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The Biggest Challenges Facing the Legal Profession in 2020

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About The Author

Peter Lennon (Joint Editor-in-Chief )

Peter Lennon recently completed the LPC at the University of Sheffield, and is a future trainee of Mills & Reeve LLP. Before law, Peter studied History at Selwyn College, Cambridge. His main areas of interest are corporate law, administrative law, and legal policy. Outside the law, Peter enjoys writing, cooking, and pretending to know about football.

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“There is a Chinese curse which says “May he live in interesting times.” Like it or not, we live in interesting times.”

Robert F. Kennedy, quoting a Chinese curse made up by an Englishman.

In 2018 and 2019, we began our glances at the year ahead by discussing “commercial awareness”, perhaps the most overused and least understood phrase in the industry. There are hundreds of articles on the internet claiming to unlock the secret wisdom of “commercial awareness”, including our own. Perhaps simpler is the wisdom given by a Sheffield lecturer who, after an hour-long session on commercial awareness, let out a beleaguered sigh and admitted:

“It’s all just common sense, really.”

He wasn’t wrong. Commercial awareness means understanding the world that you, your clients, and everybody else is living in. It takes more than knowing the law. Fascinating as it can be, the law is a poor lens for understanding the world at large. Commercial awareness involves politics, business, history, economics and technology. But it also involves understanding people from all walks of life, with all sorts of problems, and how they think and feel. Advising a small business owner, for instance, requires understanding the market and the state of their industry, but also their emotional connection to their business.

When firms look for trainees with “commercial awareness”, they often mean that recruits who are flexible, thoughtful and curious are of more use to their business than the best legal analysts and advocates. Legal skills can be taught – curiosity can’t. That curiosity and thoughtfulness will make you more employable, but it will also make you a more informed and aware citizen of the world. Which is pleasant.

There’s only so much this article or any article can do. The aim of this piece is not to provide a list of correct answers, but to ask questions, suggest some further reading, and get you thinking about the state of the industry. With that in mind this article will look at some of the major challenges for the industry – and everyone else - in the year ahead.

Brexit

“Brexit Again – Really?”

Something of a theme for 2020 – dealing with the same messes we were dealing with in 2018 and 2019. We addressed Brexit at the beginning of 2018 and 2019 and must do so again now.

Law students interviewing for training contracts this year will inevitably at some point be asked: “What do you think are the biggest challenges facing the profession?” That question is why this article exists. It is perfectly acceptable in 2020, just as it was in 2018, to answer:

“Brexit. I know that’s the easy answer and everyone says it, but it really is Brexit.”

In PwC’s 2019 survey of senior executives in law firms, they found that Brexit was the main concern for Top 50 firms in the UK (though not for the Top 10, who were more concerned with automation and legal technology). Sometimes, easy answers are also true.

“Certainty”

With a large Conservative majority in Parliament, we now have a little more certainty on the shape and timetable of Brexit. The Brexit Withdrawal Bill has now been approved by the House of Commons, and is currently passing through the House of Lords. After the UK leaves the EU on January 31st there will be a “transition period” of further negotiations with the EU until December 2020, during which freedom of movement will continue to apply and the UK will continue to abide by EU rules while negotiating a trade deal.

However, uncertainty over Brexit did not end with Conservative victory in the 2019 election. We have more certainty on when and if Brexit will happen, but the next few years are likely to consist of protracted trade negotiations with both the EU and other countries. The new president of the European Commission believes a comprehensive trade deal would be “basically impossible” by the end of the transition period in December 2020. A no-deal Brexit is still on the table if politicians fail to agree at least a partial trade deal in the next eleven months, and the contents of a prospective trade deal with the USA – themselves expecting a major election at the end of 2020 – remain to be seen.

The UK economy will be in flux all the while as news trickles out of these trade negotiations. If UK businesses are hesitant to invest, spend, and grow, then demand for legal services could suffer in the longer term, and law firms in post-Brexit Britain may find it more difficult to expand into new markets or recruit and retain talent from outside the UK. Some businesses based in the UK – in other words, clients – will be relocating operations to countries within the EU, removing potential sources of work for lawyers in real estate, employment, and corporate divisions.

Impacts for Law Firms

The obvious legal impact of Brexit will be substantial changes in the law, which legal professionals will need to keep up to date on. EU laws and protections are likely to be rolled back, though this will mostly take place after 2020, once the transition period has passed. After four years of Parliamentary gridlock where Brexit has dominated, we may see a spike in new legislation as various issues are finally given time in Parliament. Lawyers will need to keep on top of new legislation, particularly in areas like tax and criminal justice which are popular targets for new governments. In the short term, this may be challenging but ultimately good for business, generating advisory work for commercial lawyers in particular.

Less obvious but equally important for commercial lawyers will be the knock-on effects on the economy. Commercial law in particular runs parallel to other industries. If the economy slows or shrinks as a result of Brexit – as many think tanks and the Treasury predict – then demand for legal services and the amount clients are willing to pay for them may also decline. The situation is unlikely to be as bad as it was following the 2008 recession, but could be a challenge to recent growth in the industry which was already beginning to slow.

In short, Brexit presents both opportunities and challenges for the legal sector in the short-term – more confusion, but also more work. As to the long-term, we are entering into uncharted waters. Law firms will need to remain informed, aware, and adaptable over the next few years.

Data Protection & Cybersecurity

GDPR After Brexit

In 2018 the General Data Protection Regulation (GDPR) was passed by the EU and generated a lot of legal discussion, as well as a lot of business for those advising on it. The GDPR tightened data protection regulations for both EU companies and foreign companies dealing with EU citizens. With Brexit looming, the status of GDPR is a key concern and likely an area many commercial clients will be seeking advice on.

The government has stated that even in a no-deal scenario, the Data Protection Act 2018 (which accompanied GDPR) will remain after Brexit, and the withdrawal bill will retain GDPR standards in UK law. The UK will also recognise all EEA states as ‘adequate’ (see below). This means very little will change for UK firms dealing with UK personal data, or for UK firms making transfers of personal data to EU countries.

For firms receiving personal data from EU countries, however, the situation will be more complicated. After Brexit the UK will become a ‘third country’ for the purposes of GDPR. Transfers of personal data to third countries require additional safeguards per Chapter 5 of GDPR. If the European Commission decides the UK’s data protection standards are ‘adequate’ (as they recently have Japan’s), these safeguards will not be needed, but this is far from certain. Some have suggested the Commission may scrutinise the UK’s crime and security legislation, particularly the Investigatory Powers Act 2016, which gives intelligence agencies significant powers to invade individuals’ privacy.

If the Commission does not decide the UK is ‘adequate’, or in the months or years it will likely take to get a decision, UK businesses will have to implement these additional safeguards, either by reviewing and redrafting contracts to include Standard Contractual Clauses (SCCs) for data protection or in the case of multinationals, by having Binding Corporate Rules (BCRs) that cover the whole group structure and comply with GDPR.

There are likely to be three main challenges here for law firms:

  1. Advising clients with EU customers or EU operations on how to comply with the rules in the short-term, and how they may change in the long-term.
  2. Complying with the rules themselves, as law firms control and process significant amounts of personal data.
  3. Advising UK-only businesses that GDPR rules still apply to them. GDPR compliance is already poor in many cases and considering GDPR was described so often as an “EU law”, it would not be surprising to find less informed business owners who think it no longer applies after Brexit.

Cybersecurity

At the same time, firms will have to deal with a landscape where cybersecurity is an increasingly important issue. Keir Baker discussed this issue in 2018, and it remains as important now as it was then.

According to PwC’s annual survey of law firms in 2019, firms considered cyber attacks more of a threat than they did in 2018, and the second greatest threat to firms behind Brexit. Every one of the firms surveyed had suffered a security incident in the last year, the most common being phishing attempts, which some firms reported were daily events. Firms also reported malware attacks, network intrusions, and the loss of information through leakage and staff incidents. 75% of Top 10 firms and 90% of Top 11-100 firms had experienced incidents due to the “insider threat” – the threat from the firm’s own employees and contractors, either through negligence or actual malice.

Cybersecurity seems to be a particular priority for the Top 10 firms surveyed by PwC. On average they spent £17.2m (1.9% of their global fee income) on IT compared to £2.4m (0.9% of global fee income) for the Top 11-25 firms. For the Top 26-100 firms, percentage spend on IT had actually decreased since 2018. Top 11-25 firms were twice as likely to have no executive risk ownership (a senior executive with overall accountability for cyber risk), and more than half had not had senior management take part in crisis management training in the last year. While the Top 10 firms may be more at risk due to their size and profile, this still suggests firms outside the Top 10 are falling behind on cybersecurity.

Criminal Justice

Back at the start of 2019, Connor Griffith discussed in detail the impact of budget cuts and the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) on the criminal justice system.

In February, the Ministry of Justice review mentioned in that piece was published, and received a mixed reception. The review did make some welcome recommendations, from reviewing whether means testing in criminal legal aid cases was too harsh to opening up legal aid for special guardianship orders in family law. However, the almost 300-page report focuses primarily on whether LASPO met its cost-saving goals, and not on LASPO’s impact on access to justice. The Ministry recommended more “support” for litigants in person without addressing the legal profession’s key concern that a litigant in person will always be severely disadvantaged against a trained barrister. Many felt the review was “kicking the can down the road” by insisting on research into alternatives to legal aid, which arguably should have been carried out before slashing legal aid, not six years afterwards.

While cuts to legal aid have impacted the legal defence sector, budget cuts have continued to hinder prosecutors at the Crown Prosecution Service (CPS) as well. In January 2019, Attorney General Geoffrey Cox admitted the CPS had suffered a 30% funding reduction since 2010 and a “significant” reduction in staff, and stated his view that the CPS could not sustain further cuts.

In October, Vistra Greenaway-Harvey covered allegations by the End Violence Against Women Coalition that the CPS has been failing to properly prosecute rape cases. In December a review by HM Crown Prosecution Service Inspectorate found no evidence that CPS lawyers were improperly applying standards or dropping cases, but did find evidence of long delays and cases lost in the investigatory process or in the pipeline between police and the CPS. Chief Inspector Kevin McGinty stated in the foreword to the report:

“There can only be an effective criminal justice system – and one in which the public can have confidence – if it is properly resourced. The one we have has been under-resourced so that it is close to breaking point. In the case of the police, it may have gone beyond that, and while that is for others to assess, the number of rape allegations lost in the investigative process is damning.”

The Conservative government has promised to recruit 20,000 new police officers, but even this would only restore police staffing levels to just below where they were in 2010. Meanwhile for those in the CPS and the legal aid sector, austerity does not appear to be going away any time soon.

The Supreme Court

The modern Supreme Court is only a little over ten years old, and in the last few years has waded into a handful of controversial decisions: the Robinson and Commissioner cases opened up claims for compensation against the police for negligence, An NHS Trust v Y allowed families and doctors to make end-of-life decisions without applying to the Court of Protection, and most recently the Cherry case found that Boris Johnson’s prorogation of Parliament in September 2019 was unlawful. Michael Lane covered the Cherry case in two parts for Keep Calm Talk Law.

These decisions were far from universally popular. The Cherry decision was heavily criticised by leading Brexiteers and their allies, just as the Miller decision in 2017 saw the judges involved branded “Enemies of the People” by certain elements of the press. Following the Cherry decision, the Conservative manifesto at the last election promised to review “the broader aspects of our constitution” and “the relationship between the Government, Parliament and the courts”, while also making sure judicial review “is not abused to conduct politics by another means”. This followed Attorney General Geoffrey Cox stating in the Commons after Cherry that there could be a time for “parliamentary scrutiny” of senior judicial appointments, though he later walked back his comments.

Lady Hale, who led the Cherry decision, stepped down in December after hitting the mandatory retirement age. In a speech before her retirement, she chose to address the dangers of any shift towards a US-style Supreme Court, where justices are appointed by the current government and are typically political, meaning many decisions fall predictably along partisan political lines. Lady Hale’s successor, Lord Reed, will inherit a Supreme Court that is quickly finding its feet, but could soon find itself under threat.

Mental Health

Careers in law are notoriously intense. Courses like the GDL, LPC, and BPTC are rigorous, but also prepare students for long hours and stressful conditions. Would-be trainees and pupil barristers, particularly at large firms and chambers, will go in expecting long nights and constant pressure. Even after qualification, legal professionals will often struggle with work-life balance in a career where clients are increasingly demanding lawyers be available 24/7 and the competition is cutthroat.

Little wonder then that according to a 2019 survey by the Junior Lawyers Division, a quarter of the junior lawyers who responded (24.8%) reported severe or extreme levels of stress, and 93.5% reported some stress in the last month. Around a third of respondents (34.5%) stated that work-related stress had impacted their physical health, from chest pain to nausea. Half (48%) reported mental ill-health, but only one in five of these people had reported this to their employer. Of the whole group surveyed, one in fifteen reported suicidal thoughts.

Richard Collier covered some of the potential reasons for this in an article for the Law Society: poor work-life balance, hyper-competitive culture, and the personality type often drawn to law, what he calls "insecure overachievers". Impostor syndrome thrives in the profession for a reason. This is not unique to the legal sector. The medical profession and top universities also deal with these issues, and the culture frequently responds by normalising stress and mental illness rather than working to mitigate it. Suffering is acceptable because everyone is suffering.

Law firms have taken many welcome steps on mental health, from wellbeing and mindfulness initiatives to better training for managers on mental health issues. However, there are fundamental issues that these initiatives do not always address: the expectation of stress and overwork from the very beginning of law school, the culture of competitive suffering, and the fact that many junior lawyers dare not say “no”, because the culture has conditioned them to say “yes” to get ahead.

Mental health may not seem like an obvious “commercial” issue, but it is. A culture of stress and overwork leads to more costly mistakes, more wasted time, and more talented people being driven out of the industry. According to the Health and Safety Executive, British businesses lost 12.8 million days’ worth of work to work-related stress, anxiety, and depression in 2018/19. Law firms are no exception to this pattern. Firms may need to go beyond teaching lawyers to be resilient in the face of stress, and instead question the cultures and practises that are causing it to begin with.

Trust

45% of people trust lawyers to tell them the truth. These figures come from a 2018 survey by the Legal Services Consumer Panel and YouGov, and while lawyers scored better than car mechanics (19%) and estate agents (9%), this figure should still be concerning for a profession whose work is, in one way or another, to give advice or to seek justice.

To some extent this may be an inevitable outcome of the way commercial law firms work. Lawyers profit – quite handsomely - from the conflicts and complications of others, from messy disputes that end in the stressful litigation process to major life events: buying a house, distributing an estate, or ending a marriage.

This may not seem like a commercial issue at first, but social trends are just as interconnected as economic ones. A general distrust for lawyers helps to push clients to alternative business structures (ABSs) who can market themselves against stuffy, “traditional” law firms. It assists those who are seeking to rally the public against judges for their own political reasons, or to save money by cutting legal aid. And it cannot be a positive influence on the mental health and wellbeing of lawyers, who like all people want to be respected and valued.

A lack of respect for the profession can also be a hiring issue. If even one talented student decides against becoming a lawyer because “lawyers aren’t good people”, this is a loss for the industry. It can hinder diversity in the profession: Black, Asian, and Minority Ethnic (BAME) respondents were the least trusting of lawyers according to the LSCP and had less confidence that their consumer rights were being upheld by lawyers than White British respondents. A lack of trust in the legal profession could be a cause of – or because of – these groups’ lack of representation in the industry.

There is no magic bullet for increasing public trust in the profession. Nonetheless, lawyers should be aware of the need to build relationships with clients, and to be advisors rather than obstacles. This means being transparent about costs and decision-making, and why legal services are necessary at all. It means being proactive in preventing disputes, and more conscious of alternative methods of dispute resolution when they become unavoidable. It means being conscious of the client’s state, both financial and emotional. Understanding what the client wants and needs, and the best way to deliver that while still operating a commercial service, is the best means we have of building trust.

It is also, to come full circle, the core of “commercial awareness”.

Honourable Mentions

This article is obviously not exhaustive. There are several issues which are not explored here. Some we have covered in previous years, others are not so much immediate issues as long-term trends to be aware of in 2020 and beyond:

  • Gender equality (still – everything in Connor Griffith’s article from the start of 2019 remains true and relevant, as does much of Jessica Johnson’s piece from all the way back in 2015).
  • Cuts to legal aid in the civil system, as discussed by Lady Hale on her departure from the Supreme Court.
  • Preparations for the SRA’s new Solicitors Qualifying Exam, which will have impacts on both access to the profession and firms’ recruitment processes.
  • Difficulties retaining talent in a crowded legal market, with increased competition both within the industry, and from US firms and the accountancy “Big Four”.
  • Increased automation and use of AI.

For useful information on the more “commercial” side of commercial awareness, both PwC and Smith and Williamson have published their annual surveys of senior executives in the legal sector, which discuss some of the issues firms anticipate for themselves in the coming years. Technology, Brexit, and increasing competition feature heavily in their concerns.

Conclusion

There will always be challenges facing the industry, and 2020 is no exception. None of these challenges are insurmountable, though some of them (likely most of them) will not be addressed and solved by December. When Keep Calm Talk Law revisits this topic in 2021, that article will likely tread over familiar ground just as this one has.

Some of these challenges – politics, justice, and business – are complex but easily understandable for lawyers. Lawyers are trained to deal with challenges like these. In many ways, it is a lawyer's job to deal with challenges like these. Some are more difficult to grapple with: the values our industry promotes, the ways we treat each other, and the ways we treat ourselves. These are not problems with easy solutions, and they may take a lot more time and effort to solve.

In the meantime, the team here at Keep Calm Talk Law wishes you success, health, and happiness as we move ahead into 2020.

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Tagged: Brexit, Commercial Awareness, Commercial Law, Courts, European Union, Justice, Legal Aid, Legal Business, Legal Careers, Supreme Court, Technology, The GDPR, The Judiciary

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