The legal market saw another strong year, with buoyant demand for legal services driving strong revenue and profit growth across the sector.
However, with little improvement in lock-up or cash levels, the sector looked vulnerable as it headed into the COVID-19 crisis.
We delve into the issues affecting the legal industry: why are efficiency gains proving stubbornly hard to achieve? How can the sector address the problem of lock-up and improve its cash position? Is it too late?
We provide in-depth analysis, in association with Legal Week, of the top 50 law firm LLP accounts for the year 2018-2019. Using recently filed data from Companies House, we look at everything from debt levels to profit margins to partner capital to build robust insight into the health of the legal sector.
Giles Murphy on the latest LLP accounts
In conversation with Paul Hodkinson, editor of Legal Week, Head of Professional Practices Giles Murphy discusses the key issues affecting the UK’s top 50 law firms and what law firms could do to improve their resilience as they manage today’s difficult environment.
Insights and analysis
Lock-up: debtor days fall, but problems remain
For many years, the legal profession has been subject to the apparently small but persistent problem of managing lock-up. Firms consistently have large outstanding debtor days and poor cash flow. In normal times, this leaves firms with limited cash resources to invest in the business. Today, as law firms struggle with the impact of COVID-19, it may pose a more serious threat.
Efficiency: productivity gains elusive
While revenues and profits have continued to increase as demand for legal services expands, law firms have found it difficult to improve productivity at the same time. This is in spite of higher spending on technology and people, which should bring about efficiency gains.