Most Irish law firms have increased the rates charged to their clients in order to maintain their margins in the face of rising inflation and significant increases in operating and salary costs.
The trend, uncovered in a report by Evelyn Partners, comes amid increased competition from UK and international companies which has led to spiraling wages in Dublin companies.
The report pointed out that “staggering salaries” available in London had also fueled pressure for pay rises this side of the Irish Sea.
“Nearly two out of three law firms have increased their fee rates to counteract the increase in their cost base,” said the report, based on a survey of senior partners at 108 law firms across the country.
The proportion of firms that have increased their fees is significantly higher than reported in previous years.
In 2020, the percentage of companies that had increased their fees was just 29 percent, compared to 35 percent last year.
However, wage inflation has not been uniform, with Dublin seeing much higher wage increases than outside the capital.
“The average increase in the regions was 3.5 percent, which would correspond to the previous year’s figure. While in Dublin it has gone from 5.5 per cent to almost 11 per cent,” said Paul Wyse, Head of Practice at Evelyn Partners Ireland.
The data was published in the Wealth Management and Professional Services Group’s Annual Law Survey Report.
The survey was previously conducted by Smith & Williamson, which became Evelyn Partners after a merger with Tilney.
According to the report, almost half of the companies surveyed expect the outlook for the sector to deteriorate in the coming year, with the majority citing the economic cycle as a key concern.
It also noted that Dublin became ‘London by the Liffey’ following a post-Brexit influx of British firms.
Seven of the top 20 law firms in terms of practicing lawyers are now UK or international firms and half of the top 30 law firms in the UK have now opened offices in Dublin.
Almost all law firms surveyed considered recruitment and retention to be a top concern.
“The entry of so many UK and international companies into the market is now having a clear impact,” said Mr Wyse.
“You can see that in both the number of new partner hires these firms have made from other firms and the number of executives they recruit.
“We found that at least 150 career changers were made by the top 20 companies in the last 12 months. That’s a lot of talent moving around.”
Mr Wyse said wage levels in London had an impact on wage expectations in Dublin.
“It’s starting to show up in pay increases over here as companies try to keep people,” he said.
The survey found that two-thirds of the top 20 companies and just over half of Dublin-based companies had adopted a hybrid working model of three days in the office and two days remote work for partners and qualified employees.
However, most firms have trainees in the office four to five days a week, while 79 percent of regional firms operate an in-office policy.
https://www.independent.ie/business/irish/two-thirds-of-irish-law-firms-are-increasing-their-fees-as-salary-costs-rise-42172073.html Two-thirds of Irish law firms are increasing their fees as payroll costs rise