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More Legal Failures to Come?

We were challenged on this article as to the likely fall out from upcoming legislation and the changes that will be brought about by the technology of tomorrow and if it did indeed spark some thought then it achieved its aim.

However, it sparked another thought as to how has the legal profession come through the recession and it appears that there is more manure than roses in the garden.

We found the following information on line – “500 firms having been referred for special attention by their banks due to financial difficulties, including 21 of the largest 150 law firms being handled by Barclays Bank.” This surprised us.

The Lawyer reported that HSBC head of professional propositions Piyali Williams said the legal -profession will see its banks taking a more interventionist stance and advising on an increasing number of consolidations. It is likely that demergers will also occur for some firms.

In surprisingly open comments reported in New Zealand , of all places these quotes are worth noting “Merging is not an end in itself. Putting two firms together alone isn’t enough as there needs to be a cultural fit, otherwise they’ll still collapse, so firms need to continue to take advice from their bank.”

Williams confirmed that her bank had seen a marked increase in the amount of financial restructuring advice it was giving to its law firm clients due to the economic climate.

“Concerned firms are coming to us, but we closely watch firms’ working capital, and if there’s the potential of any defaults we’ll get involved,” said Williams. “We’d bring in external consultants to assess things like how the firm is operating its work-in-progress, whether it should be outsourcing work, cutting costs in some areas or whether there’s a need to divest.”

These thoughts are not far from our own.

Commenting on the UK situation Stuart Parker of Future Lawsaid that “Every business lawyer from Somerset to the City has heard whispers about firms that are in trouble but for obvious reasons most mouths remain shut. It is the anticipated turbulence in the market that was one of the founding principle behind Sirius – being a good business lawyer , doesn’t make you a good businessman. We welcome contact from any seasoned business lawyers looking for an alternative home”

2010 saw the first high profile legal failure it looks as though there may be more to follow.

Interesting times


Author: Chris Slay

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