The Law Society’s annual financial benchmarking survey is required reading for small and medium-sized law firms which aspire to rank among the best managed of their peers. It’s something of a smorgasboard for a journalist looking for a news ‘hook’, too. I plumped for what appears to be tangible evidence that working from home affects productivity, despite the many protestations to the contrary.
Many practices are calling staff back into the office for at least part of the week and this partly explains why. Yet there is more to it than that. Some firms are surprisingly lax at capturing all the time spent on a client matter. Fee-earners should be provided with targets for both productivity and recovery, the report recommends, which can then be monitored, and the process of recording time and billing should be made as simple as possible. I’m not a lawyer, but that would seem to me to be pretty basic stuff.
The startling rise in PEP recorded in 2021 was just about sustained in 2022 – and notwithstanding the headwinds of the last six to nine months, confidence remains reasonably high. This year’s sample predicts median growth in projected fee income of 3.5% in 2023, with the upper quartile forecasting 10.1% and the lower a 2.5% cut.
Inflation is presently much higher than 3.5%, of course, but it is expected to come down sharply in the coming months. There are elephants in the room nevertheless – with a newly moribund property market and upward pressure on wages probably the biggest. Search Acumen’s latest conveyancing barometer confirms that the property boom is well and truly over.
Every cloud has a silver lining. Following recent increases in bank base rates, the report confirms a return to the days of earning substantial amounts of interest on client money. Nowadays, many firms have placed the top slice of client money into SRA-compliant term deposit accounts in a bid to earn more interest, and we are even seeing the return of overnight treasury accounts. The report’s authors also recommend that firms review their interest policies, as a de minimis limit of £50 or more is commonplace. Wise counsel, for those who haven’t done so already.
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