Powered by LawFuel – The UK Legal Industry generated revenues of £9.34bn in the first calendar quarter of 2020, down 6.6% on the final quarter of 2019. And while there are usually falls between Q4 and Q1 due to seasonal factors, the drop this quarter was the highest in four years, a full one percentage point greater than the drop in the same period in the prior year. The final weeks of March cover the period when Covid-19 was beginning to impact the economy.
To put this in context, overall Q1 2020 UK Services Industries turnover was £53.49bn, down 7.6%. Both Legal and Services had however reached record highs in Q4 2019.
Legal Industry Woes
Augusta recently published analysis of 40 of the UK’s leading law firms which shows that before the crisis hit, 55% had insufficient cash on their balance sheets to cover one month’s bills and 38% could not even fund one months’ staff salary’s from reserves.
Louis Young, Managing Director at leading litigation funder Augusta commented on the ONS data: “The Legal Industry in the UK had already started to see growth fall off before the pandemic hit. UK law firms have seen significant revenue falls since lockdown began, Q2 will unfortunately be well below past quarters. Many firms are seeking support for their businesses – the provision of finance from external sources will be incredibly important to their survival as time progresses.”
Andrew O’Connor, Investment Manager at Augusta and author of the law firm research said: “Before the crisis, Law firm’s lean approaches to cash management were hailed as improving operating efficiency. However this has also left balance sheets undercapitalised to deal with the prolonged financial shock that is currently unfolding”.
Louis Young and Andrew O’Connor are available for interview as required.
About The Augusta Research:
- In May 2020, Augusta published research based on analysis of the top 40 UK LLPs published accounts.
- Data on financial health and stability was analysed to identify potential issues.
- The full research report is available on request.
About The ONS Data:
- Office of National Statistics publishes regular data on the UK services industry – the Monthly Business Survey
- The chart below shows UK turnover for Legal Services (JQ3O) by quarter since 2015.
About Augusta Ventures:
– Established in 2013, Augusta is the largest litigation and dispute funding institution in the UK by # cases. Augusta’s scale enables us to make decisions in market-leading timeframes and fund cases of any size.
– Augusta is organised into specialist practice groups: Arbitration, Class Action, Competition, Consumer, Intellectual Property and Litigation, and sectors: Financial Services and Construction & Energy.
– By the end of 2019, Augusta had funded 227 claims.
- What Happens When Partners Must Compulsorily Retire? UK Court Decision Examines The Issue
- Linklaters Set To Join The Ranks Of The Female Law Firm Leaders
- Fox-Batting Barrister Blacklisted, He Says
- Armstrong Teasdale Adds 50 Lawyers With London Law Acquistion
- Freshfields hires team of machine learning experts