Revenue generated by the UK’s legal sector is down 12% compared to last year, as the impact of lockdown on firms begins to emerge.
According to figures released by the Office for National Statistics, the legal industry turned over £2.35bn in May 2020, 12% less than in May last year, marking the lowest-earning month in four years.
While April is typically one of the most lucrative months for law firms, May is often the weakest. Industry revenues fell almost 30% between April 2020 and May 2020, with April relatively unscathed by the impact of lockdown.
The legal industry had been on course for a strong year before the crisis with March 2020 being the third highest month ever for the UK legal industry and April 2020 showing only a 5% decline on March 2020.
Louis Young, managing director at litigation funder Augusta said: ‘May’s revenue data demonstrates the significant negative impact the pandemic has had on the UK’s legal industry. But as such data reflects work that would have commenced before the crisis, which is in line with how law firms operate, the true final impact is likely to be greater.
‘As the wider economy begins to show signs of recovery, many law firms continue to look for options to control costs and strengthen their balance sheets with the expectation that they are not yet out of the woods.’
Financial results season has got off to a slow start this year, with many firms yet to publish their annual figures. It is unclear how big an impact coronavirus will have on this year’s City results, which usually cover the financial year ending 30 April. Uncertainty over work in progress values and possible bad debts could affect final figures however, and accounts may have to include the post-balance sheet impact of Covid-19.
International firm CMS announced today that global revenue is up 4.5% at €1.4bn. UK LLP turnover stood at £566m, a growth of 3.7% over last year. The firm did not provide profit figures.
*The Law Society is keeping the coronavirus situation under review and monitoring the advice it receives from the Foreign & Commonwealth Office and Public Health England.