It looks like the Federal Reserve Board have miraculously created a soft landing for the US economy, which has strong growth and shrinking inflation, and the impact will buoy the global economy, and create positive knock on effects for the UK.
Many UK citizens still have money to spend, but are withholding it in the face of uncertainty. Mortgage rates have stabilised, but the inescapable fact is that almost 2 million households will come off a fixed rate mortgage in 2024, onto a new higher rate one, which happens to be not quite as high as expected but will nevertheless be double in some cases. The early signs of positivity in the conveyancing press are not well founded.
Businesses in distress and actual liquidations are up, which means potentially more corporate and commercial inbound activity for law firms, but also more trained and skilled staff to fill vacancies in the jobs market, so that people can maintain their standards of living and move house.
The situation in the middle east will impact the global and UK economy medium term and isn’t going away. Supply chain issues will get worse (again) and fuel prices will increase. That will hit the spending power of households across the country.
A new labour government looks almost inevitable, and changes will be slow to take effect but they are likely to open up creation of new homes, which the conservatives had refused to do due to the risk of upsetting the pensioner vote. That in turn will free up more movement in the housing market as more first time buyers acquire property and others move up.
What has sustained conveyancing for centuries (old money, passing down from one generation to another, so the new generation can move their expanding families to bigger properties) is in one respect having a lesser effect as people live longer (with the exception of the covid bubble), however, average mortality rates are actually falling for the first time since the war years due to issues such as unexplained middle aged male early deaths, most of which are in their own home.
What does this mean for your firm as you try to plan? Many have already laid off numbers of conveyancers, so any new uptick is likely to cause a shortage of talent. Experienced commercial lawyers are in great demand. Many community law firms have come through covid and decided that their life priorities lie in a long and happy retirement and no longer want cash for an exit, and a lot of firms are out there looking for one.
Post covid there are still a lot of people out there who are not functioning correctly, have ongoing anxiety issues and are susceptible to stress, all working from home more often, or in the main. Few firms pay serious attention to such things and that will play out in HR, errors and omissions and forced absences as staff see themselves being performance managed and decide to go off sick to buy themselves some time. Few firms realise that there are some very clever and cost effective HR benefits platforms out there that help staff retention and enable the ones who perform to select their own rewards.
As private equity and cash influx in the legal sector gathers pace, medium sized firms will be bought more frequently, and salary to income rations will jump from the previous norms to what the PE owners require – which is significantly more. Lots of fee earners will struggle and some will bail out, looking for a better work/life/remuneration balance. That creates opportunity for the community firms who will benefit. How many law firms maintain a “people pipeline”? Not many.
Every law firm should have a senior, savvy, business manager on it’s books dealing with these aspects, identifying threats and opportunities, talking to new people and potential acquisitions, and looking for ways of bringing in business. It isn’t rocket science but only the strong commercially aware ones will survive and prosper.
Written by Jon Cook