Some may see it as intrusion. Others a lifeline when they weren’t aware there was one to hand. Whichever view, the SRA is taking a healthy interest in helping struggling law firms.
The reduction in successful personal injury claims over the last decade is well documented. Changes to the availability of Legal Aid are also impacting upon solicitors’ workload, hence profitability.
The SRA is becoming increasingly aware that law firms operating under the shadow of financial insecurity is good for neither the industry’s integrity nor the clients involved.
As such, they recently launched an outreach campaign to ascertain a fuller picture of the solicitor’s financial landscape in the UK. They’ve now compiled the results for us all to see.
Who has been affected by the changes?
The knock-on effect of the recent changes is being felt by law firms across the country. So much so that the SRA already had 700 firms – those in the sectors most affected – under surveillance before the recent campaign.
Concern for solicitors’ financial status is at the heart of this renewed outreach drive. 2,000 practises in all, including the aforementioned 700, were emailed with a questionnaire to help the SRA fully understand the industry’s plight.
500 ‘high impact’ law firms, those whose loss would have serious connotations for the sector as a whole, are also being closely monitored.
What questions were asked of the law firms?
Mike Haley, Director of Supervision at the SRA, explained just what and why the latest survey covered what it did.
Law firms were asked to submit:
- last year’s net profit
- total borrowing outstanding
- highest bank balances for the last three months
- lowest bank balances for the last three months
Mr. Haley made it clear that questions were not sent as a reaction to any single financial catalyst. Rather, knowing how the industry has suffered of late, the emails were sent to let law firms know that assistance is at hand if they need it.
It’s not just the law firms themselves who benefit from knowing that support is there if need be. He added that the SRA can cite:
“…numerous examples of better outcomes for firms and clients when firms in financial difficulty have come to us.”
What was the outcome of the SRA’s outreach campaign?
The response to the SRA survey has been extremely positive. Both the number of respondents and the law firms amongst that number who show no indicators of financial difficulty is encouraging.
Of the 1,300 solicitors practises that the SRA hadn’t already earmarked for potential financial insecurity, more than three quarters responded.
Even better, fifty percent of those showed no signs of financial difficulty whatsoever. This is great news for the industry and, of course, their clients.
Help is at hand for those law firms still to respond
The concern for Haley and the SRA Supervision team lies with the 300 or so law firms who’d not responded by the 3rd September deadline. Moreover, the risk that financially unstable practises expose clients to and possible investigations into misconduct thereafter.
He surmised that some businesses cannot accept the financial difficulty they find themselves in. It’s like the elephant in the room: they simply cannot admit that their business is struggling to themselves, much less to the outside world.
It’s not too late for those struggling law firms to contact the SRA before “potential enforcement action is initiated”.
Indeed, Mr. Haley beseeches struggling solicitors to be honest about what their books are telling them. Whether they then talk to an independent professional financial advisor or their Law Society Regional Manager, it matters not.
The important thing is to seek help as soon as possible. In the meantime, there are plenty of advice and support options for partners in law firms on the SRA’s Financial Advice page.