Change is always around the corner

When last month I wrote of how legal firms should always have plans in place for the unexpected, I did not think we’d have seen two such dramatic examples of why such preparation was necessary.

Though last month it was court rooms closed due to failing infrastructure that was of a concern to some, the challenge soon moved to something much more fundamental.

While industrial action by the Criminal Bar Association (CBA) was anticipated, the scale and length of any strike will always be an open question. Depending on those around the negotiating table, it may be days, weeks, or months.

Financial planning for delays in invoice payments are one thing, and part of any legal firm’s working lives, but the risk of whole cases potentially being cancelled, and with no certainty on when things may return to normal, is another thing.

The need then for having contingency plans in place is apparent and part of a sensible approach to business. After all, the financial obligations of legal firms have not been suspended, even if cashflow and liquidity are disrupted.

It may be necessary that a firm seeks support across over a year or more, but with the right support this can be a manageable and effective measure of ensuring operations can continue and seeing the sector through present challenges.

On top of this sector-specific challenge is the impact of the sad death of Her Majesty Queen Elizabeth II. With a moment of great historical importance, and period of national mourning, comes inevitable change to working practices.

An unexpected bank holiday to concur with Her Majesty’s funeral, and businesses choosing to adopt changes to working patterns in response to the events, created a period of unexpected flux. Invoices may have been further delayed, meetings postponed, and delays may have occurred in the system.

Coupled with the impact of inflation, interest rate rises, and energy prices, these unexpected challenges may present unexpected gaps in financing – but payroll, rent and infrastructure costs still need paying.

Supporting successful, well-managed firms who find themselves in this position is central to Iceberg’s purpose. We understand these challenges occur and the impact that they may bring, and our knowledge of the sector enables us to present firms with options suitable for their circumstances.

The specific combination of disruptions over the last months is unique but the fact that disruption exists, and will continue to do so, is an almost absolute certainty.

What almost felt like an absolute certainty was that interest rates were not going to change. After year after year of no change at all, or minor fluctuations, 2022 has seen a period of unpheaval unseen in well over a decade.Where financial planning for low, unchanging interest rates had almost become second nature, change seems to be the new order.

Firms throughout the sector will be considering the impact of further rises, which are anticipated to reach 4% in the second quarter of 2023 – and, if they were to occur, would mean a rise of over 3% in twelve months.

Though the most lasting impact of this period of change for the sector may well be the re-emergence of KCs in court rooms, after some 70 years of QCs, it will be the decisions that firms make about financial management that will be of most immediate importance.

With sound planning, the legal sector will once again overcome the challenges it may face – and I look forward to supporting them in doing so.