Growth in the provision of legal services in the UK has lent major support to the growth of the economy – and the growth in the legal sector has been running at 3.3% every year for the past decade, compared to real growth in the UK economy over the same period of just 1.2%, boasts the Law Society.
Indeed, a report in the Guardian newspaper in March of 2016 recorded an annual growth rate of 8% for the legal sector – which is now estimated to be worth £26 billion a year.
Competition
The Legal Services Act, which came into force in October 2011, transformed the UK’s legal services market into one of the most liberalised in the world – and liberalisation introduced hitherto unprecedented competition in the British market.
That competition prompted the emergence of so-called alternative business structures, which put existing law forms under renewed pressure to deliver high-quality services at increasingly competitive prices. Clients were encouraged to compare the rates charged by existing firms against the many new entrants to the legal services market.
The role of solicitors
This economic powerhouse is the responsibility of the 370,000 or so individuals employed in legal services in the UK and approximately 63% of these are solicitors or employed by firms of solicitors.
This represents the backbone of the profession that has been responding to the new competitiveness ushered in by the Legal Services Act – and the consequences have reshaped the whole business structure of the majority of firms of solicitors.
Consumers have become ever more demanding and especially conscious of the costs of the legal services they are buying.
This, in turn, has meant that many firms have been forced to look at ways of cutting costs, reducing staff and even removing some equity partners, so that profits per partner may be optimised.
The new competitors that have been introduced into the legal services market have been on constant lookout for potential acquisitions and one of the major indicators of the attractiveness of any acquisition has of course been the financial stability and success of any target firm.
Probably one of the biggest changes to the way in which firms of solicitors do business has been the switch from hourly billing to fixed fees. In the past, practically all business was conducted by charging clients at an hourly rate – based on a broad rule of thumb that one third paid the solicitor’s salary, a third went towards the firm’s overheads and the remaining third represented the firm’s profits. Today’s business models need to focus instead on the preponderance of fixed rate charges.
What it means for your law firm
What all this means for your law firm, of course, is that you are probably operating in a more competitive market than ever before.
To meet the challenges of that competitive environment, you need ever sharper and leaner budgets, together with tighter control over cashflow and working capital. A measure of your success in achieving these goals might be relocation to more prestigious offices or even the acquisition of rival firms.
All of that is likely to demand access to additional business funding.
Professions loans
That is where a business loan may provide the additional working capital you may need.
With our service, for example, you are able to choose the amount of funding your firm requires – anything from £5,000 to £1 million or more – for whatever purpose you choose, whether that is to fund essential disbursements, invest in new technology, or pave the way for acquisitions of local competitors.
They are unsecured loans, so you do not need to secure the borrowing against personal assets or those of your partnership and you may take peace of mind in the knowledge that we offer some of the most competitive market rates.
Repayment terms are equally flexible, with your being able to choose any period between three months and five years to repay the loan.
In the currently fast-moving world of legal services provision, standing still is not an option. To ensure continued annual growth, against the background of ever-present pressures on your ongoing cashflow, relatively short-term borrowing offers a solution your practice is likely to afford.
We strive to offer our customers not only a competitive rate of borrowing but also to treat each one in an entirely fair and transparent way. Our experience has shown that this is the way to developing long-standing business relationships with our customers, who recognised the value of a source of finance in which they may place their full trust.
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