In this article, we’re going to address some of the big stories to come out of 2020. Of course, there are other huge stories which will be just as beneficial to know about for upcoming Assessment Centres, but here are some that we found particularly interesting.
The Legal Sector
A 2020 Law Society survey firms showed that corporate and commercial practices were least affected in terms of their ability to continue working through the first UK lockdown. Conversely, sectors still using more traditional means of operating like property and conveyancing were heavily disrupted due to the social distancing measures put in place. Perhaps this also links to the well-known fact that larger corporate/commercial outfits are renowned for spreading risk across their business and adopt a more modern approach to deals.
2020 was a year where all firms in the legal sector were forced to adapt. Slater and Gordon announced its plans to shut down its London office and operate a work from home approach indefinitely. Of course, this shows that for some, working from home actually works! However, despite the benefits that working from home brought, around 15% of firms made redundancies and the general trend of economic downturn is illustrated by the fall in mergers within the UK legal market. There were just three across the whole year, which represents a marked decrease from the ten that took place in 2019.
Initial Public Offerings
Worldwide, there were 1,291 IPOs completed in 2020. The biggest of the year was Airbnb on the Nasdaq exchange, which saw the value of the online travel company shoot to $100 billion, putting it at the very forefront of its market. Asana, which offers cloud-based project management tools used by companies like NASA, Uber and Spotify also experienced a successful floatation leaving them valued at $4 billion. In contrast, technology giant McAfee saw a more disappointing floatation, in which their share price fell by over 6.5% in the first day of trading. Nevertheless, the company retain a value of $8.6 billion which is still pretty impressive.
2020 was a busy year regarding insolvency. The Corporate Insolvency and Governance Act introduced measures to relieve the burden on businesses during the pandemic, and allow them to focus all their efforts on continuing to operate. Notably, a restructuring plan was introduced in the form of a new insolvency process which enables certain debts to be restricted and places temporary restrictions on winding up petitions.
However, despite the Government’s efforts, the year saw the collapse of some high profile companies. Firstly, Arcadia Group – owners of Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton – went into insolvency. Things weren’t great for Arcadia prior to the pandemic, with a loss of £138 million reported in September 2019 for the 53 weeks prior, and so it was difficult to see the retail giant surviving Coronavirus.
The plethora of competition from online retailers coupled with the economic downturn of 2020 has been a difficult storm for high-street retailers to weather. The 242-year-old Debenhams entered liquidation just a day after Arcadia Group. Such high profile collapses demonstrates the need for high-street retailers to spread risk and maintain healthy competition with the likes of ASOS. There is some recourse for Debenhams, as in January Boohoo purchased the brand and website for £55 million. However, it will not take the firm’s remaining 118 physical stores meaning 12000 jobs are at risk. A similar situation may occur with Arcadia, as ASOS say it is in ‘exclusive talks’ to buy Topshop, Topman, Miss Selfridge and HIIT brands out of administration but will not take the high-street shops.
As expected, there were far less M&A deals than previous years. However, there were still some positives to come out of the year, with customer relations management firm Salesforce acquiring technology company Slack in a $27.7 billion megadeal. Salesforce CEO Marc Benioff described it as a “match made in heaven”, and Slack CEO Stewart Butterfield described it as the “most strategic combination in the history of software”. The deal puts Salesforce in direct competition with Microsoft, as Slack’s online collaboration services arguably rival those of ‘Microsoft Teams’.
In your Assessment Centre…
These are just a handful of the commercial issues which 2020 gave us. For your Assessment Centre, we recommend picking out a couple of issues and learning them inside and out. Be ready to answer questions on what the issue means for the legal sector and the firm you’re applying to specifically. Remember to keep calm and good luck!