The number of law firms in England and Wales drops below 9,000, reflecting growing pressures and consolidation
The number of law firms in England and Wales has fallen below 9,000 for the first time in recent history, marking a sharp decline from 10,885 firms in 2010. The figures, published by the Solicitors Regulation Authority (SRA), reveal that there were just 8,987 law firms in operation last month.
One of the biggest contributors to this decline is the sharp drop in the number of sole practitioners. From a peak of 4,030 in 2010, the number of solo practitioners has dwindled to just 1,367 today. The rise of fee-share law firms, where solicitors operate with back-office support but effectively work as sole practitioners, has played a role in this shift.
Despite the decline in firm numbers, the legal profession has seen significant growth in the number of practising solicitors. In 2000, there were just under 83,000 solicitors, a number that has since increased to 177,000 last month, showing a clear rise in the number of fee-earners working within the shrinking number of firms.
Experts within the legal industry are attributing this decrease in law firms to the ongoing consolidation trend, where smaller firms are struggling to keep pace with increasing regulatory costs and pressure from larger competitors. Paul Bennett, partner at law firm Bennett Briegel, noted that the profession has been moving towards larger, more diversified practices, particularly as client demands grow and financial and regulatory pressures mount on smaller firms.
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“The traditional high street firm has been diluted over time, particularly after the 2008 financial crash,” Bennett explained. “High-performing small firms can still thrive, but the trend of consolidation will likely continue. The key challenge will be to ensure that this consolidation does not lead to a loss of quality or innovation in the legal sector.”
Nigel Wallis, a consultant solicitor at O’Connors in Liverpool, pointed to two key drivers behind the shrinking number of law firms. First, the growing financial and administrative burden on smaller firms is causing many to either wind down or merge. Many smaller firms, especially those in the conveyancing or legal aid sectors, are struggling to afford the necessary regulatory compliance and the technology needed to remain competitive.
Second, Wallis cited the growing influence of private equity-backed law firms, which are using acquisition strategies to expand. These private equity firms, largely funded by US, UK, and European investors, view the legal sector as a potential area for consolidation, following similar trends seen in industries such as insurance brokers, wealth managers, and accountants.
John Gould, chairman of Russell-Cooke, a London-based firm, explained that smaller firms are increasingly disadvantaged by the higher costs of management, compliance, and technology. “The competitive position of smaller firms has weakened across all areas of legal practice,” Gould said. “Legal generalists, in particular, are struggling. Many small firms have failed to plan for succession, pushing them towards mergers or buy-outs by private equity firms.”
The shift in law firm dynamics also reflects broader societal changes, such as a younger generation of lawyers prioritising flexibility over traditional partnership roles. “Younger lawyers are more focused on work-life balance and flexibility, which is pushing firms to rethink their strategies,” said Gould.
Despite these challenges, experts agree that small firms still have the potential to thrive, provided they can adapt to the changing legal landscape. “The consolidation of law firms is inevitable, but that doesn’t mean smaller firms cannot survive,” said Juliet Oliver of consultancy Passmore & Oliver Partners. “Firms that can demonstrate the benefits of joining forces or adopting new business models will be better positioned to withstand the rising costs of running a practice.”
For firms looking to succeed, the key lies in strategic thinking. “Small firms will need to rethink their strategies to stay competitive,” Oliver concluded. “Those that respond effectively to the changing environment can still thrive.”