However, we can make some educated predictions based on research and existing data to try and surmise what might happen to small firms in the long-term. So let’s take a look.
A dip in revenue
In a recent survey by The Law Society’s Law Management Section, firms are forecasting a 10-20% drop in revenue. That’s for the 2020/2021 financial year. This isn’t a concern unique to the legal industry. We’ve seen small businesses across various sectors struggling. Unfortunately, some businesses haven’t been able to survive financially. The concern now is whether we’re going to see a long-term ‘domino effect’.
For law firms, cash flow (that age old problem) is likely to be even more of a problem. This is because of issues caused as a result of long lockup cycles of legal services. The Law Society’s survey suggested that the number of lockup days for firms of all sizes is 155 days and that most firms expect those 155 days now to increase by 15-25 days.
Changes in demand when it comes to services
As the needs of your clients change, so will their demands for different legal services. Here are some of the increased demands you’re likely to see over the coming months:
- Countercyclical services, such as restructuring, insolvency, and disputes
- Some transactional services, for example, mergers and acquisitions. There may be a short-term drop, but there’s likely to be increases in loans and credit facilities. This is because lenders will strive to determine their exposure and manage the fallout of insolvencies in their portfolios.
- Services surrounding health care and life sciences, as these industries are leading, and continue to lead, the fight against the pandemic.
- Tax services.
On the flip side of that coin, you may well see a decrease in demand in some other services. It’s a balancing act, and you’ve got to be prepared to meet the variable demands of your clients.
Firms are adapting and diversifying
The constant flux in demand for legal services has given many law firms the opportunity to expand and adapt in terms of the services they offer and the strategies they put in place. From remote appointments, to diversifying their offering, law firms are doing the best they can to evolve with the times.
Diversification allows firms to reduce their reliance on work-types and reduce their future risk, whilst using technology to continue current services avoids the risk of losing clients, or being unable to find new ones.
Want to find out more?
If you’re a law firm in need of some advice on how to handle your long-term accounts strategies, then Numero has got you covered. Just get in touch with us today and let’s see how we can work together.