Despite the pandemic, the number of law firms has remained steady, with 10,080 currently registered in the UK, according to new research.
The number of firms is down only 2 per cent compared to last year, as 10,278 firms were registered in December 2019, according to accountancy and business advisory firm Hazlewoods.
Though many firms’ income has dropped over lockdown, costs have also fallen, resulting in few firms actually having to close.
The shift to working from home that almost all law firms have followed has allowed legal businesses to reduce their operating costs.
Additionally, only a small number of firms failed to gain professional indemnity insurance (PII) during the October renewal season, contrary to fears that many firms would be unable to find coverage.
Most firms were able to afford increased PII premiums, with funding through the Government’s Coronavirus Business Interruption Loan Scheme (CBILS).
Although some areas of law firm practices such as commercial property and M&A have been quieter during lockdown, Hazlewood says law firms’ residential property offerings have rarely been busier.
“The legal profession has weathered the storm well. The Government’s moves to delay tax and VAT bills and introduce the CBILS scheme have been vitally important to law firms, particularly those that have seen their professional indemnity insurance premiums jump,” said Andy Harris, partner at Hazlewoods.
Being able to borrow at relatively low rates to pay those premiums has given a lot of firms some extra breathing room, he explained.
“The Stamp Duty holiday has also been a great help to a lot of small and mid-sized firms. Residential property work has boomed in recent months and for some firms, that is making up for a drop-off in other areas,” Harris added.
“It will be interesting to see what happens when the Stamp Duty holiday ends and firms have to start repaying their deferred liabilities. We could see increased activity in M&A activities,” he concluded.