From Brexit, to Covid, to the Ukraine crisis and, now, an economic crisis, the Irish legal sector has faced down significant challenges in recent years. There have also been other significant challenges in the sector – an ongoing battle for talented staff, wage inflation and technology adoption.

The sector has remained resilient to date, but the 2022 Survey of Law Firms in Ireland shows a significant decline in confidence for the next 12 months by firm leaders. The survey shows just 13% of respondents see an improving outlook, down from 63% in 2021, with 45% believe it will deteriorate. Our last survey showed Dublin-based firms significantly more confident about the outlook, but this time, Dublin and regional firms are almost exactly aligned.

The survey shows less volatility in results than has been typical in recent years, as the disruption of the pandemic ebbs. The sector continued its recovery from the pandemic with many firms enjoying some growth over the past 12 months, even though more firms reported a stable, rather than optimistic outcome in the period.

The influx of UK or international firms has had a significant impact on the legal market here. Most Top 20 and Dublin based firms reported that the entrance of UK and International legal firms has presented challenges for recruiting and retaining partners and staff, salary levels, the reliance on technology, service innovation, and competition in the Irish legal marketplace. The research has shown that in the last 12 months, more than one in three firms surveyed had been approached or made an approach with a view to a merger and most of them were approaches made by a UK or International law firm. Currently seven of the Top 20 firms in Ireland are now international and or UK firms.

Maintaining profitability continues to be identified as a key challenge for law firms as profit margins come under pressure from rising costs and wage inflation. It is noteworthy that almost two in three law firms have reported increasing their fee rates in the last twelve months. It remains to be seen whether the continuing increase in wages and other operational costs of doing business can be fully recovered or passed on to clients.

When asked to identify the most pressing issues, law firms named the economy and inflation as their top concern - it featured in 65% of answers. Recruitment & retention of staff placed second,

with 56% of responses. The war for talent has revived amid the pandemic recovery. The pandemic has also disrupted working practices and this remains an issue for many firms, as they try to balance a desire for flexible working with business needs. Most Dublin based mid- tier and larger firms have adopted a hybrid of three days working in the office and two days working remotely while most smaller and regional firms have adopted a more “in office” working approach.