A quarter of small firms in the South West UK face prospect of failure

August 2, 2012 Small law firms are starting to feel the impact of legal reforms in the UK, with more than a quarter of South West law firms at risk of going out of business over the next year. This is the warning from R3, a trade body for insolvency professionals, who say that the combined impact of the reforms and the recession could cause over 140 law firms in the South West region to fail.

The Legal Services Act, commonly known as Tesco Law, allows non-lawyers to invest in and own legal businesses, opening the market to new players who are offering low-cost services such as house conveyancing, wills and simple contracts. Many small law firms are struggling to cope as they lose their bread and butter business.

R3 vice-chair for the South West and Wales, Ross Connock, said: “Traditionally a firm would practice a range of different areas of law. With the introduction of Tesco law, new specialist firms will begin to emerge and they will be difficult for high street firms to compete with, partly because small practices cannot afford the level of branding and marketing that these new firms will be able to take advantage of.

“It is also unlikely that they will have the resources or the technology to compete with these alternative business structures" he said.

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