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Frank Hovis

Law Firms Going Bust

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Anybody know why? The wording is very vague, almost one would say deliberately so, as if written by a lawyer.

He added: ”It has been clear that law firms have been under financial pressure for some time, for a whole variety of reasons. With that in mind the Society has put a number of initiatives in place to enable it to deal with those pressures – educating junior members on the financial management of law firms, a forthcoming training course focusing on specific, relevant financial issues and the creation of a special interest group for those that have the oversight of regulation in their firms.”

http://www.falmouthpacket.co.uk/news/10700598.Truro_lawyers_Follett_Stock_served_with_a_winding_up_petition_by_HMRC_over_unpaid_debts/

The only one I can think of is legal aid reforms, but a solicitor doesn't work they don't get paid so where's the firm's money going? This story suggests losing an employment case was enough to tip this one over the edge so they're not keeping cash reserves (or insurance!).

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Anybody know why?

Yeah, I know why, government subsidies being withdrawn, all time low transaction volumes for properties, the general public being skint and the cost of living.

No fee no job.

Edited by TheCountOfNowhere

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Yeah, I know why, government subsidies being withdrawn, all time low transaction volumes for properties, the general public being skint and the cost of living.

No fee no job.

and spending those £250 per hour fees before they are collected.

another profession "entitled" to charge high fees and live the life they "deserve"..

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and spending those £250 per hour fees before they are collected.

another profession "entitled" to charge high fees and live the life they "deserve"..

You;re not wrong there. There is a over-supply of solicitors yet they charge the earth for their simple service. So much for supply and demand determining price...how much they take of the state more like...sounds familiar.

There fees are up their with the main dealer garages charging you £120 an hour for some bloke you went to school with but left with no O-levels to change your oil.

Is it any wonder the country is a mess.

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You;re not wrong there. There is a over-supply of solicitors yet they charge the earth for their simple service. So much for supply and demand determining price...how much they take of the state more like...sounds familiar.

There fees are up their with the main dealer garages charging you £120 an hour for some bloke you went to school with but left with no O-levels to change your oil.

Is it any wonder the country is a mess.

I had thre quotes for my case...£250 per hour was average....much more if you are in the City...Cherie Blair comes to mind...what was it..£4000 per day?

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Yeah, I know why, government subsidies being withdrawn, all time low transaction volumes for properties, the general public being skint and the cost of living.

No fee no job.

Conveyancing used to be a cash cow for local solicitors until the conveyancing supermarket firms established tie ups with local EA's and that was that one gone.

In addition to legal aid changes there has also been a move towards conciliation and negotiation in divorces.

I think there's also less people willing to risk civil cases these days but that's just my experience.

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and spending those £250 per hour fees before they are collected.

another profession "entitled" to charge high fees and live the life they "deserve"..

Yes, this is one of the primary causes.

I know of a major firm of solicitors that was within a couple of weeks of going under before they were bailed out (I won't say how because that would identify them). The problem was that the partners had maintained drawings at similar levels to the pre-2008 period, erroneously making the assumption that the downturn was temporary and the good times would roll again soon.

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Conveyancing used to be a cash cow for local solicitors until the conveyancing supermarket firms established tie ups with local EA's and that was that one gone.

In addition to legal aid changes there has also been a move towards conciliation and negotiation in divorces.

I think there's also less people willing to risk civil cases these days but that's just my experience.

Thank you, it all sounds pretty major for them.

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Yes, this is one of the primary causes.

I know of a major firm of solicitors that was within a couple of weeks of going under before they were bailed out (I won't say how because that would identify them). The problem was that the partners had maintained drawings at similar levels to the pre-2008 period, erroneously making the assumption that the downturn was temporary and the good times would roll again soon.

Can't be long now till the good time are rolling...the green shoots started 5 years ago now so we must have a great big money tree by now.

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Partners still feeling entitled to suck cash out of the business at the same rate as before but the firms income (and chargeable rates) have gone down. It can only last so long...

The easy money sources of the past (e.g. conveyancing) have now gone (i.e. those semi-automated by lower paid assistants).

Employment tribunals work now less likely as well.

The problems for firms have been going of since 09-10 in a big way nothing really that new just more incremental problems to deal with.

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Yes, this is one of the primary causes.

I know of a major firm of solicitors that was within a couple of weeks of going under before they were bailed out (I won't say how because that would identify them). The problem was that the partners had maintained drawings at similar levels to the pre-2008 period, erroneously making the assumption that the downturn was temporary and the good times would roll again soon.

I think they have been mentioned on HPC before ;) and several of us have also intereacted with them at times outside the HPC world..

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If you don't know anything about the finances of law firms, you ain't got nothing but prejudice to go on.

It's no good moaning about the fees, when the chances are nigh on certain that you couldn't do the work yourself, but you do want someone else to take the hit if something goes wrong.

AFAIK, law firms haven't made much money for years, since the government told them to allow unrestricted numbers of lawyers into the profession. The result has been declining wages and prices, with the average fee earner making about £15 per hour, and the billing rate overstated by 300% because two thirds of the time spent is not billed. Any profits go straight into the pockets of the partners, who bought their premises 30 years ago for £10,000 and are planning to retire before financial armageddon hits the country, with the profit at the end coming entirely from the house price rise, not from the legal work. Basically, 3 Bob cratchets work for survival money so that one partner can have a middle class life. Why do you think the squalid living conditions of lawyers is becoming a standard topic in comedies?

Legal aid has nothing to do with it. For years now, legal aid has been cut to peanuts, that's why you can hardly find any firms doing it (apart from criminal firms)

A couple of facts: to do a flat purchase takes about 20 hours if you actually read the documents. Look how much they're charging for it. Second fact: Take a look at your nearest solicitors premises and ask yourself the question when was the decor last changed? If it's about 20years ago, that would be about average.

They haven't made any money for years, which is why there's going to be a steady stream of law firms going bust, partners had up for stealing client money, and cases where it turns out no one read the documents, because the staff who were paid £10 an hour, didn't have time to read them.

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If you don't know anything about the finances of law firms, you ain't got nothing but prejudice to go on.

It's no good moaning about the fees, when the chances are nigh on certain that you couldn't do the work yourself, but you do want someone else to take the hit if something goes wrong.

Yeah right. Like accountants they have a disclaimer that lands you in the **** if they make a mistake.

Solicitors, like E.A. bankers, politicians generate no wealth, they only live off others. If peoples wealth is declining then it follows suit that the parasitic occupations wealth also declines.

Edited by TheCountOfNowhere

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Oh dear it`s horrible isn`t it. They now have to compete in a real open market environment which is not not subsidised by Legal aid. The best will survive and the weakest will drop by the way side. I`m self employed and have been for thirty five years. I do not earn a mint but I do compete in an open market and look after my customers.

Why not solicitors. Tough ti tty if they have been fed a line from careers advisors or by their peers about what a wonderful and lucrative profession it was to get into. Most good things come to an end.

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Oh dear it`s horrible isn`t it. They now have to compete in a real open market environment which is not not subsidised by Legal aid. The best will survive and the weakest will drop by the way side. I`m self employed and have been for thirty five years. I do not earn a mint but I do compete in an open market and look after my customers.

Why not solicitors. Tough ti tty if they have been fed a line from careers advisors or by their peers about what a wonderful and lucrative profession it was to get into. Most good things come to an end.

How true.

image_update_c1e210f1896ebd9f_1371822027_9j-4aaqsk.jpeg

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Conveyancing used to be a cash cow for local solicitors until the conveyancing supermarket firms established tie ups with local EA's and that was that one gone.

In addition to legal aid changes there has also been a move towards conciliation and negotiation in divorces.

I think there's also less people willing to risk civil cases these days but that's just my experience.

No legal aid for divorce anymore and whats point going to court and fighting over a house you cannot sell,

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Anybody know why? The wording is very vague, almost one would say deliberately so, as if written by a lawyer.

http://www.falmouthp...r_unpaid_debts/

The only one I can think of is legal aid reforms, but a solicitor doesn't work they don't get paid so where's the firm's money going? This story suggests losing an employment case was enough to tip this one over the edge so they're not keeping cash reserves (or insurance!).

No more legal aid for defending terrorists etc?

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snip Any profits go straight into the pockets of the partners, who bought their premises 30 years ago for £10,000 and are planning to retire before financial armageddon hits the country, with the profit at the end coming entirely from the house price rise, not from the legal work. Basically, 3 Bob cratchets work for survival money so that one partner can have a middle class life. snip

the joys of owning and being the one to lose all in the final crash.

The Bob Cratchetts go on the dole, the partner gets the unlimited losses and no dole.

All the professions work in this manner, ie, you work for peanuts at the beginning and the successful work their way up to a full partnership..that way the firm build loyalty and rewards come later.

It is easy to forget the ones getting the gravy today were the bob cratchetts 30 years ago...

The problem seems to be that partners take no heed of market conditions.

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No more legal aid for defending terrorists etc?

That would be the scumbag London firms like Cherie Blair's one. These are small local ones with whom I have no axe to grind and I genuinely didn't know why they would be in trouble, this thread has enlightened me.

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I'm not sure of the situation these days, but 10+ years ago, the professional indemnity insurance for solicitors used to be eye watering. Can't remeber numbers, but it was up there with salaries and rent and rates etc.

I used to see a lot of letters from insolvent solicitors, saying how they were excellent at the legal side, but they were just a bit inefficient at running the office and finance side of things. They thought that they "just needed to get on top of things", but what they didn't realise, was that they had actually been insolvent for years.

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Yeah right. Like accountants they have a disclaimer that lands you in the **** if they make a mistake.

Solicitors, like E.A. bankers, politicians generate no wealth, they only live off others. If peoples wealth is declining then it follows suit that the parasitic occupations wealth also declines.

You sound like a man who blames legal problems on someone else.

If someone takes your money, you either go to court, or you become a robber baron yourself. Which do you choose? Do you think it's the lawyers fault someone took your money? Or that it's the lawyers fault you don't always win the case?

Your definition of wealth creation is also suspect. Does someone who imports stuff made in China generate wealth himself, or is he merely living off others by operating a fat mark up? Do doctors generate wealth, or are they only living off others too? Is someone who saves you £50k generating no wealth in your opinion?

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Oh dear it`s horrible isn`t it. They now have to compete in a real open market environment which is not not subsidised by Legal aid. The best will survive and the weakest will drop by the way side. I`m self employed and have been for thirty five years. I do not earn a mint but I do compete in an open market and look after my customers.

You're arguing for law of the jungle for big cats when you're a guinea pig living in the same jungle.

Forget legal aid, it died a decade ago for most firms.

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You sound like a man who blames legal problems on someone else.

If someone takes your money, you either go to court, or you become a robber baron yourself. Which do you choose? Do you think it's the lawyers fault someone took your money? Or that it's the lawyers fault you don't always win the case?

Your definition of wealth creation is also suspect. Does someone who imports stuff made in China generate wealth himself, or is he merely living off others by operating a fat mark up? Do doctors generate wealth, or are they only living off others too? Is someone who saves you £50k generating no wealth in your opinion?

the fees, my boy the fees.

I know some solicitors who do a nice line in debt recovery....sadly, a person needing these services is usually at a loss for payment at the end of the day too.

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