Can SME law firms turn their lockdown learnings into a long-term asset for growth?

Mike Stevenson, managing director at Iceberg, says one of the biggest challenges that firms will face during 2021 is how to implement the learnings of the pandemic and create a long-term post-lockdown working model that works.

It’s no secret that December is, generally, a quiet month in the legal sector – with billings usually significantly lower than any other time of year. The reasons for this are clear – clients are out of office and requirements for work slow down, while solicitors also take holiday, which results in fewer hours to bill.

For this reason, many of those responsible for managing a law firm’s cashflow will have been expecting a difficult month. On top of the predicted festive slump were the added challenges caused by the global pandemic, December was essentially sandwiched between two national lockdowns.

Many will have, therefore, raised an eyebrow when faced with new data from the Office for National Statistics – which showed that December 2020 was the highest turnover month in the history of the UK legal profession, with a total of £3.53 billion billed. After a slow start to the year, this means the total year’s billings for 2020 are much unchanged compared to 2019.

The big question is – how did the sector manage to buck the trend so dramatically?

There are a few considerations. First, the pandemic forced the legal industry to build resilience. When the lockdown was announced, finding ways to improve processes in order to maximise stability and efficiency would have been a crucial focus for legal businesses.

This meant addressing some of the long-term cashflow challenges within the sector. For example, firms will have reviewed lockup cycles and considered how to establish better ways of working between fee earners and those balancing the books. December billings might just be an indication that the industry has finally cracked it and found a winning formula.

The second consideration is that December’s figures might be reflective of law firms getting into the swing of homeworking. With so many processes to redesign and adapt, it’s likely there were some original teething issues that impacted productivity, particularly around quality control, team collaboration and the training and development of junior team members. By the end of 2020, with two national lockdowns under our belt, many of those issues will have started to iron out, which might have led to an increase in productivity.

Finally, it’s also important to consider the general context of the pandemic. When it was first announced at the start of the year, the sense of the unknown forced the sector to make contingencies and prepare for the worst. However, the pandemic also generated a landscape of constant change – be it economic, legislative or social. Periods of transformation tend to go hand in hand with the legal industry being busy. December billings could simply be a reflection of a steep increase in workload between the two lockdowns.

One of the biggest challenges that firms will face during 2021 is how to implement the learnings of the pandemic and create a long-term post-lockdown working model that works. As part of this, they will need to consider the preferences of their employees, including the requirement for extra flexibility. Designing a hybrid model that allows employees more opportunity for remote working might be the solution for many firms. The key focus will be on creating a smooth transition to this long-term vision, that captures the best of both worlds.