Property crash puts future of law firms in doubt
Published 30/10/2008 | 21:11
The future of many Northern Ireland law firms could be in doubt after a dramatic slump in conveyancing work.
One firm has already been declared bankrupt and staff at others have been laid off or taken pay cuts.
The Law Society, the regulatory body for solicitors, revealed that conveyancing work had dropped by two thirds in just six months following the collapse of the residential property market.
Society president Donald Eakin said more lawyers could lose their jobs before the situation improves.
"There has been a significant decrease in the volume of conveyancing work," he said.
"We would estimate a two thirds drop since Easter alone - that's when it really started to kick in.
"I don't want to overplay the situation but there have been staff laid off and partners are now taking retirement earlier than they had intended."
While house prices in the region continue to fall - dropping by 10.8% in the last quarter and 30% in the last year, according to the latest survey by Nationwide - the reluctance of banks and building societies to offer mortgages has left the market stagnant.
Mr Eakin, who has felt the impact of the economic slowdown on his own practices in Larne and Belfast, said more recently qualified solicitors are being worst hit.
"It's the young solicitors we'd have most concern about, the main impact will undoubtedly be at that level," he said.
"Partners can re-allocate work amongst themselves."
He said while bigger city-based firms could still count on a steady flow of work from criminal and civil litigation cases, rural practices relied heavily on conveyancing work.
The Law Society has lobbied the Stormont Executive and lending institutions about the importance of re-stimulating the property market.
Despite the current position, Mr Eakin said he did see the shoots of a recovery.
"We can't talk ourselves into a recession and once lenders start making funds available I think we will start to see things pick up.
"I believe the situation has bottomed out and things are starting to turn round.
"But I don't think we'll ever get back to the days of last year when house prices were rising at an unsustainable level."
Mr Eakin said law firms had also been hit by the rise in insurance firms offering out-of-court settlements to people injured in accidents to avoid legal fees.