The majority of partners surveyed said they expect fee income to rise by more than the rate of inflation, but expect profits to remain either static or to grow marginally.
There was no consensus on the practice areas expected to be most active during the next six months. Partners remain confident about their firms’ commercial property and commercial litigation departments, but they expect the decline in technology work to continue and predict M&A activity will remain sluggish. Nevertheless, 60 per cent of partners predict a rise in private equity deals, particularly in the take-private arena, and expect to be involved in more restructurings.
A further area of concern is foreign inward investment. Partners said levels of foreign investment would not rise unless the US and UK started to recover. They also said the continued threat of a war against Iraq was bad for business confidence, especially because the Irish economy is a direct beneficiary of the US economy.
But despite the slightly pessimistic outlook, Irish firms have not reduced staff numbers, and all the partners surveyed except one said they would retain all their newly-qualified lawyers. A small number of firms also said they were still recruiting assistants.
Partners argued that Irish firms have generally coped better with the downturn than City firms because their practices are more widespread than corporate-focused City firms.
The partners said a key issue for the next six months was being more competitive in a weaker legal market.