The pandemic presented law firms with their greatest challenge in a generation. For the most part, our analysis, compiled with Law.Com International, of the latest set of filed accounts for the top 50 UK law firms for 2019-20 suggests that despite the pandemic arriving only just prior to their year ends, they were impacted.
In the first few precarious months, law firms acted quickly to preserve cash, improving their debtor days, negotiating with banks and cutting partner distributions.
However, with revenues of £19.5bn should the sector have been better prepared and less reliant upon government support to avert an even deeper challenge. There are undoubtedly lessons the sector can draw from the crisis.
In common with many sectors, law firms were caught by surprise when the pandemic hit the UK in March 2020. Many went into the pandemic with slowing revenue growth and high cost bases, a tough starting point to face down a once-in-a-generation crisis.
In common with many other sectors, law firms faced a potential cash crunch from the Covid crisis. The early part of the pandemic saw law firms take drastic action to shore up their cash positions in the face of sliding revenues.
The majority of UK law firms have a March or April year end, so we can now access information on their performance and financial strength for the year to 30 March/April 2020 of the top 50 firms, just as the pandemic started significantly to impact everyone’s lives.
