Talent and cybercrime key concerns for UK legal firms in 2020
Law firms across Britain have chosen to spend 2019 focusing on cybersecurity and staffing concerns over Brexit preparations, according to a new study. Meanwhile, the majority of city and regional firms expect a positive year for the legal market in 2020, even as they expect the broader UK economy to suffer a downturn.
According to the latest estimates of the Law Society, a ‘disorderly’ No Deal Brexit could leave a £3.5 billion hole in the UK legal sector. While firms are clearly mindful of the wider economic and political conditions, however, many now seem more focused on ‘controlling the controllable’ over second-guessing what the future holds as the deadline for the UK’s exit once again approaches, with no agreement in sight.
A new study from Crowe has found that instead, law firms are concentrating on managing current operational risks and adapting how teams deliver their work. As firms look to an uncertain future, this ability to focus on improving what they can has also seemingly boosted their expectations for the coming months.
While a majority of both city and regional law firms anticipate hard times ahead for the UK economy as a whole, most expect a business-as-usual scenario for the UK legal sector. Forty-four percent of city firms expect the coming year to be no different from present, and 17% expect a better year for the market, while 56% of regional firms said things would stay the same and 20% said they would improve.
Firms were even more bullish about their individual prospects. Fifteen percent of regional firms and 9% of city firms were “very positive” about their company’s outlook in the coming year, and both categories saw more than 60% of respondents at least say they were “positive.”
These findings are similar to those Crowe provided last year, when following protracted Brexit negotiations legal firms took a dim view of the country’s economic prospects, but ultimately concentrated on what they do best. The majority of participants based future growth expectations on expanding their existing market, and focusing on boosting aspects of their business they could control themselves.
Following on from that this year, firms seem to expect the rapid changes on the horizon will bring new opportunities, particularly in the regulatory segment, where many law firms have begun to offer consulting services to companies looking to prepare for complicated export and import procedures in the future. It could also be that the firms’ management teams are being optimistic that current economic uncertainties will become clear and they will finally be able to return to ‘business as usual.’
Ross Prince, Partner, Professional Practices at Crowe, remarked, “Given the current political backdrop, results for regional firms were pleasantly surprising, with a greater proportion of firms reporting growth in revenue this year. Despite a concern for the UK’s economic future, regional firm participants show self-confidence, with 80% of participants reporting a positive or very positive outlook for their firm in the year ahead. As more than half of firms will be focusing on cost control and agile working practices, it seems that building resilience is a theme on the minds of many firm’s management committees. ”
While 43% of respondents told Crowe that Brexit was a “lower priority risk”, this is not to say that the UK’s legal market is complacent, however. There are plenty of emerging problems which the industry will be wrestling with during the coming year. When it comes to the top two risks to their businesses, city and regional firms were in agreement on what matters most, highlighting talent retention and the threat of fraud and cybercrime as the top two concerns going into 2020, along with recruiting new team members with the skills they need in a distant third.
As part of this inward focus on talent, in the last year, 64% of firms increased headcount, while 65% of firms focused on increasing remote, agile and virtual working. Seventy-one percent of participating city firms and 60% of regional firms are currently making plans to increase their level of agile, remote and virtual working and 41% of all firms are planning to update their people strategy in the next 18 months.
Commenting on the findings, Louis Baker, Partner, Head of Professional Practices at Crowe, said, “Agile and flexible working is looking to be the key to delivering an optimistic future. The leaders of our surveyed firms are confident of their own firm’s prospects within what they believe to be a flat legal sector and a stuttering economy. It is striking how changes in working practices is the key focus for firms in the year ahead.”
