In 2020–2021, the top 50 law firms increased their revenue to over £20bn, despite being in the beginning stages of a global pandemic. According to analysis by Evelyn Partners, firms in the top 50 recorded operating profits at over 50 per cent.
Giles Murphy, of Evelyn Partners, stated that law firms could “take credit for swift and prudent action to strengthen their positions” during the pandemic. Among the top 10 law firms, Hogan Lovells and Ashurst recorded a 33 per cent increase in operating profits, with Herbert Smith Freehills at 31 per cent and Eversheds Sutherland at 27 per cent.
This extraordinary feat has been branded as an ‘astonishing achievement’ and demonstrates a clear need for legal advice, even during a global pandemic. The 2021 turnover for the UK legal sector grew by 11.5 per cent, worth a record £41.6bn according to the ONS. Tony Williams, Principal of Jomanti Consultants, said of this growth, “in a time where other industries were holding on for dear life, the legal sector has been immune and has perhaps emerged even stronger.”
According to a YouGov survey, small businesses in the UK lose more than £13.6bn per year because of legal issues and, on average, SMEs encounter eight legal issues per year. 43 per cent of these issues cost businesses more than £5000. The majority of these issues could be avoided entirely if businesses sought legal advice.
There are many reasons for businesses to want to find the right lawyer, from deciding on a company structure, setting up trading licences, dealing with property disputes and making sure the right contracts are in place. Getting the right advisors to support you can make or break your successful business. During the pandemic, these needs were heightened and demand increased. Suddenly, all businesses were faced with the same difficulties and there was no clear plan or support from the Government. It became a necessity for businesses to adapt and seeking legal advice was the first step.
Covid-19 added new risks and concerns about employees and health and safety for example. Finding an employment lawyer was the logical step for a lot of businesses to create their crisis plans, update their health and safety policies and ensure that their business could continue to grow and thrive during such an uncertain time, avoiding falling down any legal rabbit holes.
Lucinda Case, head of Legal Professionals Europe for Thomson Reuters, said that the UK legal market “bounced back strongly in 2021, and is poised for continued growth this year”. Businesses are anticipating a need for and recognising the value of legal services, particularly in areas such as regulatory, mergers and acquisitions, labour and employment.
According to a Thomson Reuters Institute Report, UK law firms should be focussing on ‘clients’ strategic priorities, engaging with the drivers that most impact client favourability and meet client expectations’. Law firms are now paving the way in a post-pandemic world and UK clients are willing to spend. In fact, the UK market is experiencing its highest level of spend optimism in 5 years. An 8.7 per cent growth in demand in 2021 compared with 2020, and 6 per cent compared with 2019. There is a ‘slow but very real, emergence from the depths of the pandemic crisis’.
Looking to the future, law firms must ensure that their advice to clients and those clients’ businesses complies strictly with areas like government sanctions, life post-Brexit as well as navigating the tail end of the pandemic. This is an opportunity for law firms to continue to grow as the demand increases. Finding the right legal help is so important in an age, post Covid, where demand is greater than ever.
Image from Wallpaper Flare.