There has been a sharp drop-off in optimism among law firms, including the State’s top practices, according to an annual survey of attitudes in the profession.
Brexit and domestic and international political uncertainty are identified as the key reasons for the fall to 55 per cent in the number of law firms that believe the business outlook improved over the past year. This compared with 74 per cent of those surveyed in last year’s Smith & Williamson annual survey.
For top firms, only 54 per cent believed the past year had seen an improvement in business outlook, whereas 100 per cent of top firm respondents had said so in the previous year’s survey.
The survey involved 107 respondents, 13 of which were from the State’s 20 top law firms. All of the top firms said Brexit would have a “significant impact” over the coming five years.
While 36 per cent of respondents felt Brexit would be good for the legal sector, the opposite view was held by 44 per cent.
Some 87 per cent of respondents expected more UK law firms to open offices in Dublin through a strategy of mergers or acquisitions rather than greenfield start-ups.
Despite the political uncertainties, most firms (64 per cent) reported improved revenues, with half of these experiencing a rise in excess of 10 per cent.
Profits improved in 57 per cent of firms, down from 64 per cent, with the equivalent figures for top law firms being 62 per cent, down from 74 per cent.
Salaries, staff numbers, and property costs were among the cost pressures cited by firms in the Dublin area.
The economy was identified by almost half of respondents as a key area of concern over the next 12 months.
Public sector unrest, the new-style domestic government, Brexit, and uncertainty around the impact of the US presidential elections, followed by elections in France and Germany in 2017, were all cited as fuelling concern.
When it came to staffing, there was a contrast between the situation in Dublin and outside the capital. While 92 per cent of the top firms had increased staff numbers in the past year, and 48 per cent of all respondents, of the respondents outside Dublin, only 28 per cent had increased staffing in the past 12 months.
Competition for talent was a key issue for many respondents, with getting and retaining good staff identified as a key difficulty. Increasingly, according to the survey, firms are looking at flexible working conditions as well as remuneration as part of their strategy for keeping good staff.
Some 35 per cent of respondents reported pay increases of more than 3 per cent in the past year, although 36 per cent of smaller firms made no pay increases, and only 19 per cent of smaller firms increased pay by more than 3 per cent.
For the top 20 firms, 46 per cent reported pay increases of more than 5 per cent, with 84 per cent reporting increases of more than 3 per cent. Some 11 per cent of all respondents decreased pay over the past year.