Competitive pressures - a temporary lull?
This time last year, law firms faced an uncertain future. Forced to take drastic action to shore up cash flow, confidence took a knock and many legal firm leaders were unsure about the sector that would emerge from the crisis. Our law firm survey for 2021 shows that many firms have weathered the storm better than expected and are looking to the future with confidence.
The survey showed 97% of respondents are ‘reasonably or very’ confident about the business outlook for their firm. However, it also showed that many recognise they cannot simply return to business as usual. Just 2.6% of legal executives believe that there has been no acceleration of change within their practice as a result of the pandemic. More than two thirds of respondents believe that change has been accelerated by between two and four years.
Equally, from high levels of lock up, to lack of technology innovation, the pandemic has pulled apart some existing fissures in the business models of law firms. Many law firms are now looking at this as an opportunity to reform, ensuring they are better-prepared for the challenges that lie ahead.
Flexibility will be vitally important as lock down restrictions ease, both on real estate footprints and how the firm engages with its employees. There is a real opportunity to re-engineer the culture of law firms to offer better working conditions. Equally, firms will need to be clear on how they differentiate themselves from their peers as competition re-emerges.
Turning strategy into action is often harder than it sounds. Ensuring that successful change is properly incentivised can be a powerful catalyst. Successful change requires certain behaviours to become embedded. Law firms that do this well will be in the best-possible position to build for the future.
We have analysed the latest set of filed accounts for the top 50 UK law firms for the year 2019-20, as the legal profession entered its toughest challenge in a generation. Together with Law.com International, we look at the financial strength of the sector through a turbulent time.