UNTIL RECENTLY, THE legal and accountancy sectors had been defined by specific characteristics and defined boundaries where each sector had a clear offering provided to the economy.
Legal practices are no longer competing with just legal practices and the corporate world but also with accountancy firms, management consultancy firms, marketing firms and technology firms to resource their practices to provide customer solutions in pursuit of top line revenue growth.
Growth, however, is hindered by a restricted pool of available talent. In a very competitive sector, legal practices are looking to offer more value added services to attract new clients to increase revenue and obtain a greater piece of the pie.
While advances in technology have brought some efficiencies to the sector, if a firm wants to provide a greater service offering, as well as acquire new clients, it still requires human resources.
The concern is that the legal sector is at full employment.
Tight labour market
During the recession, employee numbers in the legal sector fell by a massive 21% according to the Law Society of Ireland and while numbers have since recovered to pre-recession levels, even with interest from second level students seeking to study a law degree in 2018 (based on CAO first preference listings) increasing by 23% (+502 – 1st pref) since 2010, these numbers are not sufficient to keep pace with demand.
The legal sector has over 18,000 people working across a wide range of settings including both practices and in-house, and the sector is under pressure experiencing wage increases well above inflation as a result of a tightening labour market.
Wage inflation is placing a focus for all legal firms on talent acquisition and competition for skilled professionals.
Firms are looking beyond the historic profile of a legal firm employee to recruit diverse and talented individuals across all sectors including finance, technology, marketing, engineering and life sciences.
Legal consultancy is a rapidly growing line of revenue for legal firms. It is imperative when speaking to a business owner that the legal firm demonstrates an in-depth understanding of how their business fits in that given sector.
Legal firms, looking beyond the status quo to fill the void of a trailing supply of solicitors have unearthed an important resource in sector specialists.
When meeting a client, the engineer, scientist or marketing expert complements legal advice by demonstrating a detailed understanding of the forces and pressures in a particular sector.
Wider talent pool
Employee diversity is a solution to a tightening labour market, however, beyond that it minimises group think, widens the talent pool and opens up new opportunities for legal firms to provide a cradle to grave (start to finish) legal consultancy service across a wider range of sectors than previously supported.
As commented upon in AIB’s Professional Practices Outlook 2019, the legal sector is highly competitive and firms are constantly looking to invest in new technologies, new locations and as discussed in new talent acquisition to retain or grow market share.
While the majority of firms have increased revenue over the past few years, margins are coming under pressure, mainly from wage inflation and we now may see consolidation in a sector where mergers have not been a characteristic for the past 5 years.
The legal sector however is resilient and having worked with legal firms all over the country we are confident the profession will adapt to meet the unique sector challenges.
Ciaran Foley is an AIB sector strategist for business and professional services.