MANAGING partners throughout Merseyside say that the global credit crunch is impacting on the financial performance of the region’s law firms – but remain upbeat about the rest of the year.
In a survey conducted for Management Partners Merseyside by Exchange Chambers, 95% of those questioned said that the credit crunch was having a negative impact on financial performance.
Jonathan Brown, head of Halliwells’ Liverpool office said: “Our corporate deal flow has actually increased over the last few months with companies wanting to complete deals before the April Capital Gains Tax deadline, but with the banks now adopting a more cautious approach deal activity is sure to decline. However, in a downturn, other practice areas such as corporate recovery, litigation and employment become busier so it’s not all bad news.”
Patrick Gaul, managing partner at Weightmans, said: “The credit crunch is bound to have an impact. Raising the money to run any business will become more expensive and many law firms are now very big businesses. There will be less confidence within the business community. Everybody will tighten their belts. Firms who are heavily reliant on certain areas of business, for example residential conveyancing and corporate mergers, will have to adapt. If they don’t, the impact will be severe.”
He added: “Recession, if that is what we are about to have as a result of the crunch, may have a positive impact for some legal businesses and those with strong litigation or restructuring capabilities will prosper. You hear tales of some firms being quiet in some areas but no-one seems to be panicking. The problem is that most law firms are geared to be busy pretty well all the time and you cannot stay quiet for long.”
Kingsley Hayes, legal director at Silverbeck Rymer, believes the credit crunch could actually boost business for some firms. He said: “The personal injury sector has tended to see an increase in business in times of recession.”
Garry Abrams, managing partner at EAD says residential conveyancing work has dropped off but remains optimistic. He said: "Personal injury work is largely recession-proof but the residential conveyancing market has really slowed down. Firms specialising in a broad spread of work will not be massively concerned but firms too heavily dependent on, for example, big private equity deals or stock market flotations will certainly be feeling the pinch."
Peter Jackson, managing partner at Hill Dickinson believes firms focusing on litigation can expect a busy period. He said: “A large part of our business is litigation based and, of course, litigation booms in any downturn or recession. Employment is also booming. Our corporate teams are more niche and do not play at the level of some who will be affected.”
Tom Handley, director of Chambers at Exchange Chambers, said: “It is clear that law firms throughout the region are well equipped to weather the current economic storm.”