Avoiding juristic park – a barometer of the profession
Harper Macleod, London
As we all know, perhaps too well, many law firms switched to ‘survival mode’ when governments started imposing lockdowns. When the worst of the pandemic is behind us, the economy will have to restart and will be on government life-support. Businesses will be extremely strapped for cash, which will in turn affect pricing of legal services. With kind thanks to Marco Rizzi, as the Chair of the IBA Closely Held and Growing Business Enterprise Committee, the Law Firm Management Committee was invited to co-moderate the webinar ‘Avoiding juristic park: how to kick-start your law firm in the post-Covid-19 world’, with guest speaker Jaap Bosman. As part of the webinar, we wanted to explore whether law firms of all sizes would be able to go back to ‘business as usual’ after an initial recovery phase, or whether the post-Covid-19 crisis world would witness profound and lasting changes in the work and internal structures of law firms.
To help shape and augment the webinar we wanted to utilise ‘hot off the press’ data and, therefore a survey was conducted to take the pulse of the profession. While the world is pivoting at a pace we have never witnessed before – and if the survey was taken today the responses may well be very different – nonetheless it’s interesting to reflect on what the temperature of the profession was in mid-May and whether there were feelings of optimism or pessimism as regards the future.
The survey looked at practical matters such as working from home and return to the office, together with work levels, cashflow and aspirations for the future.
The statistics regarding working from home felt right and, you could say, wereas expected, with 64.5per cent of respondents advising that all lawyers in their firms were working from home. Of the rest, 26.26per cent reported that some lawyers were still working in the office and nine per cent advised that most or all lawyers were working in the office. As lockdown moves at different paces around the world and those in Asia-Pacific and Europe were emerging from lockdown towards mid-May, you can see the trend from these results towards a more blended style of working.
For many, the return to the office is seen as a key milestone to reach and something of a beacon to chase after. We asked firms to let us know how likely they felt it would be that they would be back in the office at some point during Q3. Thirty-three per cent of respondents felt that all of their lawyers will be back in the office by then, whereas 62 per cent felt that they would only be partly working from the office in Q3 and four per cent not expecting to be back in the office at all by in Q3.
Perhaps of most interest is what the return to the office will look like. Will we permanently change the way that we work? The results tell us that, undoubtedly, there will be change to a more blended way of working with 76per cent introducing home and office working. For those that spend a vast amount of time travelling for meetings and events, this might be welcome news: 84per cent of respondents expect that there will be less travel and more use of video communications. The traditional leverage models within firms are set to change too with 28per cent noting that they will structurally reduce the number of assistants/secretaries and, for space planning reasons, 29per cent think they will need less office space because, with the blended working model, part of the office will be working from home.
Turning to the billable hour, we asked how the billable hours were holding up for March and April. It’s fair to say that the results were encouragingly positive with 30 per cent of respondents reporting that they were still on target or not below 95 per cent of target, an excellent result. Thirty-seven per cent reported that they were somewhat below target (around 90 per cent of target) and 33 per cent reported that they were below 80 per cent of target.
Clearly, the collection of fees is paramount to the health of the balance sheet and again the results of the survey made pleasing reading: 43 per cent reported that they expect the collected rates to remain at current levels and 53 per cent expecting the collected rates to be up to ten per cent lower. A very small proportion of respondents (four per cent) expected their rates to increase.
When looking at individual practice areas and the hopes for the next 12 months, there was a very mixed outlook. As one might expect, the practice areas where respondents viewed most opportunity were employment, insolvency and restructuring and dispute resolution, with growth of up to 20 per cent. Respondents felt less positive about M&A, capital markets and construction, with a decline of 20 per cent on usual activities.
You can find the full survey results together with a recording of the webinar on the IBA website here.
Without a doubt, if we were to take the pulse of the profession today there would be a pivot in the responses provided, particularly from the economies who have been hardest hit and for whom there will be no V-shaped recovery. We must, however, take comfort in the knowledge that out of intense complexities, intense simplicities emerge, and the experiences and resilience that we will all have gained throughout these unprecedented times will stand us in very good stead for the future.