Happy New Year to UK law firms from accounting firm BDO Stoy Hayward courtesy of thelawyer.com: 15 per cent of law firms may go out of business as banks tighten credit.
BDO partner David Miles makes it sounds so civilized:
Whilst banks are still keen to lend to the right firms, they now realise they need to be more discerning in their lending decisions. As a result, we believe at least 1,500 law firms will need to merge or be wound up over the next few years.
Certainly the raft of law firm mergers announced in 2006 are somewhat driven by a desire to improve finances and ultimately liquidity. So does this portend more mergers in 2007? No so fast, says Mr. Miles:
However, we would urge any distressed law firm not to be too rash and jump at the first opportunity of a merger. Quick defensive mergers could lead to lasting regrets long after the ink on the contract has dried.
Speaking of mergers, the Drinker Biddle/Gardner Carton merger was completed yesterday. The new firm website is here; they did not use my idea for a logo (at bottom of page), although the tilted box is carton-like, I guess.