UK law firms are weathering the stormÂ
By Nicola Laver
The number of law firms in the UK has barely dropped since last year, confounding the naysayers
A drop in law firms’ operating costs during the pandemic has, despite their drop in income, ensured that the profession is holding up well during the crisis.
10,080 law firms were registered last December, a decrease of a mere 2 per cent on last year, according to research from top 30 accountancy firm Hazlewoods.
The news, which follows similar reseach in the last month, further confounded last Spring’s grim predictions that the pandemic would have a significant impact on the UK’s legal profession
Hazlewoods said few legal practices have had to close since the pandemic first hit the UK because the shift to home working has allowed them to significantly reduce operating costs; and firms have been able to defer tax and VAT payments and, in some cases, negotiate rent holidays;
The firm also said only a small number of firms failed to gain professional indemnity insurance during the October renewal season, despite fears of a sharp increase in the number of firms who would be unable to find cover.
A partner at Hazlewoods, Andy Harris, said the legal profession has weathered the storm well.
He added: “The government’s moves to delay tax and VAT bills and introduce the coronavirus business interruption loan scheme (BILS) scheme have been vitally important to law firms, particularly those that have seen their professional indemnity insurance premiums jump.
“Being able to borrow at relatively low rates to pay those premiums has given a lot of firms some extra breathing room.”
He also noted that the stamp duty holiday has been “a great help to a lot of small and mid-sized firms” but added: “It will be interesting to see what happens when the stamp duty holiday ends and firms have to start repaying their deferred liabilities. We could see increased activity in M&A activities.”