Law firms expect better outlook

Business confidence in the legal profession is improving, with one in four law firms expecting a better outlook for 2013, according to a survey.

Last year, just one in five law firms expected a better outlook for 2012.

But three out of four firms still expect continuing pressure next year to reduce fees charged to clients and say it is the number one issue facing them.

Firms said they believe the new regulatory system being introduced by the Government will result in significant changes and impose tougher regulations on the profession.

The results are contained in a survey of 93 law firms conducted on behalf of chartered accountants and business advisors Smith & Williamson.

It found that 41% expect an improved outlook in 2013; 46% anticipate a stable environment and only 13% expect a deterioration. All of these percentages represent moderate improvements on last year.

Three quarters of respondents said pressure on fees was the biggest issue they faced next year, coming against the background of significantly reduced fees in the last three years.

More than half of firms said their turnover had reduced, but profits had been maintained, mainly thanks to cost reductions.

Competition between firms for corporate and commercial work has increased, and the survey found that more firms are talking to each other and considering mergers.

Meanwhile, more than 90% of firms said they’re in favour of bringing in incorporation for law firms, which has been legal in Britain for 10 years.

More than 40% of firms expect “significant changes” to the profession arising from the Legal Services Regulation Bill, published by Justice Minister Alan Shatter last year. This will see a landmark change in the regulatory structure, with the establishment of an independent regulator in the form of the Legal Services Regulatory Authority. This will replace the existing self-regulation system by the Law Society and the Bar Council.