' experience charges between £150 and £180 per hour; a partner with similar experience in West London charges £450; legal aid fees for this kind of work are £60, which Carter proposes to reduce further. The reform would involve a three-tier fixed-sum system that cannot be exceeded, even if you have two, three or more hearings.'

Lucy Scott-Moncrieff, managing partner at Scott-Moncrieff Harbour & Sinclair, a Kentish Town-based firm that does almost exclusively legal aid mental health and prison work, is equally concerned of the likely impact of the Carter proposals for legal aid practitioners. 'I'm very worried about Carter, but if the rates can be got right, it can work. We're already in a fixed fee system, so it's about getting the rates right.'

Scott-Moncrieff, who was involved in the Law Society's response to the Carter Review, says that she and other civil legal practitioners were surprised when Lord Carter unveiled detailed proposals for the reform of civil legal aid on 25 July, when he was only expected to present outline proposals. For Scott-Moncrieff, the reform should be put back until the participants in the current 'dynamic monitoring' review (the Attorney General's office, the police, the prison service, the Crown Prosecution Service, etc) have reported back on the likely impact of the proposal. The idea is to identify the organisations that have the greatest impact on the judicial process and how that impact could be reduced. 'For a legal aid practice to be profitable, either the number of cases or the time spent on each must be reduced,' says Scott-Moncrieff. 'Prisoners failing to turn up, unnecessary hearings, the Attorney General asking for an adjournment '“ all these are wasted time which should be reduced.'

Private work only

For other, possibly newer, entrants into the profession, not offering legal aid is a choice they made from the start. Boma Ozobia, the former president of the Association of Women Solicitors, worked at two other firms before setting up her own firm, Sterling Partnership, in Southwark, three years ago. She and her two partners specialise in property and general commercial work. 'We did legal aid in my previous firms; it was not profitable and looked like getting worse. We saw where things were going with legal aid and decided we wouldn't offer this kind of service.'

The firm has local roots, but its outlook goes beyond its immediate community. 'We get instructions from local developers because they know us as a local firm. But we work outside London too: a developer who instructed us for a project in London and now has a project, say, in the Midlands, will come to us for legal advice on it.' Ozobia also says that her dual English-Nigerian qualification has allowed her to extend her reach beyond Britain. She gets referral from British firms seeking opinions on points of Nigerian law, and regularly advises Nigerian businesses trading in Britain.

Conveyancing under pressure

Conveyancing, a traditional bastion of high street practices, has already suffered from the advent of 'conveyor belt' practices and could be further threatened by the development of 'Tesco law' and home information packs (HIPs).

According to Desor: 'To try to offer rock bottom prices is not worth it. You can't make the money by charging £45 for a transaction.' Ozobia also has reservations: 'This only works for very straightforward transactions. Some situations can be very complex. Conveyor-belt conveyancing is not cost-efficient for clients who get a poor service, sometimes provided by non-qualified solicitors just ticking boxes on a form.' Ultimately, according to Ozobia, clients come back to her because they know that, although more expensive, she, as a solicitor, sees the bigger picture and is able to provide better advice. 'But clients only realise this after they've used our services,' says Ozobia. 'The difficulty for us is: how do you get them to come to you in the first place?' This is where HIPs could present a strategic opportunity for a firm like hers.

The larger estate agents chains are preparing their own packs and passing work on to their preferred solicitors,' says Ozobia. Her response is to target smaller independent estate agents and chains that do not yet have processes in place. 'From the estate agent's point of view, you can compete with the chains as an independent business producing your own pack.' Ozobia also points to Scotland, where solicitors can act as estate agents, suggesting that, although conveyancing solicitors in England cannot become estate agents in the same way, they could invest in a separate estate agents business. 'A group of solicitors could, in theory, set up a property shop as a franchise and appoint a professional estate agent to run the business. Provided there are no-conflict rules in place, this would be feasible.' Ozobia says her firm does not have the capital at the moment, but other solicitors have already started down this route.

Juggling costs, size and workload

The cost of running a business in London has significant impact on a firm's balance sheet. Boma Ozobia decided on Southwark because rent, although still quite high, was cheaper than other parts of central London, but the borough remains easily accessible for clients. Her main concern, however, is not so much the rent itself, as how smaller firms, with limited support staff, can generate the money. 'In a small firm, there is no one to take on your work when you are not there, for instance, if you fall ill. We have one support staff member here, but even then, we have to cover for each other all the time and that means very unsociable hours.'

Desor says her firm 'runs a tight ship' and has minimal debt compared with other high street firms, which it uses to fund expansion. But growth has to be controlled. 'We are the right size for the time being. Growing more would be a concern,' she says. 'We have regular meetings once a week to discuss cases, but we are quite informal, and it works for us. Clients can walk in and we will see them straight away if we are available. It is part of our public access approach and it wouldn't work in a bigger practice where you have to make appointments.'

Scott-Moncrieff Harbour & Sinclair have come up with a unique solution to the challenges posed by escalating running costs and dwindling legal aid income. They are a virtual firm. 'We have grown from four fee-earners in 2002 to 45 fee-earners today,' says Lucy Scott-Moncrieff. 'Most of the solicitors are not employed by the firm, they can work for other people, most work from home, and the office is only an administrative centre. Legal aid rates have not gone up so we must find a way of keeping the overheads down,' she continues. 'It also gives people freedom and a better work-life balance. Not everyone aspires to this kind of set-up but it has worked for us.'

For high street firms, which tend to be family-run, succession is a real issue. Selling the firm is rarely a realistic option, as most have little repeat business and, therefore, little goodwill to sell. Merging with another local firm is, in practice, the only option. But the challenge for London-based practices these days is more immediate: it is about finding a way of surviving the Carter proposals and the rising costs of living in the capital. This will require more than just clever use of technology and joining forces with other firms to bid for contracts; it will require ever greater focus, determination and innovative flair.

• Next month, we are in the North-west, get in touch if you want to discuss your firm. Email: editorial@solicitorsjournal.co.uk