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The number of law firms being closed by the Solicitors Regulation Authority has fallen to a four-year low, new figures have shown. But it has also received a record number of claims for compensation for mortgage fraud in the last quarter.

Some 138 law firms have closed after entering the assigned risks pool in the past two years, while solicitors who do not pay their ARP premiums are being pursued into bankruptcy, the Solicitors Regulation Authority has reported. Most of the firms (119) shut through an orderly wind-down, while 19 were closed by an SRA intervention.

A Solicitors Regulation Authority (SRA) committee has approved a range of alternatives to the “sledgehammer” of intervention in troubled law firms, even though they pose a greater risk of default or increased loss. The SRA’s compliance committee backed approaches such as targeted practising certificate conditions and giving firms limited time to correct breaches, transfer or close altogether. In some circumstances, pre-packaged administration might be appropriate.

There has been a sharp increase in the numbers of law firms closed and solicitors struck off, Legal Futures has discovered. Figures from the Solicitors Regulation Authority show it intervened in 31% more firms in the year to 31 March 2010, while there was a 58% jump in strike-offs by the Solicitors Disciplinary Tribunal.