Ireland’s top law firms are more optimistic about their futures than their smaller counterparts but all see staff retention as a significant issue, according to a survey.
Staff retention was identified as the number one issue for all firms but appeared more significant for big firms, particularly in Dublin, the survey found.
Nine in 10 of the larger firms had delivered pay increases of between 4 and 15 per cent over the last 12 months, plus several other initiatives to attract and retain staff. Seven in 10 firms outside the top 20 reported low turnover of staff, 60 per cent reported they had no vacancies and 40 per cent did not have pay increases.
The Ireland Law Firm Survey 2024, A Tale of Two Markets: Navigating the Legal Landscape, carried out by Red C Research last March and April for Evelyn Partners, was published on Wednesday.
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The contrast between challenges confronting larger and smaller firms suggests firms “need to have a scale” unless they are content with “a lifestyle business with a legacy client base”, said John O’Callaghan, managing partner of Evelyn Partners Ireland Ltd. “While smaller firms are more focused on ‘nuts and bolts’ challenges, their top 20 competitors are focused on more strategic issues and are investing in initiatives and technology to address these.”
One in four firms surveyed considered the legal sector generally had improved over the past year and will continue to do so over the next 12 months. A “notable minority” (17 per cent), comprised exclusively of smaller firms, felt the outlook for the Irish legal sector deteriorated last year and is likely to remain challenging in the next year.
Asked about the outlook for their own firms, 62 per cent saw an improvement over the past 12 months and 38 per cent expected stability. Six in 10 of the bigger firms anticipated further improvement over the coming 12 months. The smaller firms’ view of the future was more pessimistic, with 62 per cent anticipating stability at best and 11 per cent expecting deterioration.
All top 20 firms reported increased revenues over the past year and almost all reported increased profits. Two-thirds of smaller firms reported increased revenues, and half reported increased profits. The survey found that firms overall had success in increasing their fees.
While reducing operating costs was a big focus for the smaller firms, the big firms’ performance was driven by focusing on sales and marketing, new markets and services, and engaging third-party advisers.
Asked to identify pressures on their operations, half of firms outside the top 20 cited fee pressure and almost 40 per cent regarded compliance and regulatory costs as other key challenges. Those three challenges were not identified as significant for larger firms, with the top 20 identifying their key challenges as adopting new technology, including cybersecurity investment, and differentiating from their competitors.
Other findings included that, regardless of firm size, more than four in 10 partners are left to plan and manage their own financial and retirement planning without support from their firm.
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