COVID-19 causes law firms to jump three years into the future
By Matt Hall | 24th August 2020
The coronavirus lockdown has accelerated many law firms three years into the future, according to a Cheltenham based audit, tax, advisory and risk firm Crowe.
Ross Prince, partner in the Professional Practices Group, said: "For years, many law firms, particularly the small to medium sized ones, have been thinking about step changes to their business models, including technology solutions as well as agile and remote working for employees.
"However, the timescales for these change projects have been compressed by the pandemic, with firms surprised at how much they have been able to achieve when circumstances forced them to 'get on with it'.
"Indeed, it feels like we have shot three years into the future. It's a great time for firms to capitalise on this inertia and make those next-generation changes to their business model that will give them a competitive edge."
Crowe runs regular meetings, now by video conference, for the Compliance Officers for Finance and Administration (COFAs), working for law firms, through its Midlands office in Oldbury and South West office in Cheltenham.
The firm also produces an annual Law Firm Benchmarking Report which provides a snapshot of the legal industry's performance, helping and informing future planning for law firms.
In 2019, 78 per cent of regional law firms reported growth, compared with 70 per cent in 2018, but Ross Prince believes the picture will be very different this year.
"Many were recording good figures with activity in the corporate and commercial sector significantly increased, but then came COVID-19.
"Those that were either already set up for, or moved swiftly to remote working will have sustained earnings in certain market sectors, notably employment advice and family law.
" It has been surprising in the Midlands, to see how many lockdown commercial property deals began and completed remotely.
"In residential conveyancing, there is anecdotal evidence of a surge in completions, which may in part, be pent-up demand and completions delayed by lockdown, but in many sectors the picture has at best been static.
"Several firms are experiencing significant drops in revenue which will test their resilience. I believe we can expect to see further rationalisation in the small to medium law firm sector, as the penny, literally, drops."
Prince added, that creating a medium sized firm out of a number of struggling smaller firms was not necessarily a valid route forward.
"Inevitably, in some cases, there will be cherry-picking of good teams in specialist areas rather than wholesale mergers or acquisitions.
"A clear business plan and understanding of how to implement it is vital if law firms are to navigate through what are, undoubtedly, going to be stormy times for the industry. However, COVID-19 has given teams a shot of confidence in their ability to make change and that is an opportunity not to be missed."
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