An overwhelming majority of the UK’s biggest law firms are now facing pressure to cut the costs of their services, according to data shared exclusively with City A.M.
Nine-in-ten partners in law firms with turnovers of more than £500m a year said they are facing pressure to reduce costs and use different billing arrangements, a poll of 200 law firm partners from litigation funder Harbour shows.
Four-fifths (80 per cent) of law firms said they are planning to offer various types of “no win, no fee” payment schemes in the next 18 months, while 89 per cent said they plan to make use of litigation funding.
At the same time, two fifths (40 per cent) of law firms say they are planning to cut costs in the coming year, while 37 per cent said they are planning to invest in legal tech to reduce overheads.
The polling figures come as data from Harbour shows companies are now taking twice as much time to pay their legal bills than they were two years ago, with the average time having more than doubled from 23 days in March 2020 to 39 days now.
Ellora MacPherson, chief investment officer at Harbour said: “This survey shows that all but the very largest law firms have been grappling with downward cost pressures, enduring in many cases beyond the pandemic.”
“But responses to this survey reveal that creative firms are finding ways other than cost-cutting to maintain – or indeed increase – profitability.”
“A high proportion of firms are considering making more use of CFAs and DBAs, and working with litigation funders to support their growth ambitions.”