Sector confidence has returned
Almost half of all respondent firms reported an improved outlook for their firms over the last twelve months (47%) or that things remained the same (43%). This was a marked improvement on last year. Turnover improved for 39% of firms (and 53% of Top 20 firms), while 37% of all firms (53% of Top 20 firms) reported an increase in their profits. However, most firms continue to report that Covid has impacted negatively on their turnover, which remains below pre-Covid levels.
Attracting and retaining talent
After a brief hiatus, attracting and retaining talented professionals has remerged as a significant challenge, particularly for Top 20 and Dublin-based firms. Firms have started to expand staff numbers once again over the last 12 months. Increasingly firms recognise that they need to offer agile working options to retain high quality staff, with just one in three regional and smaller Dublin firms saying they are unlikely facilitate remote working and most Top 20 firms planning to do so.
There has also been a recovery in pay after cuts last year. This year only a small number fo firms reported salary cuts, compared to 34% of firms (60% of Top 20) in 2020. Only 3% of firms overall report they have not reinstated wage cuts implemented in 2020. There has been a continued reduction of partner drawings in 42% of firms, but at a lower level than in 2020.
The pandemic continues to slow merger and acquisition activity in the Irish marketplace. Only one in five firms said they had initiated an approach to other firms with a view to a merger or acquisition in the last twelve months
Technology and cyber risk
It is clear that cyber security remains a top priority for many Irish law firms. Agile working has given rise to significant concern among employers, including law firms, as they have seen themselves as targets of increased activity. There have been reported incidences of attacks on transfers of monies from client accounts in law firms, causing financial loss to firms. Cyber risk is now seen as one of the biggest challenges facing firms over the next three years, as reported by 27 % of all firms (up from 7% in 2020).
The year ahead holds many challenges, some familiar and some a direct consequence of the pandemic. Nevertheless, forward-thinking firms are using this pivotal moment to rethink their business models, creating a leaner and more effective business for the future. This may become a necessity for law firms navigating a world of increasing uncertainty.