The coronavirus has had a deep effect on legal services. Now we can start drawing conclusions on how deeply this sector has been affected during the last two months.
More than 1000 Hungarian lawyers filled out an anonymous online survey conducted by Pro/Lawyer Consulting. The survey was based on self-declaration, and it examined changes in workload, decrease of income, and the areas of law where service providers saw increased or decreased work.
55% of survey respondents work in Budapest, 28% of them work in large cities other than, and 17% of them in small cities. 73% of respondents operate as solo practitioners, 18% work in a small office of a few people, and the rest of them report working in a medium, large, or an international law firm. Although the survey was specifically controlled to be representative, this breakdown generally corresponds with the national segmentation of the 12,000 lawyers in Hungary.
As you might have guessed, a significant part of the legal community has been hard-hit during the last couple of months. Only 20% have reported that their income has not decreased in the last months because of the pandemic. Conversely, 20% of the survey participants have experienced a decrease between 10% and 30% in revenue, whilst 30% of respondents admitted to suffering from a 30-60% decrease, and a further 22% reported they experienced more than 60% decrease on earnings.
In regards to trainee lawyers (who are educated as lawyers but still need to work for 3 years under an attorney to be eligible to take the Bar exam), 67% stated that their salary has not changed in the last months. 14% of them answered that their salary changed in a negative way, many of which are currently on unpaid leave or work reduced hours.
One respondent commented: “Everyone thinks that lawyers have sacks of money in this situation, but we have plenty of outlay in addition to liability insurance, bar association fees, and the rental fee. A lot of young, entrants and even lawyers who have been practicing for 1-2 years find themselves in a hopeless situation, even after having spent many years and lots of money to open a law firm.”
Changes in the type of work – growth and reduction
As one would imagine, the greatest decrease of work was in the field of real estate, as one in four lawyers remarked. Litigation and corporate matters follow second with 15-20% noting that they experienced a reduction. 5% of the respondents noted that the decrease was significant with damages-related, criminal, and family law cases.
The rate of M&A and finance matters were reduced by 5% as well, but the analysis revealed that these fields employed 38% of the workers of large firms – which is understandable, as these transactions are concentrated in large firms.
It came as no surprise that the largest growth was in the field of labor law – as reported by 32% of respondents. It is not surprising either that claim management took second place in terms of an increase in workload.
The survey asked trainee lawyers how their workload has changed in the last few months. Half of them stated that they have less work, 6% have almost no work, and 9% of them lost their jobs. On the other hand, 16% of respondents stated that they have more work than a few months ago.
Survey participants’ comments:
“It might be that despite the setback, the work has increased overall. This is because, with the drop of the billable hours, more marketing-type work is expected from them.”
“The workload increased, but this is due to being assigned the work of those colleagues that left the firm as a consequence of the lay-offs.”
Lay-offs and terminations
To the question of what percentage of lawyers is affected negatively by the situation, only 1% of the respondents answered that either no one is affected, or a maximum 10% of them are. 45% believe that everyone or almost everyone has been affected and a third of them argue that half of the lawyers have been affected.
90% of the lawyers answered that there were no lay-offs in the last few months – though this can be a result of the majority of the lawyers who filled out the survey working as solo practitioners. In the firms where there were lay-offs, this mostly affected the administrative staff, but 4% stated that they had to dismiss lawyers as well.
It is interesting to compare the answers of lawyers with the answers of trainees. Trainee lawyers declared that 29% of the firm had lay-offs. As 23% of the trainees work in a one-person firm, it is clear that the lay-offs affected medium-sized or large firms, where typically trainees work.
A fifth of the lawyers are hopeful and think that every practice will survive the crisis. 42% of respondents think that 10% of the firms in the market will cease to exist, 23% believe that we will see about 20% of firms vanishing, and 12% forecast a 30% closure rate. But as a respondent summarized this shortly: “It is not the coronavirus that causes the disappearance of a praxis – for those who are considering of giving up the praxis, this is just going to be another reason.” Another lawyer said: “The lawyers that do not have any income mostly represent private individuals. Concerning litigation, uncertainty is normal. The real estate market obviously waits. Right now, people only inquire through the phone, they do not want to spend money on lawyers. This is it, but obviously we will be needed eventually, so I am optimistic.”
Trainee lawyers are not so optimistic, one in four thinks that many of them will lose their jobs in the next few months. At the same time, one in four believes that their salary will be reduced with 10% of those believing that this reduction will be for the long term.
I believe this is likely to be the case. In the last few years, there was a lawyer shortage in the market, and firms were competing for trainees by offering great salaries. It is worth checking out jobs portal – a few months ago 20-30 law firms were looking for trainees, nowadays you cannot see more than 4-5 advertisements. There will be a lot of trainees in the market again, this is going to push down their salary – and it is going to be the firms that will select among the trainees. Some people will have to give up on a lawyer's career.
Is there a need for governmental help?
More than three-quarters of the lawyers surveyed believe that there is a need for some kind of governmental measure in the sector. Primarily, they would be satisfied with a reduction of contributions, or the complete release from these, or perhaps seeing an extension to the sector of the measures helping the contractors who are in the “KATA” (self-employed) system. Plenty of people wrote that they expected more from their bar association, stronger enforcement of claims, and generally, easily available membership fee discount (or the remittal of the fee for a couple of months). If the lawyers are not working, they still have hundreds of thousands of expenses: rental fees, bar association fees, liability insurance, and also maintaining the infrastructure of their practices.
It is mainly the sole practitioners who want governmental help, 4 out of 5 would like to see these measures implemented. As the size of the firm grows, the need for help decreases, but even half of the lawyers who work in an international firm noted that help is needed. It is mostly the medium-size firms that do not see a need for help, with 58% of respondents in that group claiming they see no need for it.
The future – what are they foreseeing?
17% of the trainees believe that from now on, it will be a basic requirement to work in home-offices. As one of them says: “The expansion of home-office and electronic administration will enhance a career change among those who were not familiar with electronic services and remote working until now.” Another opinion is: “I have been working in a home-office since March, and it is great that I can manage almost everything from home. These are my trainee period’s best weeks. This situation has proven that there is no need to rush into the office in the morning and stay there even on a Friday night. As long as I am available all time, write every submission on time, and provide legal advice, I can do it all from home.”
More people are hopeful about remote working, but there has been more criticism dedicated to the court system, mainly because of the deadlines and the difficulty of administration. The widest criticism was to Skype-type trials. It not only put lawyers in a difficult situation, but the hearings of the witnesses and other parties concerned were problematic in the last weeks.
But to end up with a positive note: “We have put in a lot of time and attention right now for everyone to think over what it is that they want to evolve and specialize in. I encourage everyone with self-education and objectives to use this time to think thoroughly. I believe that now it is an important time to have a good strategy, or to have a strategy ready for the next 2 years.” – says a lawyer. Another adds: “We need the website, the marketing, and with these, there will be no problem.”
By Mate Bende, Partner, Pro/Lawyer Consulting
With 10 years of legal communication experience, Mate Bende started his legal consultancy firm, Pro/Lawyer Consulting in 2015, with the intention of, helping lawyers and the legal industry reach their business goals. Until today he worked with more than 50 law firms and several legal networks in the CEE region.. His main focus is on PR based business development solutions which include branding, online presence for law firms, social media trainings and legal ranking consultancy as well. In 2016 and 2017 Pro/Lawyer won a Hungarian B2B communications award, both times with a campaign in the legal business sphere. From 2018, the firm is a member of the Nextlaw Global Public Affairs Network, powered by Dentons.