THE LANDSCAPE

Corporate and commercial law firms find themselves in a unique position in light of the global pandemic, Covid-19. Due to the highly diversified nature of many of these firms’ work, it is likely that many will experience an increase in workflows of a litigation, dispute resolution, labour and restructuring nature. Conversely, transactional law services such as contract, banking law as well as compliance and governance are likely to see a decline in billable hours on account of third party administrative delays, a lowering of urgency in light of the pandemic and inherent delays at key institutional bodies.

While the rise and fall in demand for these firms is dependant on the sectors to which they are primarily exposed, as well as the extent to which their client base has been shielded from the pandemic’s widespread financial impact, there are a few common themes to the landscape in which commercial law firms find themselves currently:

1. Most clients will be pushing for/insisting on longer payment terms
2. Inherent delays across the legal system and its affiliate bodies will hamper completion of deliverables and the ability to invoice
3. A number of large forecasted projects will be postponed as a result of cash constraints and re-prioritising
4. Law firms, along with other major industry sectors, are being forced to restructure their organisations and workforce to offer high-tech, digitally enabled, virtual legal services

There is a unique combination of cashflow constraints and opportunity for growth facing these commercial law firms, a concept outlined in our Cash Gap article. The decreased or postponed billing hours can place pressure on a firm’s ability to sustain overheads and to invest in the remote working infrastructure and cyber-security required to meet the general need for online and virtual working practices.

The need for restructuring, M&A, legal incorporation of new business entities and expansion into services targeted at high-demand sectors all present ample growth opportunities to firms with sufficient liquidity to meet this demand.