The study found that almost one in 10 respondents (9%) said they were ‘not confident’ about the business outlook for the next 12 months – up from just 1% this time last year. Conversely, the number of respondents claiming to be ‘very confident’ about the future fell from 31% last year to just a fifth (20%).
The research – which was carried out towards the end of last year and polled lawyers from around 90 of the largest 130 law firms in the
More than half the respondents (51%) identified the state of the economy as the biggest single issue facing the legal sector over the next 12 months – compared to just 17% in 2006.
Recruitment and retention of lawyers was named as the next most significant problem for the sector, with 38% saying it would be the key issue over the coming year. Other issues named were fee income (19%), competition within the sector (14%) and regulation (13%).
In a separate finding, the survey also revealed that a third of the firms questioned (33%) were currently seeking a merger.
Smith & Williamson assurance and business services chief Giles Murphy commented: “Whilst the overall outlook for law firms remains healthy, the market seems to have peaked. Many practices are grappling with increasing costs as they have had to ramp up salaries to get the people they need, while also dealing with rising property costs. At the same time, income levels are flattening.
“Although the percentage changes for costs and revenue may be quite small, the combination of the two can have dramatic implications for profits.”
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