UK law firms are more focused on shoring up their own internal operations and managing operational risks, according to a UK legal market study released by Crowe, the audit, tax, risk and advisory firm. While previous benchmarking results showed that Brexit worries and the threat of new market entrants were keeping firms up at night, attitudes have shifted in the past 12 months.

2020 outlook

Against a backdrop of Brexit, political and economic chaos, the UK legal industry has shown remarkable resilience, with the majority of firms (80 percent) seeing an increase in revenue and more than a third achieving growth in excess of 10 percent. More than half (57 percent) of participants stated they have a negative outlook for the UK economy as a whole in the coming year, however firms are more confident about their own position, with 76 percent stating they have a positive, or very positive, outlook for 2020. A timely snapshot of the UK legal market released by Crowe also reveals firms increased headcount (64 percent), focused on increasing remote, agile and virtual working (65 percent), and now consider previous threat of new market entrants as lower priority risk (74 percent). Louis Baker, Partner, head of professional practices at Crowe, comments “Agile and flexible working is looking to be the key to delivering an optimistic future. The leaders of our surveyed firms are confident of their own firm’s prospects within what they believe to be a flat legal sector and a stuttering economy. It is striking how changes in working practices is the key focus for firms in the year ahead.”

Digital hygiene

When it comes to the top two risks to their businesses, City and regional firms are in agreement on what matters most, highlighting talent retention and the threat of fraud and cybercrime as the top two concerns going into 2020. As part of this inward focus on talent, 71 percent of participating City firms and 60 percent of regional firms are making plans to increase their level of agile, remote and virtual working and 41 percent of all firms are planning to update their people strategy in the next 18 months. Having identified cybercrime as the other major threat to their bottom lines, many are undertaking periodic reviews of their digital hygiene. Ultimately, visible robust data and transactional security may become one of the defining factors for law firm clients when they choose an advisor. Jim Gee, partner, head of forensic services at Crowe, comments “Law firms hold substantial amounts of sensitive data and information, so it is logical that fraud and cybercrime is a leading concern. This is especially pertinent given that government statistics for 2018 showed that 43 percent of organisations suffered cyber breaches – a figure which is much higher for larger organisations. Law firms need to understand the extent of their cybercrime vulnerabilities and seek specialist advice to minimise losses.” The full report can be found here.