One of the biggest remote practices in the UK today reported that profits flatlined last year despite income rising, as the battle for talent continues to rage.
Keystone Law Group announced that revenue for the year ended 31 January 2023 increased 8.1% to £75.3m, while profit before tax remained flat at £8.4m.
The company proposed a final ordinary dividend of 10.9p compared to 11.2p last year. Keystone shares dipped by almost 4% this morning to 450p.
Keystone, which operates a fee-sharing model where lawyers work remotely, said it had made a positive start to the current financial year with client demand remaining strong. But conditions in the recruitment market had started to shift, as the demand for new lawyers had reduced and potential candidates – who during the pandemic were more likely to seek a change in their working lives – were ‘cautious of change’.
The number of fee-earners increased from 481 to 507, a more modest rate of growth than previous years.
James Knight, chief executive of the Keystone Group, said: ‘Our unique business model continues to appeal to the high-calibre candidates we seek to recruit and, in what has been a highly competitive recruitment market, we have continued to grow our lawyer base.
‘The new financial year has started well. We have started to see demand for recruitment of lawyers across the industry cooling slightly from exceptional levels, and I am confident that as the year progresses, we will see traditional push factors generating increased candidate flow which will further support our growth.’
Keystone reported that most law firms across the sector have been actively recruiting in order to fulfil client demand, which has led to ‘significant’ wage inflation as they compete for talent by offering substantial pay packages. This in turn has created a candidate-led market, where the balance of power has shifted towards employed lawyers who are presented with a variety of options forcing law firms to be ‘more aggressive’ when it comes to retaining lawyers.
The company added: ‘The significant demand has meant that lawyers have had less difficulty in hitting targets, wage inflation has meant that they are better rewarded for the work they do, and, with the balance of power in their favour rather than the employers, they have been able to avoid politics and resist pressures to return to offices which would otherwise, probably, have been brought to bear. Whilst it is very difficult to predict timing, we do not believe that these factors will continue indefinitely.’
- The introduction to the story in today’s Daily News Update referred to the firm as ‘Knights’ rather than Keystone Law. We apologise for the error.
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