Senior Midlands lawyers need to take a long hard look in the mirror and ask themselves some searching questions if the region’s legal marketplace is to survive and thrive, a leading law firm advisor has warned.
Johnathan Dudley, Midlands managing partner of national accountancy firm Crowe Clark Whitehill, said his firm’s recently published survey of state of the legal profession made some hard hitting points.
Crowe Clark Whitehill runs the Midlands COFA Network for Compliance Officers for Finance and Administration.
Every law firm must have a clearly designated COFA who is responsible for ensuring the legal practice meets all its regulatory requirements on financial and administration compliance issues.
The next COFA meeting at the firm’s Midlands offices is on Thursday, September 26, and will be addressed by Mike Haley, Director of Supervision in the Solicitors Regulatory Authority (SRA).
Johnathan Dudley said: “The number of recent high profile law practices that have failed is likely to cast a shadow over our next meeting, but taking a positive from this unfortunate situation it could also be seen as a wake up call to Midlands law firms.”
The latest Crowe Clark Whitehill legal survey highlighted the problem of “lock up” – unbilled fees tied up in ongoing work
For the second year running, the survey showed that around 40 per cent of respondents reported in excess of 150 lock up days. Too many also find it hard to collect billed fees, with 69.8 per cent admitting it takes them over 60 days to do so. And this is despite many facing economic pressure with the pick-up of the legal market lagging behind that of the broader UK economic recovery.
“Working capital management is an area of continuing concern,” the report states. “The ability to bill work and collect debts is critical to ensuring positive cash flow and there does not appear to have been any significant improvement in working capital management during the year.”
The survey, which covered both London and regional firms, said most participants were only reporting small to modest growth. Those firms that did manage to prosper did so primarily through acquisition rather than organic growth.
It stated: “It has been a very mixed year for the legal market. Many law firms have had to work harder to stand still.
Survey contributors represented the broad spectrum of the UK legal market, from those with a turnover in excess of £100 million to small High Street businesses.
Other findings from the survey showed average staff costs as a percentage of revenue at 40 per cent.