More legal firms from Sheffield could find themselves in financial difficulties, according to a leading insolvency expert.
Daren Bekisz, who is northern chairman of the Institute for Turnaround and a partner in the Sheffield office of business rescue and recovery specialist Begbies Traynor, says a lack of financial and operational understanding could lead to more legal firms running out of cash.
Mr Bekisz says a number of factors are conspiring against legal firms, including the new Legal Services Act, uncertainty over legal aid payments and the increasing cost of professional indemnity insurance premiums.
“All too often firms don’t have adequate practice management in place and fail to adequately recognise and deal with financial and/or operational problems early enough,” says Mr Bekisz.
“With poorly implemented mergers, lack of financial forecasting and too slow a reaction to reduced business volumes further problems can emerge, potentially leading to insolvency and job losses.
“We recognise that with all the challenges facing the legal sector this year, many firms in Sheffield may face financial difficulties and it’s our job to help turn that around. It is important to recognise that it isn’t all doom and gloom and as long as firm’s management acts quickly and engages with their stakeholders to identify simple and sustainable actions that can be implemented effectively, legal firms will not only remain solvent, but they can go on to grow and prosper.”
Independent turnaround practitioner Martin Jesper, added: “We have seen firsthand how recent challenges have put additional pressure on firms this year and with even more impending changes to be implemented throughout this year, legal firms will continue to feel pressure to perform.