Hi RV,
To be honest, I don't know what the letter of the law is in this situation, but my gut reaction would be not to specifically include the firm's name in your domain. It's potentially asking for trouble, and could end up causing you more hassle than these guys have already generated for you.
What I would do is set up a domain called solicitor-reviews.co.uk (that's just off the top of my head), then place the bulk of the content in a folder called XWZ, making the URL something like www.solicitor-reviews.co.uk/XWZ/conveyancing.htm. That way you still get the firm's name in your main URL, but you're (hopefully) sidestepping the potential pitfalls from having in your actual domain name. I would imagine (I haven't done any research on this) that people are liable to search for terms such as "XWZ solicitor review" or "XWZ conveyancing" and suchlike to get more info on the company before deciding to use them. XWZ-AVOID is quite a satisfying domain from your point of view, but people will search on more neutral terms when looking for info on a company they're thinking of using.
If you really want to get the word out, the other thing I would do would be to write a series of short reviews of the firm for as many consumer feedback sites as possible. I'd make them all different, and try to include links such as "Find out more about our experiences with XWZ" and "Read our full review of XWZ" (if the site allows) which all point back to the solicitor-reviews.co.uk/XWZ/conveyancing.htm URL. Not only will these reviews eventually show up in the SERPs when people search for XWZ, the links will help to add weight to the main site in the eyes of the search engines.
As to possible legal consequences, I would imagine that, provided that you can back up your claims with evidence (such as emails, letters, etc.) there probably isn't a lot they can do about it. But I'm not a lawyer - hopefully someone on here can give you more qualified advice...
Hope this helps,
Martin.
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