Outlook for 2013: Expect more legal mergers
Karen Hain, partner and head of professional practices at Moore and Smalley, gives her thoughts on 2013.
2012 was another year where we saw many businesses that were profitable on paper collapse because they just didn’t have the cash to stay solvent.
The impacts of poor cashflow cannot be underestimated and it’s going to remain a concern for a lot of businesses in 2013.
All businesses need to make cashflow planning a priority, but it is a particular concern for professional practices, some of whom struggle because senior people are too busy servicing the work to concentrate on getting the cash in.
Achieving good cashflow isn’t just about good cost control and debtor management, it’s about the wider issue of cash planning. Businesses need to be producing cashflow projections, but also have a clear plan of what action they will take if they are not meeting those projections. It’s all about being proactive and having contingency plans for every eventuality.
I predict another tough year for property professionals. There may be a bit more residential work for architects and other property consultants, but that work is still going to be limited. Commercial property is not really moving and shops look likely to remain empty on the high street.
In the legal sector it will another transformational year with huge changes to legal aid contracts and the personal injury marketplace as the government continues its push to combat the ‘whiplash claims mentality’.
The opening up of the legal marketplace to non-lawyers will further increase competition and I expect to see the acceleration of legal practice mergers in 2013. For some law firms this will be seen as a final chance to keep going, for others a positive move that will enable costs to be shared and profits improved.