The Law Society has warned that thousands of high street and sole practitioner firms that play a crucial role in providing advice to vulnerable people, may have to shut within six months as a result of the Covid-19 crisis.

New research by the Law Society suggests that cash flow pressures and lower fee income have put at risk more than half of all the legal practices in England and Wales.

In March and April, nearly 8,000 small firms were approached for a survey and 10 per cent of the practices - with a total of 774 respondents - replied. It was   found that one in five said they were already feeling the pressure from lack of cash flow and fee income.

Of the sole practitioners surveyed 63 per cent - and 71 per cent of firms with four partners or fewer - said that the pressures could put them out of business by the autumn. This would equate to over 5,000 firms ceasing to trade, leaving vulnerable people - struggling with stressful legal issues - without support.

Simon Davis - Law Society President - said:

“The shock to the legal services sector has been sudden and severe. There are widespread concerns over liquidity as firms face a dramatic plunge in income with work falling away.

Although a firm may be open for business, this does not mean it is business as usual. Residential property transactions have ground to a halt. Reduction in court hearings has massively impacted on the amount of work available - while social distancing and the lack of face-to-face meetings is causing difficulty delivering in other areas, such as the execution of wills.”

He added:

“The exclusion of many solicitors from support for the self-employed means that many are struggling. Someone who has earned £51,000 profit in the preceding year is not guaranteed to do so again and is unlikely to have built up the savings to survive for a protracted period without income.

Crucially, there must be also be a support package in place for those legal practitioners who are paid via dividends. Under the current schemes such people will only be able to receive a minimal amount of support, possibly no more than £575 per month. This could be solved by extending support to sole practitioners operating via a professional service company.”

Simon Davis concluded by saying:

“Whether in relation to problems with housing, employment or wills – or advising small businesses – small firms are often at the heart of their communities.  It is vital they survive the crisis to play a role in getting the economy back on its feet.”