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How are things looking for Irish Law Firms in 2022?

How are things looking for Irish Law Firms in 2022?

Smith and Williamson (S&W) have produced their 10^th Annual Survey of Irish Law Firms.

While recruitment and staff retention have remained one of the key issues facing some of the Country’s largest legal employers, 2021 saw the return of some optimism and confidence in the sector and the start of the transition to a new normal.

S&W carried out their national survey of 113 Irish Law Firms in September and October 2021. The key findings are as follows:

Outlook

• Sector confidence has returned – More than 2 in 5 reported an improved outlook over the last twelve months (1 in 3 regional firms, 2 in 3 of the top 20 ) - 2 in 3 firms see an improved outlook for the next twelve months (1 in 2 regional firms, 9 in 10 of the top 20)

• Top challenges for the sector – maintaining profitability and recruitment and retention of talent

• 1 in 3 see Cyber-risk as a key issue (1 in 2 regional firms)

Firm performance

• Some recovery in firm performance – 39% experienced revenues recovering and increase in the last twelve months – 37% experienced profits recovering and increase in the last twelve months

• Continued challenges for some firms – 29% experienced revenues decrease (2 in 3 in 2020) – 25% experienced profits decreasing last year (53% in 2020)

• For 2 in 3 turnover and profits are still below pre-Covid levels

• Levels of WIP and debtor Lock up have returned to more normal levels

People, pay and reward

• Most firms reinstated any Covid related salary cuts to pre-Covid levels

•  1 in 2 firms increased pay levels during 2021 (80% of the top 20)

• 1 in 3 firms increased staff numbers (23% reduced staff number)

• Top 5 firms grew solicitor numbers by 8%, the rest of the top 20 reduced numbers overall

• The “new normal” working arrangements are a key issue with most firms becoming more flexible

•  There is a disconnect between how employers and employers see the workplace in the future.

Mergers and acquisitions

• Continued low level of M&A activity in the last 12 months

• Succession looms large for smaller firms with equity partners seeking opportunities to access their capital

• Top 20 firms continue to see lateral hiring as their best opportunity for growth

• 1 in 3 top 20 firms see M&A as a potential strategy for future growth

• Significant uptake in LLP structure including top 20 firms

Technology

• 2 in 3 top 20 firms reported cyber-attacks with no significant impact

• 1 in 20 firms surveyed reported significant impacts from cyber-attacks

• Cybersecurity, is the top IT investment priority for 3 in 4 firms (100% of the top 20)

COVID-19 pandemic

•  The Covid pandemic continues to adversely impact law firms. – Nearly 1 in 2 firms continued to avail of government supports in 2021 – 29% of all respondent firms availed of tax warehousing/deferral of tax payments (43% in 2020)

• 40% of top 20 firms availed of government supports in the last year down from 63% reported in 2020.

With almost all firms surveyed responding that recruitment remains one of their biggest issues, there has never been a better time to be a candidate; firms are offering record salaries and incentives to join. If you would be interested in discussing the Dublin market please get in touch for a confidential chat.