Consistency and dependability are great strengths that the legal profession holds, offering certainty to clients. Changing times has brought disruption and ambiguity into the legal sector. A number of distinct trends have emerged in the legal industry; here are just a few.
It wouldn’t be a post regarding the biggest changes to the legal industry without mentioning Brexit now, would it? Although overshadowed by Covid-19 in the news currently, we are at a crux for the Brexit process. The uncertainty surrounding Brexit remains a barrier to investment and stability for many companies, with the current pandemic making an extension more and more likely.
A considerable amount of legislation governing the UK is tied to EU law. Changes to legislation may mean that some areas of law will be completely altered, for example much of the UK’s employment law comes from European Directives. Upon leaving the EU, the UK can either keep, amend or remove parts of the existing law. While key areas like discrimination rights are unlikely to change, other areas may. Despite this, there is unlikely to be a big change to the law as much of it has been ingrained into society and practices. Vast change would create huge amounts of uncertainty for businesses and individuals. Another area that will be impacted greatly is IP law, see here for more information.
US firms, such as Latham & Watkins, White & Case and Kirkland & Ellis seem relatively unphased by Brexit, unsurprisingly as their practices are less dependent on EU-UK relations. All three reported double-digit growth in London in 2019. Nonetheless, some firms that rely heavily on cross-border transactional work may see a decline in profitability. However, UK based firms are still doing well – the demand for advisory work as clients seek to anticipate the implications of Brexit has increased. Notably, law firms are businesses themselves and need to plan for the potential effects of Brexit, just as their clients do. It is likely that European advantages such as permitting UK lawyers to plea before the European Court of Justice may reduce, and so some law firms may gradually reduce the size of UK offices or relocate lawyers to EU jurisdictions.
In the wake of Brexit, one thing is clear – law firms will have to be more flexible and responsive than ever to respond to everything Brexit throws both their and their client’s way.
2. The ‘Big Four’
A newer challenge to the legal sector is that of the ‘Big Four.’ PwC employs 3,600 lawyers worldwide. Deloitte employs 2,400 lawyers; EY and KPMG both hire lawyers in over 70 jurisdictions. This is more than most major law firms! These are not law firms, but service providers best known for accounting.
This poses a threat to the legal sector as clients can go to such a company and a “one stop service.” Often, the ‘Big Four’ has a large global footprint, bigger than most law firms; they are ahead of the game with technology also. 23% of large firms and 21% of mid-size firms reported that they have had a client use a Big Four firm for work they had expected to win. Despite the expanding influence of alternative legal services, law firms’ specialist expertise and reputation will remain an advantage, especially for high value, high steak and technical cases. This should not be overshadowed, but law firms may have to change business practices in order to be more competitive for smaller, more advisory work.
The number of trainees recruited has decreased – big national firms previously recruited 325 trainees in the 2008/09 recruitment cycle, decreasing to 260 in 2018/19. Clients are demanding greater value for money, no longer willing to pay for a junior lawyer to photocopy documents. New technology is also hitting demand for trainees, with artificial intelligence (AI) being used to do tasks that used to fall to trainees, such as conducting due diligence. The SRA suggests that AI has the potential to increase business efficiency for both law firms and their clients. AI will help lawyers perform their tasks, but it won’t be replacing them. The human part of a law firm’s service is still critical in finding solutions that work for that particular client, they do not want a ‘cookie-cutter’ response from a bot. In fact, with AI quickly and efficiently completing menial tasks, trainees have a greater ability to gain more insightful experiences during their training contract.