Unique ‘dying’ practitioner model according to research

0

Lawyers operating as independent practitioners and partnerships are a dying breed, according to new analysis from Arden Partners plc revealing the evolution of the lawyer market.

Analysis of Solicitors Regulation Authority (SRA) data reveals that the number of sole practitioners in England and Wales has declined by 47% over the past 10 years, down 1,700. Individual practitioners only represent a fifth (20%) of all practitioners, compared to one in three (33%) ten years ago.

Over the same period, the number of partnerships (including LLPs) decreased by 39%, down 1,822. Partnerships now represent 29% of regulated practitioners compared to 43% ten years ago.

The combined decline was offset by the number of incorporated companies, which more than doubled over the past decade, from 2,400 to 5,085 during this period. Incorporated companies now represent more than half (51%) of all regulated legal practitioners, compared to just over one in five (22%) in 2011.

However, the total number of regulated law firms in England and Wales has fallen by 9% in 10 years as the market has consolidated.

Arden believes this rotation from traditional partnership models to more corporatized structures has been driven by the additional ability to attract external investment and drive more efficient business models. As markets consolidate, he expects more law firms to continue to look to corporatization.

Additionally, this market consolidation will accelerate dramatically over the next decade, as companies operating a legal advisory model like Keystone Law, Gunnercooke and Taylor Rose will become the primary consolidators of large and mid-sized law firms. Arden says the success of remote working during the pandemic and the benefit gained from their significant investment in IT and back office infrastructure puts them in pole position to disrupt the industry.

A recent report from Arden estimated that around a third of all UK lawyers could work under the legal consultant banner in just five years. This trend could lead to a further 30% drop in solo practitioners over the next decade.

Arden believes the Covid-19 pandemic could be a catalyst to reshape the middle market and the general public over the next few years. The pandemic has stacked additional pressures on traditional businesses which now face a perfect storm of years of underinvestment in IT, an aging pool of equity partners, and limited and shrinking capital reserves. . At the same time, the attractiveness of working from home has increased dramatically for many legal practitioners, as they have realized that they can do it successfully while enjoying many lifestyle benefits.

John Llewellyn-Lloyd, Head of Commercial Services at Arden, said:

“The legal industry has changed dramatically over the past decade, but I think this level of change is nothing compared to the disruption and consolidation we might see over the next few years. The business model is winning its battle with partnerships as the legal management structure of choice and at the smaller end of the spectrum the UK legal market is indeed very fragmented and ripe for consolidation.

“Covid has made a quantum shift in the rate of consolidation. These practitioners are under significant pressure to invest in IT infrastructure and reduce back office costs, but they lack the cash flow to do so. I think we will see more and more independent practitioners and smaller firms joining the legal consultants whose “no office” model suddenly seems very attractive to many. “

A Decade of Change: Regulated Lawyer Practices in England and Wales

Month Alone practitioner Partnership Incorporated company Limited liability company Other Total
July 2021 1940 (20%) 1,384 (14%) 5,085 (51%) 1,501 (15%) 33 (0%) 9 943
july 2011 3,640
(33%)
3 309
(30%)
2,400
(22%)
1,398
(13%)
120
(1%)
10 867


Source link

Share.

Leave A Reply