Scottish law firms need to invest more in technology and embrace flexible working if they want to continue attracting and retaining the best talent, according to a report by Core-Asset Consulting.

The report – which highlights major issues that legal professionals need to be aware of, as well as a review of current salary levels – found that while the Scottish legal sector has traditionally been seen as immune to changes in working practices, the coronavirus pandemic has underscored the need for firms to modernise.

Kim Bower, a legal recruitment specialist at Core-Asset, said: “Shifts in both working practice and the operation of the justice sector means legal firms need to be realistic about the scale of the challenges facing their sector and the speed of technological change required.”

Flexible and remote working is likely to become a permanent feature post-Covid, which means firms will need to adapt accordingly in the way advice is given and cases are managed, Bower said.

The main problem private practice firms face in Scotland, however, is talent retention.

Bower said: “Firms have to be aware of how to attract the best talent over and above their competitors, differentiating themselves by offering flexibility, access to cutting edge technology and clear outlines on progression.”

The report also found that while women representation in the sector is strong, progression to more senior roles remains a challenge. Women lawyers account for less than a third of partnership positions, while female lawyers also earn on average a fifth less than their male counterparts.

Average salaries for private practice lawyers with five years experience in Scotland range from £36,000 to £40,000 a year for civil litigation to £46,000 to £50,000 a year for corporate law. In-house lawyers with the same level of experience could earn up to £56,000 a year at financial services companies or £40,000 a year in the public sector.

In addition, the report stated that while the pandemic had a sharp and sudden impact on the legal sector – leading to certain types of commercial and private client work being cancelled or postponed – Scottish firms had already experienced a squeeze on profits driven by wider industry trends such as lower in-house legal budgets and clients demanding fixed-fee services.

Even so, the report predicts that firms will continue to adapt positively to the impacts of the pandemic. And while industry-wide revenue has yet to fully recover, the current commercial environment will likely result in increased demand for services such as corporate restructuring, insolvency and litigation.

Research published by The Global Legal Post last month found that more than three quarters of business lawyers are anticipating a permanent shift to home working once lockdown restrictions end, most of whom believe this will improve work life balance and productivity.

However, there was less agreement over the impact of this change on diversity and particularly mental health with more than a third of respondents worried mental health – already the subject of concern within the profession – will deteriorate.