News In Focus
23 February 2010
Impact of recession on profession to continue, report predicts
Legal firms suffered a "year of turmoil" last year and confidence in a recovery this year remains weak, according to a report by a leading firm of accountants.
Mike McCusker of PricewaterhouseCoopers' Glasgow office surveyed the top 100 UK law firms and found an overall decline in profits of 30% last year.
Scottish firms showed a bigger drop on average due to a "conscious decision" not to cut operating and staff costs as severely as their English counterparts.
However with confidence remaining weak that revenues will recover this year, the report expects further reductions in staff numbers in 2010.
Catalyst
The Scots practices are said to be better at debt recovery, with an average of 75 days compared to 83 in the UK as a whole. They also spend more on HR and training, but less on secretarial support, marketing and IT.
Mr McCusker concludes that the recession has acted as a catalyst, leading firms to focus on efficiency, cost reductions by structural change and headcount cuts among both fee earners and support staff. "However the full impact in terms of profitabliity following any redundancy programmes may not be seen until 2010-11."
And he warns that "Survival in the current form for some firms may prove a challenge if market conditions do not rapidly improve."