Global law firms boosted UK productivity during pandemic, study finds
Double-digit increase in hours worked achieved by workforce that grew only marginally, according to Thomson Reuters research
Global law firms managed to boost their productivity last year, achieving a 12.2% increase in hours worked with a headcount that rose by just 2.6%, according to a new report by Thomson Reuters.
M&A work led the way, clocking up year-on-year growth of more than a fifth (21.5%) amid a record year of global deals activity. Tax lawyers were also busier, with billing hours increasing by 15.5%. Overall corporate work, which includes M&A, grew by 11.3%.
The State of the UK Legal Market report's findings helps explain the record growth recorded by many leading UK firms during their 2021/22 financial years as well as the ongoing salary war as they fight to recruit and retain talent.
But it also suggests firms have risen to the challenge posed by remote and hybrid working by boosting their efficiency. There are, however, concerns over the long-term impact on firm culture of remote working and Freshfields Bruckhaus Deringer this month tweaked its policy so UK fee earners will spend the majority of their working days in the office from September.
Meantime, almost a quarter of UK corporates (23%, on a net basis) said they expect to increase legal spend in the coming year relative to those who plan to decrease spend, with more than a third of UK companies (34%, net) saying they plan to increase spending on regulatory advice related to Brexit.
By contrast, just 1% net of legal buyers plan to increase spend on litigation and disputes compared to those who plan to decrease spending.
Lucinda Case, head of legal professionals for Europe at Thomson Reuters, said: “Global law firms are seeing demand for their services in the UK continue to rise as the economy recovers from the pandemic… Businesses are still in the process of getting to grips with new legislation arising as a result of Brexit, so it’s little surprise that they plan on upping their spend on regulatory legal advice this year.”
UK legal buyers say the most important factor that makes law firms stand out is the specialist knowledge of their lawyers (16%), followed by the breadth of services offered (12%), sector knowledge (9%) and track record and professionalism (both 3%). UK companies rank understanding of a client’s business as the most important skill they look for (28%), followed by technology and digital capabilities (27%) and business acumen (also 27%).
Case said: “Corporate clients favour lawyers with specialist knowledge of their sector and a deep commercial understanding of the challenges faced by their business and the industry in which they operate… Just being seen as being up to speed on legal changes is no longer enough of a differentiator.”
The report was based on 2,000 interviews with UK legal buyers. Data was also provided by Thomson Reuters Financial Insights.