Law firms outperform pandemic expectations
Most law firms made it through the pandemic unscathed. Around three quarters of responding firms said their revenues and profits were level with or higher than their projections for 2020-21. Despite national restrictions and market uncertainty, 31% of firms were able to outperform their revenue expectations.
And while firms are bullish about the future with 93% of firms having confidence in their firm’s future; higher than pre-pandemic levels, 70% predicted that there will be tough challenges ahead.
The statistics have come from the latest Bellwether Report released by LexisNexis today.
The report it titled “Small law in the pandemic: The good, the bad and the new” and was compiled using data from in-depth interviews with lawyers in the small or SME firms as well as online surveys completed by 305 solicitors in England and Wales, with field work conducted throughout May-June 2021
77% of firms agree that Covid-19 has presented an opportunity to drive innovation and change in working practices. The pandemic has seen law firms heavily invest in technology, to both support the operational delivery of their work, and also support their business development ambitions. 46% of respondents have invested or will invest in marketing resource while 65% and 59% of respondents indicated they have or would implement website developments or developed a social strategy respectively. Acquisition however, is increasingly seen as an unnecessary risk for smaller firms at this time with 2/3rds of respondents indicating they plan to grow organically.
The pandemic boosted business for some practice areas while others took a hit. With a global health crisis in full swing, clients reconsidered their personal and family arrangements. Family, will-writing, and taxation areas saw more work, and lawyers expect this trend to continue as private clients look to pre-empt potential tax changes.
The report also highlights the challenges presented by rising Professional Indemnity Insurance premiums, with PII identified at the second most significant operational cost pressure on law firms over the last 12 months, behind salaries. 66% of respondents said that PII represented a “very significant” or “significant” threat to their business.
Another clear challenge is the changing workplace and expectations from employees. The work location of the future is unclear. Whilst there is no clear consensus on the future of hybrid working, many expect that law firms will return to their traditional ways. The biggest reported challenge was the recruitment and retention of good talent. Interestingly, job satisfaction in the small legal market is excellent, with an average satisfaction score of 8 out of 10. Yet, conversely, the average score for stress was high at 7 out of 10.
Chris O’Connor, Director of Solutions at LexisNexis, commented,
“It has been a tough slog for law firms through the pandemic, with many depending on government grants and furlough to survive. So, it is excellent to see the strong growth trajectory in the market. But, with stress and wellbeing continuing to be a challenge – it is clearly crucial for firms to identify the root cause and seek to invest in solutions that will help to mitigate it.”
You can read the report in full here: https://www.lexisnexis.co.uk/research-and-reports/bellwether-2021.html