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The 10th anniversary edition of the Bellwether, titled ‘Transformation troubles’, suggests the post-lockdown boom has continued into 2022. 91% of the 345 small firms and solo practitioners interviewed expressed confidence in the future of their firm while one third have outperformed revenue expectations.
However, the post-pandemic growth boom may be plateauing and the pressures of running a law practice continue to evolve. Just over half of respondents said they were growing―a slip from two-thirds in 2021 and 57% in 2019. Recruiting and retaining good lawyers was cited as a top three challenge by half the respondents.
Four out of five respondents reported their professional indemnity insurance costs have increased. PII and salaries were the most significant operational costs in the past 12 months, while technology spend was also high at 34%.
These pressures may partly explain why the number of firms actively open to a merger or acquisition has climbed to 21% from 14% since 2021.
Some firms are tackling these challenges by investing in cloud-based tech to drive efficiencies and win more business―more than one third have already done so and almost one quarter plan to do so. On the other hand, 47% have no plans to invest in tech and nearly three-quarters still use Google for research and guidance (even though 63% of the survey acknowledged this was riskier and slower than using legal tech).
The divide in the industry continues when looking at business generation activities and ways of working. Only 46% are investing in their marketing spend and 55% are developing a social media strategy. While firms overall coped well with the switch to remote working during lockdown, almost 50% are now insisting their teams come into the office five days a week.
Rakhee Patel, senior marketing manager and the report’s author, said: ‘It is wonderful to see that the industry has found its feet again after such a challenging period.
‘But with continued challenges with recruitment and business generation, firms must be open to embracing new technologies so that they can survive, grow and thrive.’
Read the report here.
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