Challenges
This year’s annual survey of Irish law firms shows challenges bubbling below the surface, including Brexit and a faltering global economy.
None of these problems appear to be hurting just yet. Of the firms surveyed, around two-thirds saw revenues improve, with 87% of the top-20 firms reporting increased revenues, year on year. More than 40% of firms saw revenue grow by more than 10%.
Around half of firms now view Brexit as a threat to their firms’ revenues, rising to two-thirds of the more internationally-focused top-20 firms, stemming from anxiety over the kind of barriers Brexit might create in the marketplace,
The employment market is at near full capacity, with significant pressure on salaries, and pay increases regularly outstripping inflation.
Pay increases
Of the firms surveyed, 46% awarded pay increases in excess of 6% in the past 12 months, with the pressure felt more acutely among the top 20, where two-thirds of firms had pay increases at this level.
Margins are also being squeezed by an increasingly competitive environment on legal fees.
Wyse says that smart firms recognise that retaining existing staff is a priority, with growing female representation in the legal workplace as firms get better at offering flexible working.
Equity partners
Of the firms surveyed, 35% of all equity partners are now women, with 35% making partner in their firm.
Most of the firms surveyed now have more qualified female solicitors (55%) than male. Solicitor vacancy rates remain high, with a growth in staff numbers generally for one-in-two firms, climbing to two-in-three for the top-20 firms.
The traditional partnership structure of Irish law firms continues to be a significant barrier to consolidation through mergers and acquisitions (M&A) but 59% of firms (and 87% of the top 20) will move to a Limited Liability Partnership (LLP) structure in the near future.
However, only two-in-five regional firms are looking to move to an LLP structure, compared with two-in-three Dublin firms.
Potential merger
A significant 50% of firms have been approached for a potential merger or team acquisition, increasing to 80% for the top-20 firms, as British law firms look for a foothold in the Irish market.
A total of 15 British firms have already built a presence in the Irish market.
“Given these hazards, it is perhaps surprising that so few firms have prepared a Brexit plan or strategy, just 19%, though this rises to 67% for the top-20 firms,” says Wyse.
Cautious
Most firms are cautious, however, believing that business for the next 12 months will be stable (43%), or deteriorate (38%).
None of the top-20 firms believe the legal sector will see an improved outlook in 2020, a figure down from 40% in 2018.
Cyber-security
And cyber-security remains the highest priority for firms, with 72% indicating it as a priority investment area. Of the top-20 firms surveyed, 80% said they had been targeted by a cyber-attack in the past 12 months, with 18% of these reporting a “significant effect”.