Law firms “acted quickly, made sound business decisions, and put cash first” in their response to Covid-19 and are now “coming out fighting”, according to new research.
This positive approach, combined with the government support schemes, has allowed firms to weather the storm and client activity is now returning.
Law firm consultant Simon McCrum – former managing partner of Darbys – has been tracking the impact of the coronavirus through a series of qualitative surveys, initially weekly and then at month-ends. Twenty firms, from large to small, took part in the survey for June. You can read our stories on the previous surveys here.
Most reported that June had been at worst an ‘OK’ month for billing, and in several cases far better, with almost all practice areas busy. Crime, with few arrests, and commercial, because deals were on ice, were struggling the most.
Conveyancing, said one firm, “has gone beserk – it’s our best month ever in terms of new work coming in”, while another firm said it was “struggling to cope with the tidal wave of new instructions”.
Chargeable hours were generally back at or above pre-lockdown levels, and even those who had not reached that were not far behind, with profit and cash were holding up well due to the measures taken in previous months.
Those firms that took out coronavirus business loans from the government have yet to need to dip into them, although practices were aware that deferred VAT would need paying down the line.
The firms were mostly positive about the coming months, while recognising the wider economic uncertainty and the need to decide what to do about staff continuing to work from home or return to offices.
A few reported starting redundancy processes – mainly among support staff – while there was also a warning about a bottleneck in the courts in the autumn as cases that were adjourned during lockdown are meant to be heard.
Mr McCrum said the responses showed overall that law firms were entering the post-lockdown world “looking leaner and meaner, focusing on profit and cash more than before, with tech at the forefront of things along with flexible working and lower overheads”.
The solicitor praised firms for “working wonders to absorb the shock that came out of nowhere”.
While firms managed in March and April with their existing pipelines, his most pessimistic report came at the end of May when new file openings had slowed considerably in many areas of law.
But Mr McCrum said June was “not at all what I feared”. He went on: “Rather, it is a very upbeat report that shows that normal client activity is indeed on its way back and that the participating law firms were good at making decisions and acting on them. They also look like the decisions they made were the right ones.”
He predicted that, on current trends, the profession “has done enough to not only ‘hang on in there’ but also come out fighting fit and to move into the new world as stronger, leaner businesses”.