A recent survey by Key Business Finance, the professions finance arm of Heritable Bank, shows that despite the current economic climate, 65% of those surveyed remain confident of the prospects for their firm. The survey of smaller firms, with between three and 10 partners around the UK, found that an overwhelming 85% expect their fee income to at least stay the same or increase over the next six months, with only 15% expecting it to decrease.
Firms though are however less confident than they were six months ago; 82% were confident or fairly confident six months ago and that figure has now fallen to 65%.
Nick Sanders, managing director, Key Business Finance, comments: ‘The law firm market appears very optimistic for the future. We have though, started to see the effects of the credit crunch and the various threats to the market, such as the Legal Services Act and the legal aid reforms, starting to bite. Looking at the results, most firms were confident, but the majority don’t expect next year to be a growth year. At Key Business Finance, we have already seen an increase in applications for funding from the legal profession this year as firms move to protect their cashflow.‘
When it comes to spending, law firms are not planning to cut down. Two thirds are planning to spend the same over the next six months and over a quarter (27%) plan to increase spending. IT spending looks set to increase.
Increase | Stay the same | Decrease | |
Overall spend | 27% | 64% | 9% |
IT | 33% | 60% | 7% |
Marketing | 30% | 60% | 10% |
Office Improvements | 26% | 65% | 8% |
Staffing | 26% | 67% | 7% |
The majority of firms (71%) are not saving in the current climate. However 16% of firms are cautious about the future and are planning to save money to help tide them over. 13% are already looking to the future and are putting money aside to finance future business expansion.
