The value of the UK legal services market remains unchanged at £36.7bn, with a slump in revenue during the first lockdown followed by an increase in the last quarter of 2020, a report has found.
IRN Research predicted that the market would grow by 4.4% this year and 5.2% next, taking its value to £40.3bn.
It said the “structural impact of the pandemic” on the market appeared to have been weaker than expected.
“There have been some law firm closures in 2020 but not a significant amount and the extension of the furlough scheme until the end of September 2021 should help those struggling law firms to continue to weather the storm for a while.
“However, the competitive pressures, particularly for many high street law firms, plus financial concerns that might start to emerge after the furlough scheme ends, could see a more noticeable decrease in the law firm population from late 2021 onwards.”
Researchers said indemnity insurance renewals in October 2020 were “challenging” for many law firms and there were increases in premiums, but not as many law firms were refused cover as had been expected.
However, October this year could see “more problems for renewals”, given general financial pressures and weaknesses in practice areas such as personal injury and criminal law.
As part of the UK Legal Services Market Report 2021, last autumn IRN surveyed 222 legal practitioners providing services to the public.
A majority (55%) said they believed work volume would increase over the next 12 months, compared to 14% who said it would decrease and 31% stay the same.
Wills and probate lawyers had a busy year, with three-quarters (72%) saying their workload had increased in 2020 and 76% predicting an increase in the following 12 months. They were closely followed by family lawyers (65% and 68% respectively).
Conveyancers were more sceptical about the future. Two-thirds (64%) said there had been an increase over the previous 12 months, but fewer than half (44%) expected it to continue.
The one practice area where practitioners said workload had fallen off significantly was personal injury, where only a quarter (25%) experienced increases in workload, compared to 45% in 2019.
“Of all consumer law sectors, personal injury has suffered the most particularly in RTA and work-related injury cases as traffic volumes have fallen in the lockdown and more people are working from home.”
However, the survey found that 43% of personal injury lawyers expected their workload to increase this year.
Researchers said 40% of practitioners expected to see some reduction in office space or office closures in 2021 and 2022.
“Most firms have closed offices during the pandemic and there are signs that the move back to traditional offices will not be universal.
“Larger firms are likely to be able to cope better with these changes: they have the resources and technical expertise to switch to more homeworking, while smaller firms may find the technical issues more difficult to deal with.
“Many large consumer law firms had already started to invest heavily in IT systems to engage their clients virtually before the pandemic hit.”