Read the results of the latest 2021 law firm survey
Throughout May and June, Smith & Williamson, in collaboration with The Lawyer, launched its 26th annual law firm survey.
The opinions of 198 UK legal professionals were sought and the analysis was supplemented by interviews with managing partners at the country’s top 200 law firms. The findings form part of a write-up that is available for download from Smith & Williamson.
The survey traditionally includes continuity questions on topics such as confidence, competitive pressure, finances and strategic direction, as well questions based on an annual ‘theme’ based on whatever the main issue for the year has been.
This year the choice was clear, as there has probably never been a more dominant issue in the post-war period. It has cancelled your holidays, it has made you wear a mask when you go to Tesco, it is, of course, the coronavirus pandemic.
The pandemic does inevitably impact those continuity topics, particularly confidence. However, other results from the survey are surprising. When asked how confident they felt for the coming year, 69 per cent of respondents felt reasonably confident about the business outlook for their firm, while 11 per cent felt very confident. Just 20 per cent felt not very or not at all confident, which is perhaps low considering the impending economic shocks.
Confidence appears to have been fuelled by two key factors. The first is the support that has been provided by the Government since April. These support measures, as the findings demonstrate, have been adopted in some form by a vast majority of surveyed law firms.
The second factor is experience; as many of those in senior positions in law firms today ‘came of age’ during the 2008 financial crisis and feel that if they weathered that storm, they can do it again.
Measures adopted to survive the pandemic
Our survey respondents were asked which measures they’ve undertaken in order to cope with the coronavirus and lockdown, the motivation behind coronavirus-related decisions, and what the business is likely to look like in the ‘new normal’.
The most common measure undertaken by firms throughout lockdown has been furloughing of staff – with 70 per cent of respondents indicating their firm had done so.
Partner drawings meanwhile had been reduced at just 60 per cent of respondent’s firms. Less than 10 per cent of firms had made staff redundant, however as the impact of lockdown hits client sectors such as real estate and hospitality and as the furlough support winds down this is surely set to rise.
The drivers behind the response to the pandemic
When asked to state their main drivers when responding to the coronavirus pandemic, the top two results from the respondents are perhaps unsurprising. The ability to ‘protect jobs’ was way out ahead at 68 per cent, while ensuring that ‘client service did not deteriorate’ ranked second at around 48 per cent.
Over 40 per cent of respondents indicated that their firm was driven by ‘ensuring firm survival’. Consider that for a second; an industry as wealthy as the UK legal sector having to rely on government measures for their own survival. This does not sound like an industry that should be reporting the high levels of confidence as indicated in the survey.
What if the government hadn’t offered schemes like furlough, tax deferrals or interruption loan schemes? Te poor management of finances is something this report has warned of consistently throughout its 26-year history. However, there is no sign of improvement here, with lock-up at the UK’s top 200 firms at a five year high in 2020.
With most government-support schemes set to expire in October, ensuring the survival of the firm will become the responsibility of the firm itself. A few months later the UK will leave the transition arrangements with the EU into a, as yet, undefined arrangement.
Those firms that have managed to improve lock-up over the last few years (and there are some) have survived the initial impact of the pandemic with much more certainty. The pandemic has surely been a wake-up call for those who haven’t.
The end of the office?
One of the biggest cultural shifts likely to result from the coronavirus lockdown is changing expectations around working remotely and how organisations manage their office space.
Survey respondents were asked to indicate how often they worked from home prior to the pandemic; 49 per cent indicated that they did so infrequently (less than four times a month), 25 per cent did so sometimes (one to two days a week), 5 per cent frequently (3 days a week or more), and 21 per cent never.
Things do not vary significantly for firms based in London. Prior to lockdown, 7 per cent of London-based respondents worked from home three or more days a week. Post-Covid, a quarter expect to do so. 22 per cent were working from home one or two days a week pre-Covid, and 58 per cent expect to do so once ‘regular’ working conditions resume.
The interesting variable for the London respondents is the fact that none of them expect to never work from home in the new normal, down from 23 per cent who did so prior to the lockdown.
To read the full findings of the research, please click here.
