Our latest benchmarking survey of the legal sector, in conjunction with The Institute of Legal Finance and Management (ILFM), looks at firms’ financial performance, their strategies for success and the key challenges they are facing. This research took place at the end of 2021.
We present a highlight of our findings below, but you can read and download our full report at the bottom of this page.
What are the greatest challenges facing law firms?
It is very clear from our research that the two key challenges firms faced over the past 12 months are sourcing and retaining the best people. As 2021 saw a return to more ‘normal’ living conditions, the recruitment market picked up and the movement of staff increased. When predicting challenges for the next two to three years, again finding good quality candidates was high on our respondents’ list, whilst managing staff morale was also noted as being a key concern.
Will working from home policies change in the next 12 months?
With patterns of home working changing so frequently over the last two years, the firms we surveyed had a split in terms of how they see their home working policies developing over the next 12 months. 20% said that staff will work from home the majority of the week (3-4 days), while 37% of firms said staff will work from home two days a week, but 35% said that staff will only work from home on an exceptional basis. Interestingly, it also seems that current patterns are not permanent, with only 25% of firms stating that their current policy will remain in place beyond the next 12 months.
The challenges of recruitment and staff expectations
Finding suitable staff and retaining them has been noted as a key issue for many of the firms we surveyed. Wellbeing and working policies now appear much more important for staff and figure more prominently in decisions about whether to stay or change role, more so than remuneration. The majority of respondents predict that staff members will expect up to 5% inflationary rises to their salaries.
Linked to this, 70% of firms report an increase in fee earning staff, but the same cannot be said for support staff, with 40% now having fewer non-fee earning staff than prior to the pandemic.
How are firms monitoring success?
Time recording is still a key measure of how closely staff are working to capacity and utilisation. Only 4% of firms we spoke to said they have no time recording policy, so it is still the main tool when monitoring day-to-day work. Client satisfaction and cash availability were the two key performance indicators that firms use as important benchmarks of overall business success.
Future growth strategies and how firms are going about this
There seems to be real optimism for future potential growth, with 55% of firms reporting that they were likely to pursue a growth strategy in the short to medium-term, the majority of this in the form of organic growth. In correlation to our other findings, the key barrier to this growth is the availability of good staff and successful recruitment, while it is worth noting that there is still some uncertainty in the sector over Covid-19, and how this may still impact the future.
If you have any question on the findings of our report, or would like to speak to us on how we can help your firm, please contact your usual Saffery partner. Alternatively, speak to Jamie Lane, head of our Professional Practices Group.