More than half of Irish law firms have seen their revenues rise in the past year and many larger firms have given staff a pay increase as their fortunes have improved.
Just 6 per cent of firms polled for a new survey identified the Government’s overhaul of the legal sector, legislation for which is expected to be published before Christmas, as the main issue facing the sector. But when asked what the biggest change to the profession will be if the Legal Services Regulation Bill is implemented as currently drafted, 32 per cent of firms said it would put pressure on fees and 18 per cent replied that it would result in increased regulation.
Overall, the second annual survey of the Irish legal sector by the accountancy firm Smith & Williamson finds an increasingly optimistic outlook among solicitors’ firms, but the results suggest a clear divide between the big companies and smaller practices.
Half of law firms anticipate improved economic conditions next year, compared to just one in four last year, according to the research. The areas of business where most growth is expected are in property/convey-
ancing and litigation.
Revenues increased at 53 per cent of firms in the past 12 months, while profits rose at 45 per cent. But the figures are especially strong among the 20 biggest firms, 81 per cent of which saw revenues rise and 63 per cent of which recorded a jump in profits.
A majority (56 per cent) of all firms made no change to levels of pay over this period, but 56 per cent of the “top 20” groups gave staff a pay increase of 3-5 per cent.
Asked to identify the key issues facing the legal sector over the next year, many firms pointed to problems maintaining profitability given pressure on fees and increased competition for tendering work. Some 61 per cent of respondents indicated the downward pressure on fees had a significant impact on their firm in the past 12 months, followed by cash-flow pressures (47 per cent), falling business levels (30 per cent) and availability of finance (27 per cent). Large firms said these issues had a less significant impact on them than the wider sector.
Two in three firms reduced their operating costs in 2013. Hourly billing rates have fallen at 36 per cent of companies, though more than half (56 per cent) have left their rates unchanged.
Smith & Williamson has been conducting research on attitudes and market sentiment in UK law firms for 19 years. This, its second Irish survey, is based on telephone interviews with senior staff at 101 firms. It polled 16 of the “top 20 firms”, 16 mid-tier groups and 69 small firms.