Economic turmoil, difficulty in recruiting and retaining employees, and compliance and regulatory costs are key concerns for many law firms here for the coming year, a new survey has disclosed.
Most of the top 20 firms here reported cyberattacks in the last 12 months but have indicated strong confidence in their cybersecurity, the survey for Evelyn Partners reveals.
Dublin is fast becoming ‘London by the Liffey’ in the legal sector with UK or international firms now comprising seven of the top 20 firms here. Half of the top 30 UK law firms have now opened offices in Dublin.
Almost half of the 108 firms surveyed in September and October 2022 expect a deterioration in the outlook for the legal sector in 2023 with most citing the economic cycle as a key concern.
Although the larger and Dublin-based firms continue to experience some growth and increased turnover, regional firms are experiencing a slowdown in growth. Outside Dublin, 40 per cent of respondent firms reported a decline in profitability over the past 12 months.
Almost all respondents, particularly the large and Dublin-based firms, regard recruitment and retention of staff as a key concern. The challenges include losing recently qualified solicitors lured to London-based firms by “eye watering” six-figure salaries.
About 50 partners in Irish firms joined UK and other international firms in the past five years.
UK and international firms are opening offices in Dublin to service their largest clients with operations here, to give them access to EU courts and to deal with Irish businesses with UK operations to give them access to the UK post-Brexit, all of which increases competition in the marketplace for legal firms in Ireland.
Addressing recruitment and retention issues, the authors of the survey suggest, requires more than increased remuneration as many employees seek a better work-life balance.
While 2021 gave rise to the ‘great resignation’ of employees, this year will see the emergence of the ‘silent quitter’, employees who work their contract hours and no more. Efforts to maintain a culture of staff working extra hours as part of their normal career progression are increasingly being resisted more typically by younger staff, the survey notes.
Evelyn Partners, a wealth management and professional services group created from the merger of Tilney and Smith & Williamson, released its 11th annual law survey, on Friday. Based on Red C research, the survey collates the views of managing and senior partners in the respondent firms.
Paul Wyse, head of professional practices, Evelyn Partners Ireland said: “Challenging times have been felt across all sectors including law firms, as the last 12 months have thrown up more than its fair share of complexities. The war in Europe, a surge in inflation, increasing interest rates, and an energy crisis have all contributed to the turmoil being experienced. ”
Despite the challenges, most of the top 20 firms continued their growth trajectory but are reporting “a more competitive marketplace with more international firms now established in Ireland with aspirations to grow their presence here even further”, Mr Wyse said.
The economy and subsequent rise in inflation was viewed as the key issue for the legal sector by 65 per cent of respondents. Most (88 per cent) thought the current economic environment would have a negative impact on the legal sector over the next 12 months.
Despite the challenges in 2020 and 2021, revenue increased for 55 per cent of firms in 2022. Almost all – 93 per cent – of the top 20 firms; 67 per cent of Dublin-based firms; and 44 per cent of regional firms reported an increase in their revenues in the past 12 months.
Smaller firms were significantly more concerned than larger firms about compliance and regulatory costs, including professional indemnity insurance.
The Covid-19 pandemic opened up huge opportunities for employees to enjoy more flexible working, which has resulted in lawyers moving away from cities and larger towns, the survey found. If an employer was not open to accommodating remote working, employees left and moved to firms accepting senior lawyers working remotely.
