Impact of coronavirus on the legal sector

Published On: May 28, 2020

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The economic consequences of the Covid-19 pandemic are having a big impact on law firms and will affect their jobs and recruitment.

Overall Impact 

With this Covid-19 outbreak legal work has been reduced suddenly and significantly with overall revenues down considerably. It is also taking longer for firms to get paid for work already done (or, in the worst cases, not getting paid at all) and this has become a big problem for many firms.  Bear in mind most firms still carry most pre-virus operating expenses such as staff wages, insurance and rent (furlough leave if it has been taken up, only helps to a limited extent). And these firms have a lot less revenue coming in.

In addition, most law firms do not keep large cash reserves on hand.  Even where they have become companies or Limited Liability Partnerships (as opposed to general partnerships), they generally distribute profits to partners typically monthly or part monthly rather than retaining them in the firm.  

This is a problem for all sizes of law firm. Some may think that large or medium sized full-service firms will manage because they are more stable and have a strong client base.   But this thinking is only accurate if the firm does not have high operating expenses (such as a large wage bill or leasing costs) and can cope with reduced revenue.  Nevertheless, many firms – large, medium and small will likely be negatively impacted.  And so will many of the firm’s clients.

It has been stated by economists and others that the UK is about to enter a recession. How long and deep this recession will be, and the impact it will have on client behaviour for legal assistance remains to be seen. To assess things, we have looked at what has happened in other recessions to see what might be learnt about the potential impact on jobs and recruitment in this Covid-19 situation. 

Impacts on jobs 

During the recession that followed the financial crisis in 2008, there were fewer transactions taking place than there had been before in transactional areas of work, such as conveyancing, commercial property and corporate.  This meant that firms reliant on this type of work did not do as well financially as they had previously.  Already lawyers are indicating that there has been a reduction in transactional areas of work. If this situation continues it is likely to mean: 

  • Potential redundancies, particularly amongst support staff, paralegals and junior lawyers (essentially anyone requiring supervision) 
  • Where firms may have in the past turned a blind eye to performance problems, in a context where it is increasingly difficult to get new work into the firm, the firm may be less tolerant of under-performance e.g. not reaching billing targets and claims on the firm’s insurance 
  • Alternatives to redundancies such as being asked to take a voluntary reduction in hours (and therefore pay) or re-training (as explained below)
  • Pay freezes 
  • Promotion freezes 

Over the longer term, it may be that firms look to increase their efficiency by reducing the number of any non-fee earning roles. 

Impact on recruitment 

A recession is likely to impact recruitment.  Lockdown has already had an impact on recruitment, and most firms will probably have to adopt at least something from the following list: 

  • Looking at alternatives to hiring first such as retraining lawyers or support staff.  One example would be moving a commercial property lawyer who is not busy to the real estate litigation team who need an extra person. 
  • Reducing the number of any investment positions such as trainee roles, NQ jobs and 0-3 year lawyer roles.  
  • Delaying or freezing all but essential hires. 

If firms start to make redundancies this would mean that the fewer available jobs should attract a wider pool of candidates and hence greater competition for vacancies. This would be in stark contrast to recent times where it has been common for law firms to fail to find someone for a vacancy.  


These are obviously tough times for both law firms and legal recruitment companies. But things will recover and although there are likely to be fewer vacancies available in the short term, firms with openings will likely to have more candidates to consider, which will make for a more involved recruitment process.  This may also make it tougher for candidates and require extra preparation to succeed.

Whatever position you find yourself in, we at Olsen Recruitment will, nevertheless, do what we can to help.

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