Report sounds recession alert

FEWER than half the law firms operating in conveyancing work are making money out of it, the Law Society's annual statistical report has confirmed.

The report, released on Friday, predicts that the profession may be on the brink of a recession and makes particularly gloomy reading for sole practitioners and high street firms.

It says growth in the financial turnover of private practice firms this year was insufficient to maintain previous levels of earnings and profitability.

A quarter of sole practitioners made a profit of £10,000 or less while the same proportion of partners in two- to four-partner firms earned under £24,000. These figures are compared to average profits of £77,000 for partners in 11- to 25-partner firms.

Conveyancing was a particularly unprofitable area, according to the report, which says the expected recovery in the sector had not occurred.

For the first eight months of this year the total number of conveyances was 9 per cent lower than for the same period last year.

John Jenkins, who wrote the report with co-researcher Verity Lewis, said larger firms were doing very well but smaller firms faced an uncomfortable period of belt tightening.

He said: “There are worrying signals that total gross fees for firms in private practice appear to be levelling out.

“Up until now the number of firms has continued to grow but so have the gross fees; there are indications the profession may have reached a turning point and there may be a fall in fees.”

Law Society president Martin Mears said the report demonstrated that the image of “fat cat” solicitors was a myth.

“While many solicitors are doing well, a significant number are barely making ends meet,” he said.