Law firms look ahead to 2021
December 21, 2020
The coronavirus pandemic was a shock to most sectors, and law firms were no different. Our Law Firms’ Survey 2020 revealed the initial reaction of organisations to the pandemic. Now, five months on since receiving responses to our survey, how are firms dealing with the pandemic? And do the priorities we identified still hold up as we look to the year ahead?
What firms are saying now
Law firms have proven resilient to past economic pressures - and this time is no different. Response measures have included office closures (or limited access), delayed partner profit distributions and staff promotion rounds, tightening of discretionary spend, and in some cases limited hours or furloughing of staff.
As the pandemic continues, and with multiple vaccines on the horizon, a sense of cautious optimism has emerged. The impact of Brexit and new waves of the virus are still concerns, but firms are now confident they can deliver a quality experience to clients remotely. With firms accepting that, at least in the near future, hybrid working will continue to be the norm, a number of costs - such as travel - have been saved.
Staff will gradually come back to the office, but there is widespread recognition that there’s a desire amongst the workforce to work from home 2-3 days each week going forward. This also means that many firms are reviewing office space requirements, although few concrete decisions have been made as yet.
Priorities as we head into 2021
The priorities for firms that we identified in this year’s survey still hold true. With the impact of Brexit still uncertain, and COVID-19 set to continue into next year, it feels like a lot of firms are holding their breath. Plans and priorities are being identified, but big moves are awaiting the go ahead.
Here are some further short-term trends we’ve identified from speaking to various firms:
- Cash is still front of mind, with firms keeping a careful eye on cashflow management and forecasting. There’s also widespread recognition that improving working capital is a top priority: doing work in January and not being paid until April/May won’t be acceptable going forward. Marketing and business development spend is also likely to be reduced in the short term at least.
- Talent and people issues aren’t going away. Utilisation is still falling and staff aren’t consistently hitting their hourly targets - even when they’re realistically achievable. There’s also a sense that the ‘bulge’ of senior fee earners are doing work that could be done by junior staff and potentially blocking promotion pipelines.
- Firms are set to improve IT investment, but the question is where. Better HR and client management systems, cloud technology and cyber security investment are all on the cards for 2021, and a broad spread of Artificial Intelligence (‘AI’) tools continue to be of interest.
Building the firm of the future
What’s the end goal of these priorities? Setting the foundations for the firm of the future - one that’s agile and tech-enabled.
Two major events have affected the economy in the past five years, and they’re going to keep coming. Law firms that improve their agility will be best placed to respond to whatever challenges come next. Agility will be an important factor in retaining clients too - they’ll expect a digital, responsive experience that’s not curtailed by tradition.
This means firms need to start their IT investment now so they have a strong base to build on. We’ve already seen examples where smaller firms who have invested effectively are competing with larger firms in terms of revenue per lawyer. Cyber security investment and training will also be important - with ransomware attacks rising, the money and data firms hold make them an obvious target for threat actors.
And what of the lawyers themselves? Well we believe they’ll no longer be wedded to the 9-5. Or even one firm. Some may choose where to work on a demand basis, agreeing to shifts or shorter contracts via online portals for their particular skills. We’ve only heard of this on a smaller basis at the moment, but if the pressure for more freedom to work remotely continues, this could become much more widespread.
So to sum up, firms are currently waiting to see where the dust settles. But they’re very aware of what they need to do. It seems our theme for the 2020 Law Firms’ Survey - ‘Embracing Change to Succeed’! - still holds true as we prepare for 2021.