Keystone Law’s head has said the listed law firm is readying itself to profit on the looming economic downturn, with a view to poaching lawyers laid off from other firms.
Speaking to City A.M. Keystone chief executive James Knight said the remote-first law firm is ready to pick up those lawyers facing heightened pressure to meet top level billing targets, as firms seek to justify the bumper salaries that have been handed out during the boom.
Knight said those lawyers reluctant to return to offices may be increasingly keen to jump ship, as pressure ramps up to get back to work.
He said that while the market for legal services is “still strong” it is inevitable the boom will subside. “At the end of the day, an exceptionally strong market is exceptional,” Knight said.
Established in 2002, Keystone is one of just six UK listed law firms. The AIM listed company works on a remote-first model, in taking a 25 per cent cut of its lawyers’ fees.
Any downturn will in turn lead to a release of pressure in the UK’s currently “intensively competitive recruitment market,” Knight said.
He explained the past two years’ boom, paired with national inflation, has driven significant wage inflation in the legal sector. However, any drop in demand for legal services will put pressure on lawyers on firms.
The situation could see the lawyers hired on bumper salaries over the past two years pushed out of their new firms. “If people are not able to meet their billing targets, law firms will cut the cloth,” Knight said.
The comments come after Keystone today posted a 9.3 per cent uptick in its revenues for the first half of 2022. The firm however saw its adjusted pre-tax profits drop one per cent compared to last year to £4.5m.
Knight said the return to in-person networking events, following the lifting of pandemic restrictions, had “skewed the profitability”, due to the cost of hosting such events. Knight said the in-person events help ensure work continues to be “cross referred” inside the firm.
“It’s very important for those lawyers to know each other,” Knight said. “The nature of humans is they need to know each other personally to work well in a team.”