Explore state of high-street law in Scotland in numbers from survival to growth

The overall sentiment of those surveyed about the future of their practices was mixed, with an almost even split (39 per cent vs. 38 per cent) feeling optimistic about the future and pessimistic.

• Practices with 10 or fewer solicitors were more optimistic but sole practitioners were most likely to be very pessimistic.
• If a practice was involved in offering legal aid work, they are significantly more likely to be very pessimistic about their future and the future of the small firm sector as a whole than those not offering legal aid (19 per cent vs. five per cent).

Amongst the positive attitudes for the future, several key areas have been highlighted as strengths for smaller firms including a more personalised service, the integration of technology, more competitive fees, better work culture and retention, consolidation in the market and greater specialisation.

One respondent said:

“I think that there's certainly still a very high demand for the sort of work that we do and the client base that we have seem to want to deal with a firm that's local to them, and they can actually speak to the solicitors working on their case.” 

Clearly, however, there are existential threats to the survival of Scotland’s smaller practices. It is a precarious market. Practitioners are concerned about increasing competition with larger practices, being absorbed by rivals and the burden of regulation (the study was conducted before the passing of the Regulation of Legal Services (Scotland) Bill).

What’s more, recruitment and retention is a ‘major issue’ as these high-street and rural firms struggle to offer competitive salary and benefits in comparison to larger practices. Economic pressures, which are affecting small businesses across different sectors, present dangers with instability, higher running costs and taxes highlighted.

Legal aid funding could be the final straw for firms offering such work, and shifting client expectations (more consumers expect AI-driven services, for instance, and lower fees).

“Big firms are swallowing up the small firms creating a power struggle and leaving small firms having to justify their existence.”

Earlier this year the Journal explored the next generation of Scottish legal talent, the skills they bring and the expectations of the profession they carry. The message was comprehensive and clear: the next generation expect the profession to change and to be the ones to change it, with improvements in work culture and balance, ESG considerations and development opportunities prioritised.

But what does this mean for smaller firms? Broadly speaking, solicitors at these practices felt turnover was at an ‘expected’ level (60 per cent of responses), although larger small firms (with 11 or more solicitors) were significantly more likely to consider turnover ‘higher than expected’ (37 per cent vs. 14 per cent). This likely speaks to the benefits of office culture of smaller businesses.

So why are talented solicitors leaving, aside from pay? Key issues highlighted by the respondents include lack of clear career progression with opportunities more limited in smaller environments, the perceived lack of variety in work in comparison to full-service firms, high workloads and pressure, limited employee benefits and resources including technology, and finally questions of prestige when comparing experience at high-street firms and flagship practices.

“We're finding that young solicitors, newly qualified solicitors, trainees, often they gravitate to the big cities. They'll go to Glasgow and Edinburgh because they see it as having more opportunities there or once they qualify, because the money is better, there's better benefits, better security. So, trying to attract young solicitors to work, particularly in a firm that is not in one of the big cities, is pretty difficult.”

What does the future hold for the firms themselves?

• 44 per cent of respondents had not taken steps towards retirement, succession planning or ceasing to practise. Sole owners and practices with 10 or fewer solicitors were even more likely to have taken no steps.
• The majority (53 per cent) view succession as their preferred exit strategy.
• Only 20 per cent have a succession plan in place, but 30 per cent are consider a plan but have yet to put it into action.

The starkest revelations in the report were about the future of legal aid and it should worry all those in the profession and in society more broadly. These is unquestionably a crisis.

In the next two years, 20 per cent of respondents who currently conduct civil, criminal or children’s legal aid work will not still be carrying it out, with a further 20 per cent unsure. More than half of the surveyed solicitors do not undertake legal aid work now, and nearly half of those who currently do may not be doing by come 2027.

The biggest drivers for maintaining the system are the needs of their communities and a sense of moral obligation to provide access to justice, especially for vulnerable clients. Can a point of principle alone sustain a system which is not currently economically viable?

Those who expect to stop their legal aid provision consider it no longer profitable, too heavy an administrative burden and highly stressful.

Taylor McKenzie Research concluded the general sentiment of those surveyed is ‘overwhelmingly negative’.

One respondent added:

“We are still working on legal aid rates from 20, 30 years ago. We can do difficult, complex, long running cases and be doing them for less than minimum wage. That's a common thing because of the way the blocked fees work for civil legal aid. You can do a horrible case that takes up half your life and you do loads of hard work on it and you do a really good job and you come out earning less than minimum wage. That's just not acceptable.”

Technology may be the issue which represents a great opportunity and a great threat in equal measure. Could new technologies be a life raft for ailing or under-threat smaller practices?

Currently Microsoft Office (or similar) is the most commonly used digital technology which is to be expected – 92 per cent of respondents use it, followed by 82 per cent uptake of video call platforms like Teams or Zoom, and some form of case management software at 72 per cent.

At the other end of the technology spectrum, only six per cent of smaller firms currently use AI in their work, and predominantly for research tasks. Furthermore it’s not rated as effective by those who do use it.

Practices with 11 or more solicitors typically consider themselves as closer to being fully digital when compared with those with fewer practitioners (62 per cent vs. 55 per cent).

Is it perhaps a question of knowledge and training? Time constraints were highlighted as a barrier to uptake, with solicitors in these smaller firms struggling to find time to adopt, train and use on new tech. Instead, practitioners are reliant on the platforms already provided by their firms and change is resource-intensive. There is also a feeling the legal sector is both sceptical about embracing AI and other new tools, as well as slow to do so when compared to the broader service economy.

“Quite knowledgeable as to what is available, however, the rate of technological advancement is greater than the rate at which individuals can be up-skilled to fully (or even partially) understand the pros and cons of using certain technologies.”

That said, those who have adopted new technology are feeling the benefit, with three quarters of respondents believing it had helped how their interact with clients, and just nine per cent feeling a negative impact.

Software such as video conferencing and calls have allowed communication with clients to be easier, quicker and cheaper. This is a result of a swift shift during the Covid-19 pandemic. This remote way of conducting legal business has made law services more accessible to many clients, and more efficient for all parties.

But technology is also viewed as a barrier to building relationships and human interaction, long considered one of the strongest draws to local high-street firms. It has also increased client expectations for how quickly their representatives respond, including outside business hours. This is a shift seen across the service industry. And finally, ‘low-digital clientele’ (often older or vulnerable clients) are facing more challenging access to law and justice.

• A fifth of respondents view the level of stress their experience as a result of work unhealthy or unsustainable, a figure which rises from 18 per cent to 22 per cent for solicitors who are not business owners.
• Experienced practitioners aged 65 and over, and those with more than 40 years PQE, reported significantly lower stress.
• 63 per cent of respondents feel overstretched and need to work extra hours to meet deadlines

What are the top causes of stress and poor work-life balance? Client demands, regulations and profitability and cashflow are the issues proverbially keeping solicitors up at night.

“I know that some of the bigger firms have said that they make a conscious effort to promote wellbeing at work. They encourage staff to take breaks or do things like that, or they allocate them days off work that are annual leave, but they are wellbeing days. And I know that in the Procurator Fiscal service they are allocated a mental health hour. I think it's either daily or every second day, where they can take a break for an hour to do something to reset. That's a very big stark comparison to where I am and I have a boss who's in his 50s who doesn't want to hear about mental health. So just maybe something to raise awareness across the board.”

As alluded to earlier on, the younger generations of solicitors entering into and rising through the profession have different career ambitions and expectations in comparison to those who have gone before. For instance, just 29 per cent of solicitors who are not partners or business owners now aspire to become a partner. Nearly 50 per cent say they have no aspirations for that kind of career progression, driven by maintaining a better work-life balance and protecting themselves from additional stress.

“'I find the combination of increasing regulatory role and advance in technology are changing the job.   I do not think that there will be a place for my current role in 10 years and I do not want to spend so much time on AML compliance.”