For the last 20 years, the Law Management Section has undertaken an annual Financial Benchmarking Survey.

It’s the leading survey for medium-sized and smaller firms in England and Wales, providing participants with a bespoke report showing how their firm compares to similar firms.

To complement insights from the annual survey, we’ve developed a quarterly pulse survey with our futures and insights team to provide a timely barometer of business conditions for small and medium-sized (SME) solicitor firms.

This paper reports on firms’ experiences of quarter one, 2021. 319 firms took part.

Income, expenditure and new work

  • Compared to the previous quarter, around half of firms had experienced increases to new work (48%) and in fees billed (52%). Of firms offering residential conveyancing, 54% saw an increase in new matter starts for this area
  • Around one-fifth of firms reported decreases in relation to new work coming in (21%), chargeable hours recorded (19%) and fees billed (19%)

Staffing and office space

  • For the majority of the 319 participating firms, staffing and office space had remained the same as the previous quarter
  • 4% firms reported redundancies during the January to March quarter
  • Of firms with physical premises (93%), 15% had reduced their office space and 10% anticipated a reduction in the next quarter

Cash position

  • 41% of the 319 participating firms reported a better cash position compared to the previous quarter, 18% reported a worse position
  • Of the 148 firms (46%) which took a Coronavirus Business Interruption Loan Scheme (CBILS) loan, 45% have used the loan

Business confidence

  • Businesses were confident in their outlook for the next twelve months, with around half predicting an improvement in firm’s fees (52%) and profitablity (46%)

Challenges

  • Looking ahead to the next 12 months, an economic downturn and cashflow were the most commonly cited challenges for firms over the next year

‘Other’ included:

  • workload (either too much or too little work)
  • managing staff remotely: ”training, supervising and managing employees remotely, maintaining team spirit with some working at home and others in the office, keeping on top of the changing COVID guidelines and risk assessment”
  • ’online competitors and external agencies with long delays’
  • takeover
  • bureaucracy and regulation
  • panel requirements and restrictions – ”We are not in the panel of all high street lenders, due to the issue we can’t accept all the instructions. This is a major issue facing by small and medium-size firms” and client budgets

Participating firms

Thank you to the 319 firms who took part in the first pulse survey. This survey provides insight into how your firm compares with other SMEs in the sector.

With an improved understanding of the experiences and challenges of SME law firms, the Law Management Section is better placed to support you and your business going forward.

Lloyds Bank logo

“The Law Management Section pulse survey is new and intended to support the profession with some detailed data collection on current issues every quarter. We are delighted with the level of response and would encourage firms to participate next time and to help us grow the survey so they have the chance to help shape the knowledge of the current issues.”

Paul Bennett
Chair of the Law Management Section