Small firms “hit hardest” by lockdown

Coronavirus: Impact on firms not too bad overall

Small law firms have been hit hardest by the lockdown, a survey of the impact of Covid-19 on the legal profession has found.

Conveyancing was the worst hit practice area in terms of workload, but staff carrying out wills and probate work, which fared best, were the most likely to be furloughed.

Firms with up to 10 employees were the most likely to say that the lockdown had resulted in a reduction of more than 25% in their level of business, according to a survey of 100 firms carried out last month by DPS Software.

The only category to report ‘no change’ in business was the second largest, firms with 200-300 employees. The others all reported a reduction in business of up to 25%.

However, researchers said there had only been “a slight reduction in business across the board”, showing that law firms had “largely seen only a minor impact on business levels”.

Wills and probate was the practice area least affected by the lockdown, followed by personal injury, immigration, family and employment.

The three areas most affected were conveyancing, company and commercial, and crime.

Most firms (60%) said they had put staff on furlough, and on average the numbers put on furlough amounted to almost half their employees.

The highest proportion of furloughed staff worked in wills and probate (74%), followed by conveyancing, crime and family.

The smallest firms, despite saying their workload had been hit hardest by the lockdown, were the least likely by far to put staff on furlough, with little more than a third (37%) using the scheme.

The most likely to do this were firms with 11-25 employees (78%) and 26-50 employees (76%).

A small minority of law firms, only 15%, made redundancies, and the figure did not vary whether or not firms had used the furlough scheme.

Researchers said that firms looking to recruit could “benefit from a more competitive jobs market”, with redundant employees looking for work, so firms should “work quickly to get the best talent”.

Company and commercial was the most popular choice for firms wanting to move into new practice areas. Researchers linked this to an anticipated rise in insolvency work.

The survey showed that, despite the lockdown, some smaller firms did not have any staff working from home.

Researchers concluded: “There’s no denying that the UK legal sector has taken a big hit from Covid-19.

“Small firms and the conveyancing sector, in particular, have been affected. Business levels have reduced significantly for both and amongst other practice areas. Staff have also been out of work, with many furloughed and others unfortunately made redundant.

“This paints a bleak picture of post-lockdown life for law firms, but there is much reason for hope.

“Many practice areas and firms of a certain size have felt relatively minor effects from the lockdown. As such, these firms will find the road to recovery a lot smoother as the lockdown is eased.”

Law firms that responded to the survey were upbeat about the future. Four in ten said they were optimistic about the future of legal services, 46% were ‘neutral’, and only 14% pessimistic.

Data from another legal IT company, Quill, showed that new instructions were running at about 70% of the pre-lockdown level, but there were definite signs of a revival, with conveyancing roaring back.

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