Georgetown University Law Center’s 2021 Report on the State of the Legal Market concluded that “2020 may in retrospect be seen as an important inflection point for the redesign of the delivery of legal services on a broader scale” and, despite the unprecedented disruptions caused by the COVID-19 pandemic, most firms were able to adjust and adapt to the challenges with notable success, which “is a tribute to the innovation and resiliency of law firms.”
Despite the hopes of quickly returning to normal, the trend has continued during 2021. In bigger western law firms, largely due to their size, aggressive cost-cutting measures needed to be implemented, including widespread lawyer and office staff headcount and salary reductions, as well as cutting expenses related to office space with reduced use. Reports show that sharp cost-cutting resulted in large profitability in the western world.
Due to an adaptive firm structure, local independent law firms such as ourselves reacted differently. Without cost-cutting on account of our fee earners and office staff, or office space, we managed to maintain our usual steady growth rate. Colleagues have to know that there are not only good days, but they also have to know that we are one team – rain or shine. Our growth is due to un-interruption in a large number of areas, such as competition work and other compliance matters (primarily data protection and security), dispute resolution, M&A, and real estate project work. While we saw a short-term decline in finance, mainly due to payment moratoriums, there was also a sharp increase in labor law cases in relation to large-scale labor force restructuring and new forms of work. Due to the lack of traveling, we experienced saving opportunities. On the other hand, firms developed their IT infrastructure. We missed out on conferences as networking opportunities with colleagues but switched to digital means.
“It Is Not the Strongest of the Species that Survives But the Most Adaptable.” Darwin’s approach has helped us move forward. Those firms that successfully switched to safe and remote data access and work during the early stage of the pandemic were able to continue business almost uninterrupted. However, this was not what many law firms of smaller size – numerous in Hungary – experienced, particularly those who reacted late. I assume that this is typical for our region – it is a question of mentality, adaptivity, and, last but not least, financing the necessary IT infrastructure.
The current situation presents an opportunity for law firms of all sizes to gain new experience, to develop skills and technologies – instituted during the pandemic and retained as a competitive advantage. We now see fully natural virtual communication with clients and colleagues, remote database access, independent access from the office, home, and anywhere in the world, to electronic communication with courts and administrative authorities. Lawyers have to have access to the same information and databases, communicate equally well from a desktop, laptop, smartphone, or any other device, regardless of where they are. This is now a must-have, expected by clients.
Despite the widespread belief that the home office is welcomed by many people, it is my belief that many young lawyers are still eager to work in an office, meet face-to-face, and be a part of a company’s culture. Fortunate enough to have suitable office facilities and a high vaccination rate, we could afford to welcome these colleagues in the office at all times (approximately one-third of our staff). As we see developments on the office facility management front, big law and consulting firms now expect that office occupancy will be at 70 percent capacity. I expect the same trend for our firm and generally for law firms in Hungary.
The big question for most consulting businesses remains: How do you attract colleagues back to the office, with what schedule, and how do you create a new and adapted company culture? One thing is for sure: teambuilding activities and group outings are a preferred means to catch up on the “lost” year and a half. I myself have only just returned from an office cycling tour in Austria. We trust that good team spirit and the ability to rely on each other are big assets of our firm.
As to economic trends, we see large real estate, IT, and healthcare market cases on the horizon, as well as anything to do with the further digitalization of operations and the widespread use of smart technologies. For the public capital markets players and financial markets the new challenge, for clients and lawyers alike, is to understand and cope with ESG and sustainability policy challenges. I’m sure we’ll manage. Law firms in our region will remain adaptive.
By Andras Szecskay, Managing Partner, Szecskay Attorneys at Law