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07 February 2008
Issue: 7307 / Categories: Legal News , Legal services , Procedure & practice , Profession
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Uncertain year ahead for law firms

Legal Services

Law firms face a rocky year thanks to economic uncertainty and a drop in business confidence, a survey of the UK’s top 100 firms shows. The research, carried out for accountancy firm, Smith & Williamson, shows firms face increased pressure on costs and flatter income levels. Giles Murphy, head of assurance and business services at Smith & Williamson, says that while the overall outlook for law firms remains healthy, the market seems to have peaked.

“Many practices are grappling with increasing costs as they have had to ramp up salaries to get the people they need while also dealing with rising property costs. At the same time, income levels are flattening. Although the percentage changes for costs and revenue may be quite small, the combination of the two can have dramatic implications for profits.” He says practices relying on merger and acquisition and transaction work look most vulnerable, while those focusing on litigation, private client, arbitration or insolvency will fare better.

The trend towards increased consolidation is apparently continuing, with a third of firms questioned scrambling to find other firms to hook up with. Murphy says: “The main motivating factors are to forge links with a firm with complementary areas of activity, to grow the client base, and as a means to develop specific sectors.” The need to recruit and retain quality staff was cited as an area of concern by over half of participants. “The problem is primarily a lack of talented people rather than the lack of numbers, and this pressure on recruitment tends to force up payroll overheads. For those firms who have been investing in new talent, the economic uncertainty could not have come at a worse time,” says Murphy.

MOVERS & SHAKERS

Signature Litigation—Catherine Naylor

Signature Litigation—Catherine Naylor

International fraud and asset recovery offering boosted by partner hire

Stevens & Bolton—Alexa Payet

Stevens & Bolton—Alexa Payet

Private wealth disputes team adds contentious probate specialist

Morgan Lewis—Paul Feldberg

Morgan Lewis—Paul Feldberg

Firm strengthens investigations and sanctions capabilities with London partner hire

NEWS
Cheshire West, which established an ‘acid test’ for deprivation of liberty safeguards, has been overturned by the Supreme Court
The Chancery Division and other segments of the High Court are to be replaced by a new Business and Property Division (BPD), in a major civil justice shakeup
Law firms that hold client money will need to file annual accountants’ reports and make a declaration, the Solicitors Regulation Authority (SRA) confirmed this week
Two district judges and a tribunal judge have been sanctioned for delays in delivering judgments and orders
Private equity (PE) investment into UK law firms halved to £250m last year, but deal volume rose, according to research by Acquira Professional Services’ Momentum private equity market tracker
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