91% of South East law firms have made a profit since first COVID-19 lockdown
Published: 31 Mar 2021
Remote working helps 63% of firms increase productivity.
Nine in ten South East law firms have seen a recovery in income and a return to profit since the end of the first lockdown, according to a survey from MHA.
The findings, which include data gathered by Sussex-based chartered accountants MHA Carpenter Box, dispel the pessimism expressed by the legal sector in May 2020.
The report highlights that in December last year almost 50% of legal firms reported either ‘no’ or a ‘minor’ impact on their fee income as a result of COVID-19 - in May 2020 this was just 14% of firms. By December, only 9% of law firms said the pandemic was still having a major impact on fees, down from 38% in May 2020.
Charlie Eve, Head of Professional Practices at MHA Carpenter Box, said: “These results demonstrate that legal firms across the UK have been able to adapt their commercial operations in the second half of 2020, and overcome the challenges brought by COVID-19.
“The wildly pessimistic expectations many of us had at the beginning of the first lockdown have thankfully not come to pass and profits and legal fees have now stabilised and even increased for many firms.
“Even though law firms have generated lower fee income since March 2020, many made immediate decisions to reduce expenditure which, along with government support, helped profitability. We reported in May 2020 that 87% of firms utilised the Coronavirus Job Retention Scheme and the furlough payments reduced outgoings and led to better profitability than expected.”
The MHA survey also casts a light into the strategic adjustments that firms have had to make to respond to the impact of the pandemic. Indeed, 53% of firms made redundancies between March and December 2020, while on a more positive note 73% of survey respondents recruited new members of staff in the same period.
Working practices across the sector have also changed since the first lockdown, with 77% of firms now expecting their employees to spend either three days or fewer in the office. Remote working did not negatively impact on working hours, with 63% of businesses seeing an increase in productivity.
Charlie Eve added: “Looking ahead, 2021 offers firms an opportunity to continue to reorganise, streamline and go forward as a leaner and fitter business, placing a greater emphasis on employee welfare, particularly on how and where they work. Working from home has shown even the most traditional of firms that they can operate effectively via remote working. With this survey indicating a greater desire from employees to continue to work remotely for part of their working week, the onus will be on employers to embrace this new way of working to support and retain their staff once restrictions are lifted in the months ahead.”
*100 law firms of all sizes across the UK were surveyed in May 2020 and 87 in December 2020 as part of this analysis. The full results of the May 2020 survey can be accessed here. Key findings and headline figures for the December 2020 survey are available via infographics here.