Legal Finance Market Update 2014

The legal sector’s internal finance teams in London had mixed fortunes in 2014.

There was increasing demand for accounting teams to provide an in-house consulting function to fee earners and other business services teams. Consequently, we saw a continued trend of new roles being created with an emphasis on analysing and commenting on pricing, profitability and utilisation as well as providing transparent information to clients. 

This creation of new roles was offset by many firms choosing to relocate non-essential positions outside of London.

The criteria of whether the position needed to be filled in London was often whether it required face to face Partner/fee earner interaction. An increase in commercial accounting and analytical roles in London was counteracted by a marginal decrease in transactional positions. 

Law firms’ clients’ demands for increased levels of management information and competitive pricing seems to be the key driver for the growth of commercially-focused positions and the advent of the Head of Pricing or Pricing Manager position is no longer restricted to only the very largest firms or US-led businesses. 

However, there is still a high proportion of businesses in the top 50 UK law firms that have a broader Commercial Finance Manager or Business Manager position with a remit including pricing, profitability, working capital and general client strategy. Although these are not new functions in the legal sector (indeed in many businesses they have been in place for several years), an increasing number of firms are now creating these positions and there does seem to be a growing emphasis on their importance. 

There is also a growing emphasis on analysing client performance during the WIP management process.

This has led to individuals in these roles receiving additional duties which in turn has resulted in a steady rise in salaries. In the Cashier function, residual balances received renewed attention and several firms created specialist roles for Senior Cashiers to focus on this area. Many firms also brought in contract or temporary staff to cope with this demand. 

2014 saw the re-emergence of firms using temporary staff on an hourly rate.  

This was due to a number of reasons; spikes in workload, projects without defined timeframes leading to finance teams requiring additional headcount, or recruitment for permanent members of staff taking several weeks and a short term solution needed to ensure that the work was completed on time. This demand saw a noticeable rise in the numbers of temporary workers we recruited for multiple clients, a really positive sign that firms are now busy enough to be able to justify using this kind of resource for the first time in several years.