Sole practitioners and freelancer solicitors at financial risk, says Society

The extension of urgent financial help for all businesses has been announced by government, but the Law Society warned that the legal sector must not fall through the cracks.

Separately, the Ministry of Justice (MoJ) announced a new support package to help legal aid providers through the pandemic – but the Law Society questioned how adequate this would be.

On 3 April, Chancellor Rishi Sunak announced he was bolstering business interruption loans for small businesses.

He said the Coronavirus Business Interruption Loan Scheme (CBILS) will now support “all viable” small businesses affected by covid-19, “not just those unable to secure regular commercial financing”.

So far, more than £90m of business interruption loans were approved under the CBILS for around 1,000 firms.

“Despite the changes, there are still fears that sole practitioners or freelance solicitors may fall through the cracks”, warned Law Society President Simon Davis.

“These practitioners are particularly exposed – often with significant cashflow concerns – and their survival is key to a wide-range of the public whose concerns they look after.”

Davis said strengthening the loan scheme was “a necessary step to shore up vital parts of the economy”, but warned: “Law firms face a dramatic plunge in income as work falls away.

“There are also widespread concerns over liquidity and the ability to meet liabilities and taxes.”

“It is of crucial importance to the economy that the legal services sector can continue to function through this challenging period - to support commercial transactions, provide bespoke advice to business, and to facilitate access to justice whilst upholding the rule of law”, added Davis.

However, he said: “It is heartening that government appears to have acted upon many of our recommendations to support the legal services sector.

“Increasing the turnover threshold, removing the need for personal guarantees and the requirement to have exhausted commercial sources of credit first, are all significant steps which will be of considerable benefit.”

Meanwhile, the MoJ announced a number of measures including expanding the scope and relaxing the evidence requirements for hardship payments in Crown Court cases, such as reducing the threshold for work done to £1,000, instead of £5,000.

Hardship payments will also be easier to access; and some firms will have their debt repayments to the Legal Aid Agency (LAA) “paused”.

Davis welcomed the move, which is intended to enable practitioners to make payment claims earlier than they usually would.

However, he warned that there is “significantly more that needs to be done to ensure the criminal defence sector is able to make it through this crisis”.

He said: “If criminal law practitioners, who have to go into prisons and courts to keep the system of justice going, cannot afford to keep going themselves – the whole system risks grinding to a halt.