This site ranks in the top 5 for nearly all the search terms relevant to it. URLs ending with .htm are still valid and always will be and don't have any negative SEO impact, so at the moment, the only argument in favour of changing them is that it will make working with default CMS behaviour easier. That might save the client a few dollars in development now, but the SEO impact if rankings were to drop could cost them a lot more.
To answer Pete that SEO should remain intact, in theory that's the case, but in reality, it's not. 301 redirects aren't guaranteed to retain all the SEO strength that existed before the redirects were put in place. Any changes in URL, whether 301 redirected or not, will have an impact on SEO, even if it only for a short while, so it's not really an option for this site which has such a strong position and they don't want to alter that.
It's possible that I can get away with a certain manual amount of setting pages URLs in the control panel as the client isn't likely to add new pages too often. I may also be able to use the redirect module to redirect the new URLs to the old ones (rather than the other way around) so thanks for the suggestions everyone.