PwC warns of further job cuts for lawyers
Job losses and potential mergers could be on the cards for some of Birmingham’s lawyers, financial experts have warned.
The annual legal sector survey carried out by PricewaterhouseCoopers said mid-tier national firms had been the worst affected by the financial crash, with profits down an average of 28 per cent compared to the year before.
Some of the mid-tier firms included in the bracket have significant offices in Birmingham.
The largest firms in the country saw profits drop 21 per cent, kept slightly ahead of the pack by outsourcing parts of the business to reduce costs, as well as expanding overseas operations.Three quarters of the country’s top 10 firms now earn more than 40 per cent of all fees from international operations.
Business confidence is still weak among all firms, PwC said, and both staff numbers and hourly rates fell, putting huge pressure on many companies.
PwC partner Alistair Rose said: "This year has seen the greatest turmoil in the law firm sector since our survey began in 1991. A relatively small number of firms predicted the likely extent and severity of the recession and started to cut headcount and take out cost early in the second half of financial year 2009."
"Looking to 2010 and beyond, we believe structural change in the UK legal profession is clearly underway. The catalyst of the recession has led firms to focus on becoming more efficient, reducing cost by structural change, as well as significant cuts in both fee earner and support staff headcount. There is still some way to go in this respect.
"Fierce competition has made firms think hard about how to become distinctive in the eye of the client. The recession has put some operating models under severe stress and survival in the current form for some firms may prove a challenge if market conditions do not rapidly improve."