Pessimism in the legal services sector at the height of the first lockdown appears to have been overdone, with most firms saying they have remained in profit since the pandemic hit.
A survey by accountancy network MHA, carried out in December, found that 91% of UK firms have made a profit since March 2020. Almost half reported either ‘no’ or a ‘minor’ impact on their fee income as a result of Covid-19.
The figures were in contrast to a similar poll from May last year, when just 14% of firms said there had been little impact on revenue. By December, only 9% of law firms said the pandemic was still having a major impact on fees, down from 38% in May.
Of the firms reporting in December that they were in profit for 2020, almost one-fifth reported profit growth of more than 20% since the start of the first lockdown.
Karen Hain, head of professional practices at MHA, said that while many firms generated less income last year, many had maintained profits by reducing expenditure at the same time. Most firms had also used the coronavirus job retention scheme and the furlough payments significantly reduced outgoings. ‘The wildly pessimistic expectations many of us had at the beginning of the first lockdown have thankfully not come to pass and profits and legal fees have now stabilised and even increased for many firms,’ she said.
More than half of firms surveyed had made redundancies between March and December last year, mostly affecting support staff and areas of the business not making profit, but 73% had also recruited new members during the period.
Working practices across the sector have also changed since the first lockdown, with 77% of firms now expecting their employees to spend either three days or fewer in the office. Remote working did not negatively impact on working hours, with 63% of businesses seeing an increase in productivity.
Hain said: ‘Looking ahead, 2021 offers firms an opportunity to continue to reorganise, streamline and go forward as a leaner and fitter business, placing a greater emphasis on employee welfare, particularly on how and where they work.’
The latest survey was of 87 firms of all sizes. The May poll featured 100 firms.