Oh well it had to end sometime, all this boom and more boom, and money and more money … just couldn’t be sustainable could it ?
So it turns out that lawyers too will be losing their jobs, as some are already. Terrible stuff as most of the public wont give a hoot about a few lawyers losing their jobs, or will they ? Pity the Law Society hasn’t improved the levels of public respect in the legal profession, but maybe they just want to keep lawyers in the hated stakes for some reason ?
The Herald reports :
Lawyers’ jobs under threat as credit crisis hits earnings
MARK SMITH, Deputy Business Editor
Large numbers of Scottish lawyers could be made redundant and firms' equity partners could see their annual profit-sharing pay-outs slashed amid the credit crunch and the ongoing slump in the housing market.
According to a survey by accounting giant PKF, Scottish legal firms now face the threat of both large-scale job cuts and dramatically reduced profits.
Moreover, law firms with exposure to property - either directly through conveyancing or indirectly via their connections with construction or property clients - are likely to be hammered the hardest.
The survey provides the latest chapter heading in the tale of a housing downturn and credit crisis that is now gradually rippling through the rest of the economy, with the legal profession the latest unforeseen casuality.
Seasonally-adjusted figures from the British Bankers' Association last week show the number of new mortgages approved for house purchase in the UK plummeted to yet another record low in May.
And while consultancy Capital Economics said that Scotland will probably not be as badly affected as the rest of the UK, house prices north of the border are still expected to tumble by between 20% and 25% between this year and the end of 2010 - although the group noted this would be a significantly better outcome than the 30% to 35% fall predicted nationwide.
Charles Barnett, a partner at PKF, said: "Of course, not all Scottish law firms are at risk. Those firms with different speicalities, such as criminal law, for example, will not really be impacted.
"But those with a connection to the property market are vulnerable, because most of their work is essentially transactional and with the property market is in decline their are simply fewer transactions.
"I suspect that before long there will be widespread redundancies, and I don't just mean legal assistants and secretaries, but I think this will go right through practising lawyers and partners.
"I'm not going to name any firms in particular, but those which are heavily dependent on the property market are already making staff redundant."
In many Scottish law firms, a large chunk of the profits from a given financial year are often divided up among the partners, and in the good times such distributions of wealth often results in large pay rises for partners.
Barnett added: "Eventually, I suspect there will be a series of mergers among Scottish law firms and these firms should ultimately reassess their strategy so in the future they are not so dependent on the property market."
PKF conducted its survey by sending questionnaires to many top law firms in Scotland and 54% said their greatest concern at the moment was the economy, with 36% stating that their second-biggest worry is staff recruitment and retention.
Asked about the level of concern, Valerie McEwan, a spokeswoman for the Law Society of Scotland, yesterday told The Herald: "We do know that a number of paralegals have been let go recently, but we don't know of any solicitors that have been made redundant.
"We are monitoring the situation very closely."
According to the PKF study, nearly two-thirds of the law firms surveyed also said they believed that the most significant impact of the credit crunch would be a decline in turnover growth, with 55% concerned about reduced profits for equity partners.
Barnett said: "When partners come up short with their profits, it's unlikely they'll be able to go to the bank these days and ask for a quick £250,000 to tide them over to pay the wages until times get better.
"The banks still have no appetite to lend."
Nonetheless, the survey also found that many firms have devised a variety of solutions for dealing with the predicted reduction in turnover.
Some 55% of firms surveyed proposed selling more specialist partner time, and 45% said they will develop new service lines Another 36% believed that expanding geographically would be the best option for increasing fee revenue over the next two years.
Barnett added: "Law firms, like any other business, are not immune to the credit crunch and developing the services a firm offers either through specialisms, acquisitions or expanding geographically are all sensible solutions to counter a downturn in the marketplace."
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