An annual survey of Irish law firms has revealed the extent of the impact of COVID-19 on the legal sector across the country, with nearly two-thirds of firms recording a decline in revenue over the last year.
According to the survey, carried out by Amárach for accountancy and professional services firm Smith & Williamson, 80% of firms say the outlook for their business has deteriorated over the past 12 months.
And 60% believe that maintaining profitability will be the main challenge for the sector over the next two to three years.
Firms take profits hit
One-third of firms surveyed recorded a decline in revenue of more than 20% over the last 12 months. In addition, more than half also saw their profits drop this year. The fall averaged 10% among the top 20 firms, but was more than 20% elsewhere.
Just 40% of the top 20 law firms increased staff numbers this year, while almost half of the remaining firms saw a reduction. More than one in three firms reduced fee-earner salaries, while 40% of the top 20 firms implemented salary reductions of 10% or more.
70% of firms chose to avail of the State’s Temporary Wage Subsidy Scheme, with one in three businesses using the Pandemic Unemployment Payment.
Pre-pandemic challenges remain
According to Smith & Williamson, many of the challenges facing law firms before the pandemic remain as growth rates slow, Brexit looms and competition for talent increases.
The research reveals that while most firms’ technology infrastructures coped well with the massive increase in staff working from home, top law firms continue to be a target for cyber-criminals and are experiencing a significant number of online security threats.
Two-thirds of the top 20 law firms experienced a cyber-attack in the past 12 months. While more than 60% of these incidents did not affect activity, 17% of firms reported a significant impact from a cyber-attack.
“Legal firms have had to adapt and will need to develop their strategies further for the new era in the areas of business development, team culture and work flexibility,” said Smith & Williamson’s managing director Paul Wyse (pictured).
The survey covered 87 law firms, including 15 of the top 20.