In what seems to be an unrelenting trend, new figures released this month by the British Solicitors' Regulation Authority (SRA), have disclosed that 30 of the top-200 UK law firms are in serious financial difficulty and have entered into "intensive engagement" with the SRA. While no names were named, it was revealed that these firms were among a wider group of 400 UK firms that were under active management by the regulator.
North-West firm, Cobbetts LLP, is one of the latest UK firms to kick the bucket. Administrators, KPMG, blame the LLP's failure on the significant drop in corporate and property deals since 2009 and the firm entering into expensive new leases back in 2006.
Another handful of firm insolvencies have been blamed on over-dependent relationships with litigation financing funds (who fund risky litigation in exchange for a share of the pie at the end of the day) as a quick fix. While it may seem like a convenient solution for firms in trouble, firms should be warned that jumping into bed with dubious litigation funders may only serve to hasten their demise.
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