LexisNexis: Annual Bellwether survey reveals that smaller law firms see a strong future ahead
The latest Bellwether report titled “OMG or BAU – COVID-19 and the legal industry” was released today by LexisNexis Legal & Professional, a leading global provider of information and analytics. The report highlighted that COVID-19 has knocked the 2020 growth prospects for many small firms and has overtaken Brexit as the most significant threat to their business.
Whilst short-term prospects look mixed - 33% expect a short-term spike in demand and 49% a drop - the sector is surprisingly bullish about the future. More than two-thirds of firms are planning for growth over the next 5 years. In 2019, 91% of respondents proclaimed forward-looking confidence. This year, 78% share the sentiment – a drop of only 13%.
This confidence may be on the optimistic side. Whilst the number of firms in decline is still relatively small, it has nevertheless doubled this year - reaching levels not seen since 2013-2014. Nevertheless, fewer firms are in distress than many would have feared. Yet, with 57% claiming to have furloughed staff, 36% furloughing fee earners and 17% believing redundancies may be a necessary step, there is a gulf between the post-COVID world and growth.
Almost half of those surveyed believe the impacts of COVID can be mitigated with an appropriate and effective response. Clearly, the legal industry has high faith in its own ability to weather the crisis. Most concerningly, lawyers do not have the same confidence in the ability of their clients to bounce back. 38% see COVID as a critical threat for their clients. There can be no path to recovery without a buoyant consumer and commercial market.
Unlike many other industries, a lack of technology and reluctance from senior leaders meant that at the start of the year, legal firms had not embraced remote working practices or technologies. In a matter of weeks, 75% of workers were moved to effective homeworking. The provision of the new technology seems to have been smooth, despite almost a third of respondents claiming not to have a laptop before lockdown. The bigger challenge has been in the adoption and use of technology, with 61% of over 45s experiencing difficulties adapting compared to 34% of under 45s.
COVID has brought a wellbeing change to the industry. In 2019’s Bellwether, 90% of respondents considered stress and mental wellbeing to be a significant problem at work. In 2020, this number had dropped by 64%. The working from home lifestyle has offered a better work/life balance for many – but more hearteningly, the crisis appears to have been the long-a waited trigger for meaningful action. Almost half of respondents reported that they have seen a greater focus on their mental health in the wake of COVID-19 home working.
Chris O’Connor, Small Law lead at LexisNexis commented: “The COVID-19 crisis has been tough for the legal sector, but there are positive signs in the darkness. With high growth predictions, improved wellbeing and an uptake of new technologies – law firms have a lot to look forward to. But, with commercial and consumer market-places stuttering – much rides on a sharp recovery.” He continued “Will a focus on work/life balance and mental wellbeing return when the workload increases?”
The report can be downloaded from: www.lexisnexis.co.uk/Bellwether2020