By Rebecca Shields
Your commercial awareness dose.
The UK law sector, like most industries, has been affected by Covid-19. The Law Society’s law management section conducted a survey which suggested UK law firms were predicting a 10-20% decrease in revenue for the 2020/2021 fiscal year. Consequentially, the Law Society has started a campaign to support their sector, entering a submission to HMRC that will place focus on ‘Return, Restart and Recovery’ in hopes the sector will be included in the nation’s economic recovery.
One of the biggest concerns is the extensive lockup cycles of legal services, which has created cashflow problems for many law firms. The Law Society’s survey found that the average number of lockup days was 155; most law firms predicted an increase of this by 15-25 days. It is important to note that Armstrong Watson’s database suggests the current average for lockup days to be approximately 130. A survey conducted by The Lawyer for Smith & Williamson concluded that 43% of the participating law firms had noticed an increase in competitive pressure over the last year. In combination with the decrease in geographical expansion experienced by two-thirds of firms, it would seem to an outside eye that the UK law industry was somewhat defeated by the pandemic.
According to the Smith and Williamson survey, however, this could not be further from the truth. 69% of survey respondents said they felt ‘confident’ about the future of the industry, a further 11% reporting themselves ‘very confident’. In fact, only one in five UK firms said they were ‘not confident’ about the future of their sector. In comparison, during the last recession in 2008, 42% of UK law firms said they were ‘not confident about their business’ outlook’.
This positive attitude is in part due to the government’s furlough scheme. 70% of surveyed law firms have signed up for the Job Retention Scheme. The general sense of optimism is not due to the JRS alone: there is a sense of much-needed change in the industry. In 2015 the government released a report about changes needed in the UK court system. Preliminary adjustments have been slowly enacted over the last few years, however, Covid-19 has forced the changes to occur far more rapidly. These changes have included the courts becoming digitalised, an increase in virtual hearings, and electronic document filing systems. These modifications are both more time-efficient and cost-effective.
For most firms, the move to digitalise has been a smooth transition. Video conferencing was commonplace before the pandemic and has continued to rise throughout it. Most firms have reduced their work hours down to 4 days a week, the loss of commute time leading to higher amounts of productivity within the work hours. Law firms working remotely also means more geographical flexibility in who they chose to employ.
There are downsides to these digital changes. New joiners can no longer shadow their seniors’ day-to-day. Some people struggle to work from home; specifically, where regarding court cases. Hearings are often extremely sensitive and being on a video call can limit empathy. This has not stopped hearings from taking place online: both the High Court of Justice and Court of Appeal have been holding video call hearings. In March, the Supreme court even held its first virtual case.
Digital hearings, whilst impressive, are less than ideal. There are technical problems with internet connectivity issues and the alarming concern that individuals could unofficially and secretly record the hearings. There are also concerns about virtual cross-examinations and that documenting heavy hearings, requiring quick access to large amounts of information, could have access issues.
Despite these concerns, the general feeling in the UK law industry is positive. The short-term solutions are working for most, however, for a long-term return to form and economic growth to be possible, further changes will need to be made and the government must make further investments into the industry.
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