The news began to circulate after the former head of legal services for bank Cheltenham and Gloucester Chris Smyth told the Law Society Gazette that price pressures had forced hundreds of firms into crisis talks with the regulator.

'Chasing work'

According to the Gazette, Mr Smyth said the SRA was 'concerned about the financial stability of a very, very large number of firms – I have heard 2,000. Firms have been chasing work [without pricing it realistically].’
Research from the SRA itself has also shown that the number of law firms has dropped to its lowest level since figures were first collected four years ago. Statistics show there were 10,819 firms in England and Wales at the end of January – a significant drop from May 2012’s peak of 11,369.

Management controls

‘There are probably a number of firms who could do with paying attention to making sure their financial and management controls are working well,’ said SRA executive director Samantha Barrass, who also added that the SRA would intervene if firms did not ‘face reality’.