Bellwether 2021: The good, the bad and the new

Financial Performance — Survive or thrive?

Most firms have seen revenues and profits hold strong through the pandemic. As such, lawyers are confident about the future of their firms and most expect to grow without the need for merging or acquiring firms.

Around three quarters of responding firms said their revenues and profits were level with or higher than their projections for 2020‐21. Despite national restrictions and market uncertainty, 31% of firms were able to outperform their revenue expectations.

Operational Challenges

Professional indemnity insurance has fast become the top threat for law firms thanks to rising premiums. At the same time, firms must find new ways of bringing in business and keeping staff happy to address talent retention risks.

Firms’ operational costs are still dominated by salaries and were bumped up by buying new tech for remote working. However, professional indemnity insurance (PII) is now firmly on their radar. Beyond the increasing costs, lawyers also found the process behind PII time consuming and overly complicated.

Cost of Free Information

Firms’ PII costs may be higher if lawyers use the open web for information, as lawyers are at a greater risk of using inaccurate or misleading information. Despite this, Google was the most-used source for research and guidance information.

Most lawyers were unsurprised that free resources were more popular than subscription-based online libraries. However, all firms stressed the necessity of these tools when gathering accurate and relevant information. 46% of respondents said it is risky to use the open web to search for real answers and only 5% completely trust the accuracy of free legal information found on the internet.

Digital Competitiveness

Another threat listed by firms was generating new business. To respond to this, firms are taking on a digital‐first strategy to draw in clients. Responding lawyers said they will be investing in website development, social media, and marketing. 65% of firms have or will implement website development and 59% have or plan to develop a social media strategy to attract customers.

With staff already stretched thin, some firms are looking to bring in outside talent to help them online. 26% of firms plan to hire, or have already hired, more staff to focus on marketing or business development.

Working From Where?

Lawyers expect to return to offices, but many are split on how many days they’ll be there. The most popular option was returning to the office full time, but a majority expect the future of work to be (at least in part) at home. This is in line with wider research from Aviva that showed 7 in 10 UK workers want hybrid working to stay.

Balancing these expectations is no easy feat, especially in a traditional industry such as law. 63% of respondents listed keeping working practices and systems up to date as a significant threat to their business.

Business leaders are aware of the benefits of having staff meet in person, especially for new joiners or younger workers. This perhaps explains why the vast majority of firms (71%) won’t be changing their office size, with only a handful going fully virtual.