Almost two-thirds of chambers taking part in our survey report rising revenues in recent years, a finding consistent with figures from The Bar Council. However, while aggregate revenues are up, so is membership. Between 2005 and 2010, the number of practising barristers and QCs rose by 4% and 10% respectively. As a result there is an oversupply of barristers and individual incomes are down.
Government, individuals and companies are cutting costs, lawyers are being squeezed and there are high-profile casualties even among the larger firms of solicitors. Solicitors are keen to negotiate better rates, while the Government and local authorities are introducing block contracts and fixed fees. This combination of oversupply of barristers, cuts to legal aid, fiercer competition and economic downturn has resulted in near universal (99% of respondents) pressure on fees.
Meanwhile other factors are at work. The Legal Services Act (LSA) allows chambers and solicitors to adopt new business models and structures. The intention is to reduce restrictive practices and create a brave new world of increased competition and lower prices. Sets are not clear what this will bring - nearly two-thirds of all respondents see the LSA as both an opportunity and a threat.
A result of these concerns is that more than 75% of respondents expect greater consolidation, although participants were unclear how this and other structural changes will play out. Many view ProcureCos as red herrings, whereas SupplyCos are untested. Alternative business structures are being monitored more closely, but mainly from a spectator viewpoint. Sets are more interested in working out how to manage their relationships with law firms, since those firms will be both clients and competitors. Relationship management will be complex and some respondents were disparaging about the ability of rival sets and barristers to cope.
On direct access, many believe that the Bar can offer high quality, low cost advice to the public, but communicating that message will take time. Overall, direct access is an issue for our respondents. The majority welcome it, even if they are not sure how to facilitate it.
Looking at international work, some have found that international clients offer good work at healthy rates, but only a handful of sets have an office abroad. The vast majority travel as required, although overseas offices are on the agenda for a few.
A challenge common to all sets is how to manage a group of fiercely independent sole practitioners who need to co-operate and share costs. Would a more collective and corporate model serve them better? This is one step too far for many and completely against the Bar's 800-year heritage, but the profession has not previously faced today's level of competition.
In the same way that sets are not corporate, their marketing is frequently seen as basic and built around technical training and hospitality. Where there is a budget, it is extrapolated from the previous year. At best, marketing tends to be tactical rather than strategic.
And strategy is key. To prosper, a set will need a clear view of who it wants to do business with, how it will achieve that goal and how it can differentiate itself and charge premium rates. Chambers are entering the age of brand building. Law firms have tackled this with varying success and many still struggle. For barristers, the challenge will, if anything, be greater.
Those in criminal and family areas who rely on public funding recognise they are in a precarious position - the current £2.2bn legal aid budget is forecast to reduce by £350m. The story throughout this report is consistent. Although regional costs are lower and London chambers are more likely to work overseas, the differences between London and the regions are not huge. Irrespective of location, the pressure is greater and the outlook bleaker for those who practice only in family, criminal or publically funded areas, compared with similar chambers that have extended their reach into civil or more private work.
Chambers who work outside the publically funded areas are still concerned about change and access to justice but their outlook is correspondingly more upbeat. All of which suggests that at present, while the full implications of the LSA are unknown, the cut in legal aid is still the main concern for many.
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