Learning from the pandemic – what happens next?

 In Practice Management

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

Has the pandemic resulted in long term changes to the legal sector?

Each year I write a report for NatWest on the financial health of the legal sector. The most recent report, which was published in May, looked at the financial impact of the pandemic on the legal market. I talked with managing partners and looked at the accounts of firms before the pandemic and then during the pandemic.

The sector coped well and most firms have achieved an increase in profit despite a slight fall in fee income. The drop-in fee income was only for a few weeks in most firms as fee earners became used to working remotely. The reality is that the pandemic created unprecedented change and lawyers normally get busier when there are changes in the economy. Most firms are now busier than usual and are struggling to resource the work volumes being taken on. While firms are therefore very focused on the short term and servicing the needs of clients, they should also now be thinking about the longer-term impacts of the pandemic.

If there had been just one lockdown then there would probably have been fewer long-term changes. Because the pandemic has lasted well over a year, many of the changes that have been forced on the legal sector look likely to remain. Some of these changes are considered below.

Things to consider for the future

Capital requirements and cash balances

Most firms were grateful for the rapid setting up of the furlough scheme which gave them time to think about how to cope best with the pandemic. Without this scheme, and the availability of emergency Government loans, more firms could have faced serious cash flow problems. Firms should be able to survive a short-term drop in income and therefore might be well advised to plan to be able to pay three months of operating expenses even if no income is generated over that period. This is then linked to how much capital should a firm carry.

FREE monthly newsletter

Wills | Probate | Trusts | Tax  | Elderly & Vulnerable Client

  • Relevant learning and development opportunities
  • News, articles and LawSkills’ services
  • Communications which help you find appropriate training in your area

Given that firms need to finance their WIP and debtors, which normally amount to a third of a year’s income, firms require partner capital of about this amount or more if they purchase a property and they do not want to borrow from banks. As firms grow, it would make sense to build up more capital to avoid becoming too reliant on debt. This should be reviewed annually, particularly if a firm is growing quickly.


Managing partners said that there was surprisingly little pressure on prices during the pandemic; clients were grateful to firms who could deliver services well and on time under difficult circumstances. With increased competition in the sector prices have been squeezed over recent years. Firms should always remember that when they are instructed a client wants their help and if real value is delivered then a client is more than happy to pay a good fee. As demand has increased for certain legal services as the economy rebounds, there have been some very significant price increases that have been accepted by clients.

Staff and well being

Most firms have worked hard to look after their staff during the lockdowns and everyone is more aware than ever of the importance of good mental health. The lockdown over the winter was clearly the hardest. Whether all employees feel that they have been treated well will be tested over the summer as the economy opens up and employees will think again about whether they want to carry on working for the firm or move on.

Firms should be thinking about involving everyone in activities that will bind teams together and recreate the spirit which makes people enjoy working with their colleagues.

Agile working and working in the office

For many years I have suggested to firms that they should embrace remote working, but few have embraced it. Now that it has been forced upon all firms it seems likely that very few firms would suggest to everyone that they must return to the office full time to work. Progressive firms that wish to attract the best talent will have to be flexible and think about how client service can be maintained or improved. This shift will save commuting time and costs for many and help with our necessary commitments to a lower-carbon economy.

Most firms are not talking about a major reduction in their office footprint but appreciate that as they grow more employees could be recruited without the need for more space. Many lawyers now say that they can actually do their core work more efficiently now at home and so firms might need to think again about the office will be used when employees are in and whether it is set up to embrace office-based activities. Firms also need to think about further investments that are necessary to help their staff to work remotely in the most productive way.

Business development

When lockdown struck, business development was hit hard as many of the traditional business development activities were no longer possible. There is little doubt that clients, just like employees, will welcome some face-to-face meetings and events when they are allowed again but it is likely that business development will be carried out differently in future. There will be a growing need to embrace social media, organise more webinars and think again about the best ways of developing new business. Many firms are involving younger employees in their strategy and business development activities to ensure that the firm will be able to target a full range of clients.

Because there is now less need for face-to-face contact, firms can probably target a far wider geographical spread of clients than might have been considered previously. This will probably increase the competition in major metropolitan areas with provincial firms targeting higher value instructions.

It will be interesting to reflect in five years’ time on what did change as a result of the pandemic and whether the changes helped the sector to develop faster than might have otherwise happened.

The LawSkills Monthly Digest

Subscribe to our comprehensive Monthly Digest for insightful feedback on Wills, Probate, Trusts, Tax and Elderly & Vulnerable client matters

Not complicated to read  |  Requires no internet searching |  Simply an informative pdf emailed to your inbox including practice points & tips

Subscribe now for monthly insightful feedback on key issues.

All for only £120 + VAT per year
(£97.50 for 10+)

Lawskills Digest
Recent Posts
alex barr