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| Solicitors The increase in demand for legal services has led to a continuing increase in the number of solicitors holding practising certificates. However, the recession in the early 1990s saw a reversal of the fortunes of solicitors due to reduced commercial activity, a huge reduction in conveyancing work and changes in the legal aid system. The introduction of conditional fees and the upturn in the housing market in the mid 1990s eased the position but downward pressure on fees continued. The late 1990s saw extensive changes to the civil justice system (the Woolf reforms) and the enactment of the Access to Justice Bill. This overhauled the legal aid system in England and Wales and created the Legal Services Commission which, from April 2000, assumed responsibility for the Community Legal Service and, from April 2001, for the Criminal Defence Service. Firms wishing to undertake legal aid work must be under contract to the LSC. The early 2000s have seen the relaxation of various restrictions in Law Society rules which had been identified as anti-competitive by the Office of Fair Trading. Gross fee income of the sector reflects the buoyancy of the economy generally. Thus, there was strong growth in the second half of the 1980s, a decline in real terms in the first half of the 1990s, followed by a recovery in the second half of the 1990s and into 2000. The great majority of solicitors (some 80%) work in private practice. The profession consists of firms of all sizes, from sole practitioners on one hand to large international concerns on the other. The late 1990s/early 2000s have seen an increase in the number of large firms with 26 or more partners. The large city firms have mainly commercial clients while private clients tend to use smaller local firms. The increasing regulation of all aspects of life makes it likely that the demand for legal services will increase. Within that general increase, however, there are factors which will affect the gross fee income of the sector, including the performance of the national economy, reforms to the legal aid scheme and the civil justice system, competition from organisations such as estate agents and banks, and the increasing number of solicitors. The firms which prosper are likely to be those which are well managed and which, having identified the services most appropriate to the local client base, establish the necessary contacts to obtain work. The qualifications and many of the operating practices of solicitors are regulated by the Law Society. Practice work requires that a wide range of legal services is offered, although a significant proportion of the income of smaller firms still comes from conveyancing. Although the majority of the fees are still charged on the traditional hourly basis, there has been an increase in the use of fixed, conditional and contingency bases for charging. According to the Strategic Research Unit of the Law Society, in 2001 36% of single solicitor firm's cases were charged on a fixed fee basis. The mix of work and the dependence on legal aid work will generally reflect the size of the firm. 57% of the income of smaller firms derives from residential conveyancing, commercial property, family and criminal law. Generally smaller firms have a higher proportion of legally aided clients than larger firms. The 2001 Law Society Business Survey established that, in firms with between 41 and 170 solicitors, income from legally aided clients accounted for just 3% of gross fee income. The reforms to the legal aid system in England and Wales have resulted in fewer firms offering services to legally aided clients. Small and medium size firms of solicitors deal mainly with private and small commercial clients. Since this market is more cost conscious than large commercial organisations, solicitors may be expected to do the work for a fixed fee. Law Society members are required to provide to their clients details of the cost of the legal services to be provided. Formal procedures exist for disputing a solicitor’s fees. Rates for Legal Aid work are laid down and payment is usually received within 4 to 5 weeks of the conclusion of the case. Otherwise, 30 days credit is normally allowed, although solicitors are notoriously slow in recovering their fees. A firm’s success in generating fees can be measured against the average gross fees per size of firm established by Law Society surveys. Its general efficiency can be measured by comparing the ratios of its various expenses to turnover. An imbalance of support staff and overheads costs to fee earners will adversely affect profitability.
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For further information or to become a part of our winning team contact us at: Hadrian House, Front Street, Chester Le Street, Co. Durham, DH3 3DB Te: (0191) 388 3377 Fax: (0191) 387 1745 Email: straughans@straughans.co.uk Straughans Limited (trading as Straughans) is a limited liability company registered in England and Wales under No 0354727. Registered office: Hadrian House, Front Street, Chester le Street, Co Durham, DH3 3BB | ||
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