A report published today (Monday 26th November) by accountancy and professional services firm Smith & Williamson has found that the Irish legal sector is braced for the pain and uncertainty of a Brexit.
According to the results of Smith & Williamson’s 7th Annual Survey of Irish Law Firms 2018/19, an alarming 79% of all firms have not prepared a Brexit plan or strategy, strongly indicating that the Irish legal industry is not prepared for the impact Brexit will have on its business.
The new survey also found that 55% of firms are more concerned now about the potentially severe and lasting impact Brexit will have on their business than twelve months ago. This represents a significant increase on the previous year. Of the Top 20 largest law firms, more than two thirds identified competition from UK firms opening offices in Dublin after Brexit as a threat to their business while 60% believe it will impact both their revenue and profitability. This alarming statistic highlights the levels of concern in the Irish legal sector about the impact of Brexit.
Confusion over the possible impact of Brexit is underlined by nearly a quarter of respondent firms who remain unsure of the ways in which it threatens their business, with 33% also unable to identify any possible opportunities.
Commenting on the findings of the survey, Smith & Williamson Professional Services Managing Director, Paul Wyse, said: “Our seventh annual survey is, as always, a vital benchmarking tool for the sector and this year’s edition is no exception.”
“The findings highlight an increase in the sector’s concerns about Brexit with many firms admitting they remain uncertain about what form it will eventually take.”
“Our hope is that Irish legal firms will take the time to revisit their Brexit plans. We have spoken to many of the firms since our survey was carried out in September and October and, in spite of last week’s announcement of the withdrawal agreement, we understand there is now a great deal of uncertainty about whether this deal will ever be implemented. In turn, this has raised concerns once more about the prospect of a hard Brexit and what that might mean for the Irish legal sector.’’
Other findings in the survey indicate a continuing level of growth in the Irish legal sector, with 69% of firms reporting an increase in revenue and 60% showing an increase in profits. However, these increases are tempered by increased pressure on operating margins, especially as a result of pay rises due to difficulties in hiring and retaining key talent, which remains a significant issue for most firms. In addition, 79% of respondent firms reported escalation in pay levels, with 41% of firms seeing increases in excess of 6% this year.
Paul Wyse added: “Around 80% of the Top 20 law firms in Ireland highlighted talent recruitment and retention as a major issue facing their business. Much of this war for talent is as a result of UK legal firms establishing greenfield operations in Dublin as a result of a possible Brexit.’’
This year, Smith & Williamson’s Dublin office completed a merger with LHM Casey McGrath, which saw it become one of the top ten largest accountancy firms in Ireland. The firm now has 135 staff in its two Dublin offices and turnover in excess of €15 million per year.
Smith & Williamson’s Annual Survey of Irish Law Firms, now in its seventh year, is an annual study of the Irish legal sector and has been running since 2011. The survey was conducted by Amárach Research during autumn 2018 and canvassed the opinions of 123 large, mid-tier and small law firms across Ireland.