The number of new accountancy practices is growing at its fastest rate since before the financial crisis. There are now more than 45,000 accountancy firms in the UK – almost 16 per cent more than in 2008 with the number of jobs in the sector increasing from 157,000 in 2009 to 177,000 at the end of last year.
Although enjoying slower growth, the UK’s legal sector is rapidly becoming a global centre for law services with more than 7 per cent of all legal work globally carried out in Britain. A report by TheCityUK found that solicitors’ turnover increased by 6 per cent last year on top of an 8.4 per cent rise in 2013 with legal firms now enjoying revenues of £31 billion.
Hurdles to Growth
Yet starting and growing a firm in either sector is not for the faint-hearted. At a time of strong growth, both new and established accountancy and legal firms can find it hard to attract good staff when competition for qualified candidates is so intense. Research carried out by trade body Accountex earlier this year found that identifying a niche area, being able to offer new services, using technology to improve efficiencies by cutting out manual processes, standing out in a crowded market and improving marketing to bring in new clients are the five biggest hurdles to growth.
Scott Hilder, Accountex’s exhibition director, said that accountancy firms must be distinctive by offering new services backed by strong marketing and the use of the latest technology. “There are quite a few [firms] who are only just realising that the market is only going to get better for accountancy firms that invest and adapt,” he added.
It is a view backed up by some research we carried out on social media. Crunch – an accountancy firm specialising in offering its tailored services to small businesses online – told us that embracing new technology was a springboard to growth. “Just about all the manual bits of accountancy can be automated now, meaning accountants can spend more time consulting with clients and helping them run their business.” Crunch also advised new firms to take the dearth of newly qualified accountants and the competition for them seriously. It started its own academy to train new accountants, taking on apprentices from college every few months and training them on the job.
Another legal firm we spoke to while conducting our straw poll on social media, was Keystone Law. They are an example of how technology has very much assisted in streamlining the business.
Back in 2002 Keystone pioneered the introduction of the dispersed model in legal services. Much like the term ‘dispersed’ suggests, the firm’s lawyers are situated all over the country and beyond. Using technology to fill all the geographic gaps between lawyers, clients and central support staff, Keystone brings a real element of entrepreneurship to a profession with over a thousand years of history. Lawyers have the freedom and flexibility from work wherever they choose – at home, in-house with a client or at one of Keystone’s designated work-hubs. All whilst being supported by a dedicated central support team.
Managing Director, James Knight, said: “By removing the traditional partnership structure, which sees a strict hierarchy of Partners and Associates, the firm has realised an increase in productivity and significant efficiency gains because all lawyers work on a level-playing field, under the title of Consultant Solicitor.”
Recruitment issues are also seen as major challenges in the legal profession although for different reasons. Increasing use of technology and the outsourcing of administrative functions to lower cost economies like India and South Africa mean that many solicitors are no longer willing to employ people with legal training to carry out fairly mundane tasks in the office. Instead, legal firms are concentrating their recruitment efforts on the higher end of the market – looking for better-qualified graduates who can hit the ground running on executive work.
Automating many tasks is also seen as vital for growth by solicitors. It can reduce spending on paralegal services and improve a firm’s marketing at the same time. Writing in Law Practice Today, Frederick Esposito said: “Technology can offer law firms and their clients more efficiency and if properly structured, reduced spend and value. For example, some practice areas are very paper-intensive or form-driven, and by automating processes or outsourcing to reduce costs, that value is passed onto clients. We’re beginning to see more firms outsource these types of processes to focus their efforts on the more strategic legal work.”
There is little doubt that solicitors are facing a harder economic outlook than their counterparts in accountancy. Cuts in public spending, continued uncertainty in the global economy and increased competition for international clients are all seen as drags on growth. But the message for both accountants and solicitors is clear: these hurdles can be overcome by thinking strategically, investing in smart new technologies, ensuring that staff are properly trained on the job and finding a niche and marketing heavily within it.