Law firm FDs predict public sector work will grow in 2010 - but only moderately

Almost half of the top 100 law firms in the UK expect their public sector practice to grow in 2010, according to a survey of finance directors conducted by legal publisher Sweet & Maxwell.

Some 42% of the respondents predicted moderate growth in public sector work over the twelve months, while 4% forecast fast growth.

However, a significant number – one in four (27%) – said their public sector workload would contract. The same percentage believed there would be no change in 2010.

Of 17 practice areas covered by the survey, public sector was seen as the one with the weakest prospective performance.

Finance directors pointed to restructuring/insolvency, commercial litigation and dispute resolution, and fraud and white-collar crime as the three most promising areas for growth. Regulatory and employment work are also seen as areas where workloads are likely to increase.

The Sweet & Maxwell survey suggested greater optimism among law firm finance directors about staffing levels than in 2009, which was marked in many cases by severe cuts and recruitment freezes. Just 7% of the respondents said redundancies are likely, although almost half (47%) conceded they were possible.

Sweet & Maxwell, which has run the survey for four years, said: “A number of leading firms felt that they had reduced their staffing levels to the point where they were as lean an organisation as possible. Redundancy has a very negative impact on staff morale, many of whom will have felt significant job insecurity over the last eighteen months.”

A possible return to growth mode is highlighted by the fact that 40% suggested that it is likely their firms will make lateral hires of senior teams during the year, while 50% say it is possible.

The most popular methods for improving profitability are an increase in cross-selling and tighter credit control. A third (33%) said it is likely that they will cut unprofitable services.

The greater bullishness among firms is also highlighted by the finding that one in four (27%) finance directors said it is likely that they will seek to increase charge out rates.