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The Biggest Challenges Facing the Legal Profession in 2015

About The Author

Jade Rigby (Writer)

Jade is a third year Law student at Newcastle University. She is currently completely an Erasmus year abroad at Universitat Pompeu Fabra in Barcelona, Spain, and will return to Newcastle in 2015. Jade is predominantly interested in commercial law, but also writes on criminal and private law topics.

We have now published updated articles for 2016, 2018 and 2019. See "The Biggest Challenges Facing the Legal Profession in 2016" and "The Biggest Challenges Facing the Legal Profession in 2018 and "The Biggest Challenges Facing the Legal Profession in 2019".

According to the Solicitors’ Regulation Authority, ‘[s]olicitors and law firms regulated by the SRA are in a period of significant change’.

The SRA are not wrong. The legal landscape has changed considerably in the last few years due to economic pressures, technological challenges and market competition. Indeed, Richard Simmons argues that:

The legal profession is being shaken up like never before – and it is not just down to the economic downturn… Reforms first suggested a decade ago are now taking effect and the rise of new technology and the increasingly globalised world we live in are having unexpected repercussions for law firms.

As we approach the end of 2014, we have to consider how recent trends could shape not only the next year, but also the future of the legal profession. It is not yet clear whether the legal industry will be left shaken or stirred by 2015.

The Economy

Unless you have been living under a rock since 2008, you have no doubt heard about the financial crash and the global recession that followed. This article is not concerned with the origins of the financial crisis, but the legal landscape in the aftermath. However, if readers are interested in the history of this economic turmoil, the economist provides an excellent summary.

Although the financial outlook has been described as “gloomy”, 2014 appears to be ending on a (slight) high note. The UK unemployment level, for example, has fallen below two million for the first time since the onset of the economic crisis.

So why are we still concerned that the global economy will have an influential impact on the future of the legal profession? According to The Gateway, ‘[c]orporates and financial institutions are still suffering from the effects of the economic downturn, meaning that some areas of commercial legal work are very quiet.’ The aftermath of the recession has had a huge effect on client spending, and this is unlikely to change in the near future. Law Practice Today reported that, as a result of the financial crisis, clients have become ‘more sensitized to the need for improved efficiency and value, and most important, reduced cost’. Hence, it may be a case of once bitten, twice shy. 2008 has left a scar in the economy, and it is unlikely that this will disappear by 2015.

Changes to Legal Education

The economy will not be the only cause of turbulence in 2015. Reporting for Lawyer2B, Richard Simmons suggested that changes in the legal landscape will be influenced by other pressures:

There have been recessions before and there will be again, but this time other factors are coming into play.

For today’s aspiring lawyers, the route to qualification has now become much more accessible. Many firms now employ trainees who did not graduate with a law degree. Skills learnt through a degree in the sciences or humanities can be very marketable qualities.

Hence, changes to legal education and training could also lead to an industry re-think where trainees are concerned. Readers should see ‘The Sufficiency of Legal Training in England and Wales’ by Keep Calm Talk Law’s Executive Editor, Chris Bridges, for greater insight and analysis.

Additionally, legal apprenticeships have an increasingly important role to play in the make-up of a law firm. In a previous article, I discussed the benefits and disadvantages of legal apprenticeships. However, it is worthwhile reiterating a few points. Legal apprentices have a major advantage in terms of work experience. They are able to get on the job experience whilst working towards qualification. As law firms typically place a great deal of emphasis on work experience in the legal sector, it is not difficult to see how the changes to legal education could have an influential effect on the legal workforce of tomorrow.

Globalisation

Even before the economic crisis of 2008, business in the modern world was evolving:

Business owners and managers of all companies – large or small, domestic-centric or multi-national – need to be aware of global trends and the changing business, economic and politic climate in which they operate.

It has never been easier to communicate and interact with entities in other countries. As more and more economic links are constructed between businesses in different countries, this has put increased pressure on law firms to provide a full-service, multi-jurisdictional approach for their clients.

For example, as recently as 8th October 2014, Allen and Overy became ‘the first of the global elite law firms to establish a presence on the ground in South Africa’. The hope for Tim Scales, a partner in the firm’s international projects, energy and infrastructure team, and the head of Allen & Overy's Africa Group, is that the new office will ‘offer clients a seamless service across sectors, combining a global presence and specialisation with a premium local team’.

With clients firmly in the driving seat, even smaller, typically ‘regional’ firms may have to form international alliances in order to provide a competitive service.

The consequence of globalisation, according to Richard Simmons, is that ‘British students will have to think globally in the face of increased competition from abroad. As the top law firms become ever more global, degrees that allow students to get qualifications in two countries will become more valuable and more common’.

International experience may also give some students an edge to their applications. Although very few UK universities offer a degree which qualifies the candidate both in the UK and abroad, other travel programmes are available. The popular Erasmus scheme, for example, enables students to study or work in different EU countries for anything from one semester to a whole academic year.

New Technology

As I have noted in a previous article, ‘Facebook Consumes Whatsapp’, ‘[o]ver the past 15 years, the technology industry has exploded’. This “explosion” has generated new legal battlefields, but the impact has also gone into the heart of the legal industry.

Writing for Law Practice Today, Frederick J Esposito commented on the impact and ability of technology in the legal profession:

[Technology can] offer law firms and their clients more efficiency and if properly structured, reduced spend and value. It enables firms to automate certain processes to reduce costs to produce legal services. For example, some practice areas are very paper-intensive or form-driven, and by automating processes or outsourcing to reduce costs, that value is passed onto clients. We’re beginning to see more firms outsource these types of processes to focus their efforts on the more strategic legal work. This provides a win-win situation for the law firms and their clients.

Technology is also influential for the brand management of a law firm. It is becoming increasingly common for firms to have their own Facebook or Twitter accounts, often detailing pro-bono work or their latest successes.

In some firms, it has even become common practice for trainees to assemble and summarise a selection of important, industry-specific issues for their client’s convenience. Technology, therefore, may shape the workload of future trainees and provide the basis for improved client relationships.

However, this is not to say that the increased use of technology is entirely positive. Client relationships will continue to be important for the future business of a law firm, as Law Practice Today additionally points out:

Technology is one way law firms can improve efficiency and reduce costs, but it does not provide the client-centric focus and attention to value that is now expected by clients when providing legal services.

The Changing Face of the Law

  1. The Office Boom

Traditionally, the firms in the City commanded the highest value work from the biggest clients. Clients were attracted to the “magic circle” law firm because of their reputation and competency in a variety of fields.

However, 2013 and 2014 have seen some significant changes in the DNA of regional law firms. In 2013, the firm Bond Dickinson was formed following a merger between two large regional players. Bond Dickinson now has eight offices spanning the length and breadth of the England, and a ninth office located in Aberdeen, the booming oil and gas heart of the UK.

The same has happened with other firms, such as DWF. The firm has been incredibly active over the past year, and is now based from 12 locations in the UK, operating with over 2500 staff.

These changes indicate that national law firms are real contenders for high value deals and clients. The range of locations and broad sector base enable these firms to provide a range of services to clients, without having to compensate for operating from London.

This is not to say that these firms do not have London offices, or that the traditional London firms have a lot to fear, but it does provide a new dimension to the legal landscape. In an increasingly economically-aware age, the ability to “shop about” for the best value legal services will undoubtedly have a huge role to play in firms’ marketing strategies.

  1. Rise of the Non-Lawyer in the Law Firm

Finally, we have to consider the fact that the legal landscape is no longer a lawyer-only zone. The Legal Services Act 2007 brought with it an entirely new concept; alternative business structures.

Lawcareers.net provides a comprehensive summary of ABS:

In brief, an ABS is a law firm that allows for both lawyers and non-lawyers to share the management and control of the business, as well as allowing for external investment.

According to Slaughter and May, ABS creates opportunities for:

  1. Investment in law firms by non-lawyers, from individuals to large corporates; and
  2. The establishment of multi-disciplinary partnerships, where lawyers share a business, profits and management with other professionals.

One of the most significant consequences of the rise of ABS is that it has allowed non-legal businesses to enter the legal market.

As Richard Simmons suggests:

Joe Public could potentially have Tesco sorting out his will or house move, while accountancy firms such as Deloitte or PwC could handle both a company’s accounts and its disputes.

This could have a potentially huge effect on traditional law firms. In particular, some new competitors, such as PwC, have impressive reputations and longstanding client relationships, which could impact on firms seeking out new business.

For Polly Botsford, this could spell disaster for traditional firms:

Like the straw that overburdened the camel, ABSs are coming at a time when law firms are coping with an extremely sluggish economy, hefty public funding cuts, new technologies, and more articulate and demanding clients.

The challenge ahead, therefore, means that firms must have greater industry insight and (dare I even mention it) commercial awareness in order to compete in the new legal landscape.

No one has the ability to see into the future, so we cannot predict exactly what will happen in 2015. However, if the aforementioned trends continue, we can expect to see more turbulence in the legal sector. For all aspiring trainees out there, now is the time to invest in yourself by spending some time getting to grips with “commercial awareness”. It might just land you the job.

This article is part of a series that will be running throughout vacation scheme application season. Be sure to get your free email subscription so you do not miss out!

Further Reading

Law Firm Application 101: Maximising Your Return

Commercial Awareness: Defining The Undefinable

Oil Prices and Your Commercial Awareness

The Many Forms of A Law Firm

The Biggest Challenges Facing The Legal Profession In 2015

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Tagged: Commercial Awareness, Legal Careers

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