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Trouble in the valleys?

Posted by: Laurence Simons 15/08/13

Welsh lawyers are unhappy with government-driven attempts to attract national law firms to the country in order to increase competition in the legal services market, according to a report published at the start of August.

A study carried out by Bangor University Law School found Wales has the highest percentage of firms undertaking less lucrative areas of work, such as legal aid and residential conveyancing, reports the Law Gazette.

Professor Dermot Cahill, head of the law school, argued that law firms and chambers need to develop more specialisations in order to become profitable, with the market fundamentally changing and traditional areas of focus disappearing.

Despite the concerns expressed by many Welsh lawyers, the report indicated that it could be in their best long-term interests if Cardiff was to be developed into an international legal hub like London, which would naturally mean driving up competition by bringing in global firms.

"Present [government] policy is perceived, rightly or wrongly, as creating more competition in a marketplace which is already saturated," explained the study.

While this may be inevitable, Professor Cahill argued that more needs to be done to bolster the position of struggling law firms that could be forced under when better-financed rivals arrive in their area.

"Law firms and chambers should be looked on as a distinct SME [small and medium-sized enterprise] sector, with support tailored towards those seeking to develop high growth potential in new areas of practice," he argued.

Every solicitor interviewed as part of the research viewed alternative business structures whereby large firms can enter the legal market as a challenge, highlighting just how tight business is for Welsh lawyers.

Wales has a total of 487 private practice firms employing solicitors along with five sets of chambers in Cardiff and two in Swansea.

With increased competition likely to be inevitable, it is clear these organisations will need to reconsider their current business model if they are to be successful over the coming decade.