Welcome to the latest issue of Legal Insight, the PM+M legal newsletter. In this edition, the spotlight is firmly on Sara Hutton, an adviser with significant experience in the legal profession, working predominantly with professional practices.
In the final article of our interview series with Sara, Helen Clayton catches up with Sara to discuss possible opportunities for law firms as we look to the future, post-pandemic.
Helen: Continuing the theme of looking forward, we can’t look at challenges and not opportunities.
Sara: Economists are significantly more bullish than they were 12 months ago and talk of recession has long since fizzled out. Undoubtedly, there are areas of the economy that will struggle for some time but overall demand for the wide range of legal services many firms offer is likely to be good to strong.
Whilst the conveyancing market will settle down, there will be areas picking up including new opportunities driven by things such as HMRC fraud investigations re Covid support schemes; landlord/tenant disputes; the government spending and investment plans; mergers and acquisition activity; the end of the furlough scheme driving difficult business decisions.
Helen: What do you envisage for new firms being established and those choosing to or being forced to close their doors?
Sara: Whilst new entrants are starting to gain a foothold in the market, there are more firms closing their doors or being acquired so, overall, firm numbers are coming down. This provides opportunities for well-resourced firms with a strong presence in their market – whether that be by specialism or geography – to grow through excellent client service and expertise whilst maintaining or even improving pricing.
As I’ve mentioned, the long talked about consolidation in the legal market appears to be on the horizon. With many firms enjoying healthy cash positions and increasing activity from new entrants including venture capitalists, there are opportunities for both vendors and purchasers.
If you are a purchaser, depending on your ambition there are opportunities to explore the VC market or other external investment, such as listing, given there is plenty of liquidity in the market and listed firms are reporting strong results, driving more market interest. For those with more modest ambition, there are plenty of good advisers out there to support you and an increasing number of firms looking for purchasers.
For vendors, the established consolidators are increasingly active and now have the experience and funding to complete deals smoothly. However, you need to make your firm “sale ready” so talk to an accountant who really knows the legal sector and has the experience to advise.
Helen: Indeed, preparing your firm for an exit is so important in being able to drive the best deal. Whilst focus is often on price, deal, securing people’s employment, due diligence is critical for the acquirer and being ‘sale ready’ encompasses so many areas. It’s absolutely worth the early consultation on being prepared.
Read more on mergers and acquisitions in the June 2020 edition of Legal Insight by clicking here.
To read the next article in the series, ‘Research and development in law firms’, click here.
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