Articles From the Team
Trading forecast: factors affecting confidence in Manchester's legal market
Nationally, 2019 has been a difficult year for the legal industry: uncertainty in the market proves to be a testing time for UK law firms. The current political climate is having an impact on business performance; as well as other factors affecting trading ability, including a loss of talent and growing competition (opportunities and potential problems, depending on who you ask).
BCL Legal is in a unique position when it comes to market analysis. This year, our Manchester city centre-based commercial team placed candidates in firms of all sizes: from the largest internationals and US firms to commercial boutique and high street practices. It’s a similar story in our Birmingham office. Through regular meetings and conversations with our established clients, and making judgements on the firms that are expanding and hiring, we have an accurate picture of which firms are the most optimistic with their trading forecasts. The main recurring factors when speaking about future trading capability seem to be:
- Brexit worries
- Attracting and retaining talent
- Growing competition
- IT and technological infrastructure
Brexit
In August, the Lawyer reported that a no-deal Brexit will cost the legal sector around £3.5billion. This will prove to be a difficult time for everyone in the industry, with the uncertainty around Brexit leading to trepidation in the market and the slow progression of large deals.
Many of the firms we’ve met with of late are struggling with clients becoming more nervous around taking on large ‘risky’ projects, meaning a reduction in commercial legal work. It seems to be the large national and international firms that are more reliant on national-level work experiencing a slow down, whereas regional firms with a strong North West client base are less impacted. There’s also acknowledgment that certain disciplines may actually benefit from Brexit.
Talent and growing competition
Attracting and retaining talent has been a consistent issue for law firms in Manchester, and the growing competition with new entrants to the market means fierce competition for both clients and legal practitioners. Manchester has gone from strength to strength in recent years; considered a legal hub separate to London, with most firms operating up here to service local work, rather than satellite offices for London. This being said, opportunities aren’t endless and work is finite. We’re hearing concerns from some of our regional and mid-tier firms when it comes to the added challenges that competition will bring. It’s impossible for a firm to continue to thrive should their workforce routinely leave for other opportunities, or their clients choose to move to other firms.
IT
IT is something that’s been on the agenda for most firms for a couple of years now. With legal-specific software on the up, firms are taking advantage of growing AI and automation opportunities to better streamline their offering. Many of the biggest firms have implemented best-in-class infrastructure to automate tasks that were previously undertaken by junior fee-earners. The firms unable to keep up will struggle to offer as good a service, and this may impact profitability.
Here at BCL Legal, we have a dedicated team of consultants, each working within their specific niches offering in-depth insight and analysis about the market. Whether you’re a client looking at how best to prepare for the future, or a candidate looking for the firm best positioned for your priorities, we have a consultant working locally to you. Should you like to hear more, contact us now.