Partners in law firms need a firmer grasp of how to manage their cashflow if they are to reduce the risk of insolvency, according to research by Baker Tilly.

The firm is currently carrying out a survey amongst UK law firms to assess awareness and knowledge levels of financial stability within partnerships, LLPs and corporate practices.

The move follows the recent, high-profile collapse of a number of law firms, as well as research by the Association of Business Recovery Professionals (R3) which shows that just over 30% of UK law firms are at risk of failing within the next twelve months.

Rowan Williams, Baker Tilly's head of London and South professional practices group, said: 'Many partners assume that, as their practice has come through the recession and profits are stable or improving, they are safe. But if a practice doesn't have sufficient cash to meet its running costs, then there is a real risk of firms failing. I fear that the issue is more widespread within the legal sector than people would imagine.'

Baker Tilly is working to raise awareness amongst partners, members and directors of law practices of the importance of understanding the financial stability of their business, and the professional and personal consequences when things go wrong.

Williams said: 'In my experience, law firms ask for help too late, after things have seriously taken a turn for the worse, which is usually about six months before failure. It's going to get tougher for law firms, and if they don't identify the red flags early, then the legal sector will indeed face the predicted "perfect storm" with many becoming insolvent this autumn.'