Smaller firms reducing office space as recovery gathers pace


On the up: Half of firms billed more fees

A quarter of small and mid-sized law firms have either downsized their office space this year or expect to shortly, according to Law Society research.

It also found growing confidence in the market, with 48% of firms reporting more new work in the first quarter of 2021 than in the previous quarter, and 52% billing more fees.

However, around a fifth of firms recorded falls in relation to new work coming in (21%), chargeable hours recorded (19%) and fees billed (19%).

The poll of 319 firms – the majority of which had a turnover of less than £2m – was the first in a new quarterly ‘pulse’ survey conducted by the society’s law management section.

The pandemic-induced move to home working, which has seen many large law firms rethink their office needs, appears to be having the same effect on their smaller brethren, with 15% of firms with physical offices saying they have reduced their office space in the last quarter and a further 10% saying they planned to do in the current one.

This was even though fee-earner headcount increased for 23% of firms, with 15% growing their support staff numbers. Only 4% of firms reported redundancies in the first quarter of 2021.

Two-fifths of firms had a better cash position compared to the previous quarter, while it was worse for one-fifth.

Just under half of the 148 firms that took out a Coronavirus Business Interruption Loan Scheme loan have actually used the money and the survey found that business confidence was strong, with 52% of firms predicting an improvement in fees and 46% an improvement in profitability over the next year.

The most commonly cited challenges for the next year were the wider economic conditions (46%) and cashflow (39%), followed by succession planning (36%) and changing employee working arrangements (34%).




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