The accelerating downturn, and the UK property market (both residential and commercial) hitting the buffers, has already started to change the legal market. Leaving aside the rumours of cash calls and firms in trouble, the middle market consolidation is starting in earnest (for example the recently announced merger of Withy King and Marshall & Galpin, to say nothing of the gossip circulating about who is talking to whom; or more interesting, who is not being talked to.)
It is an appropriate time to revisit Legal Services Reforms: Catalyst, Cataclysm or Catastrophe by Stephen Mayson, Professor of Strategy at and Director of the Legal Services Policy Institute. In his March 2007 review of the legal services marketplace (inefficient, ripe for reform) Mayson summed up its health as follows,
My diagnosis so far, therefore, is that we have too many qualified lawyers, too many law firms, and too many equity partners.
Later he identifies consolidation as a one of the key themes for the future, highlighting ‘the need to reduce the number of firms . . . in the interests of quality, consistency, efficiency and cost’.
Well, this is already happening and will gather pace. Mayson identified one of the drivers as the ‘natural forces of competition’. I would add to that diminishing fee income, the cost and, at the moment, the availability of borrowing, and the demographic imperative. To say nothing of the Legal Services Act, and the arrival of new entrants into the market.