Confidence among Irish law firms has taken a hit over the past year, according to a new survey, with a majority of firms fearing the longer-term impact of the UK’s Brexit vote.

The Smith & Williamson Survey of Irish Law Firms 2016/17 found that only 50 per cent of firms anticipate an improved outlook for their firm, compared to 74 per cent in a survey conducted last year.

Paul Wyse, managing director at Smith & Williamson Ireland, said there was a “glass half full/half empty scenario in responses about Brexit in the shorter term as to whether firms see Brexit as a threat or opportunity”.

The reduction in confidence is more pronounced in top 20 firms, where confidence in an improved outlook for 2017 for the sector has dropped from 100 per cent to 38 per cent, with less than half of the top firms expecting a stable outcome for 2017.

The study found that the key issues facing the legal sector over the next 12 months continue to be maintaining profitability, pressure on fees, cash flow pressures and recruitment and retention of staff (specifically in the top 20 firms).

Revenues are up for 64 per cent of firms in the last year (84 per cent of the top 20 firms) and profits increased in 57 per cent of firms in the last year (62 per cent of the top 20 firms). Almost half (44 per cent) of these firms saw profits increase by more than 10 per cent.

In relation to Brexit, most firms fear the longer term impact of Brexit with all the top 20 firms thinking Brexit will have a significant impact on the legal profession over the next five years.

Mr Wyse said: “There is a glass half full/half empty scenario in responses about Brexit in the shorter term as to whether firms see Brexit as a threat or opportunity with 44 per cent seeing it as a negative thing for the sector (62 per cent of top 20) but 64 per cent see it as less of a threat to their firm.”

He added: “Most respondents anticipate that Brexit will result in more UK law firms opening offices in Dublin, and also mergers and acquisitions by UK law firms in Ireland.”

One in two firms have increased their staff numbers in 2016 (92 per cent of the top 20 firms) and expect to increase staff numbers in 2017.

In terms of pay, one in three firms implemented a pay increase of more than three per cent last year, while almost half of the top 20 law firms made pay increases in excess of five per cent during the same period. One in three firms surveyed made no change to levels of pay and 11 per cent of those who responded to the survey decreased pay.