HomepageCommercial LawPrivate LawPublic Law & Human RightsCriminal LawEU & International LawCareers

Accessibility

Have Irlen Syndrome, or need different contrast? Click the button below for options.

Background Colours

Subscribe

Enter you email address below to subscribe to free customisable article notifications.

Alternatively, click the button below for our various RSS Feeds (available journal wide, or per section).

The Biggest Challenges Facing the Legal Profession in 2021

Article Cover Image

About The Author

Peter Lennon (Consulting Editor)

Peter Lennon is a trainee solicitor at a Top 50 UK law firm, with experience in insurance, commercial disputes, and contentious probate. Prior to law, Peter studied History at Selwyn College, Cambridge, before completing the GDL and LPC at the University of Sheffield.

His main areas of interest are litigation, law reform, history and foreign policy. Outside work, Peter enjoys books, cooking, and pretending to know about football.

[Read More]

The events of 2020 and the ongoing lockdowns have been bad for productivity, to say the least. That is both one of the Biggest Challenges in 2021, and the reason why this year’s list is a little later than previous entries. Much about the year ahead remains uncertain, most of all when things will go back to normal for the industry, and what “normal” may now mean. Regardless, Keep Calm Talk Law will look at some of the bigger trends on the horizon, and hopefully a few you may not have considered for the year ahead.

With that said, a quick look through last year’s list of the Biggest Challenges in 2020 – which conspicuously did not contain “global pandemic” as the biggest challenge of all – should be a reminder that the unforeseen will always be a challenge facing the industry. Throughout the pandemic, it has generally been good advice for firms to be well-hedged and flexible, and for professionals to be adaptable, with one eye on the future. That will continue to be good advice long after COVID-19.

This look at the year ahead was prepared in no small part based on data gathered by PricewaterhouseCoopers (PwC) and Smith & Williamson (S&W) for their excellent annual law firm surveys, and on publications by the Law Society, law firms, and others which have been linked throughout. For those interested, this piece should be a jumping-off point, not a definitive resource.

Brexit (Again)

First of all – as has now become a tradition in these lists – we need to talk about Brexit.

As of 31 December 2020, the transition period has come to an end and the UK is officially “out” of the European Union. The worst-case scenario of a no-deal Brexit was averted – barely – with the EU-UK Trade and Cooperation Agreement agreed on 24 December and ratified six days later.

Perhaps surprisingly in a trade deal that focused much more on goods than services, legal services were one of the small number of services to get their own provisions, though how valuable those provisions are remains to be seen. UK lawyers retain some right to establish in EU countries and advise on home country (ie. UK) and public international law, but have lost the right to advise on host country and EU law that they previously enjoyed under the freedom to establish and provide services. The trade deal does not provide for mutual recognition of qualifications, only a framework for future recognition, and it contains nothing on mutual recognition of court judgments.

For law firms, the exact shape of Brexit is likely to settle over the next year. At minimum, the UK’s exit will have an impact on firms looking to recruit European talent (and looking to make sure their current talent is able to continue practising in the UK), and it remains to be seen what the long-range economic impacts of Brexit will be.

If forecasts are accurate and the UK economy contracts over the next few years, firms are likely to see increasing pressures on business, increasingly cash-strapped commercial clients, and potential knock-on effects in sectors such as insolvency and real estate. If the forecasts are wrong, improved fortunes for UK businesses could mean more money flowing to their legal advisers.

Barristers and advocates, meanwhile, are left dealing with the new concept of “retained law”, the snapshot of EU law (as at 31 December 2020) incorporated into domestic law by the European Union (Withdrawal) Act 2018. Pinsent Masons estimate this comprises around 150,000 pieces of legislation, though only around 3,000 may have a practical impact in the UK. The task now will be determining what retained law is relevant, how to interpret it, and whether it has been amended by any post-Brexit legislation – or the more than 80,000 amendments, mostly technical, made by the government through domestic secondary legislation.

Coronavirus

Suffice to say, Covid-19 was the long shadow over 2020 and continues to linger into 2021, though there is now some cause for optimism. National roadmaps are in place for the end of lockdown, and the UK’s vaccination scheme is proceeding at impressive pace, with more than 20 million people having received their first dose at the time of writing.

In the legal sector, Covid-19 had impacts which were predictable, but certainly not as bad as the worst-case scenarios many firms planned for, in part due to government measures such as furlough and VAT deferments. 70% of firms surveyed by S&W had made use of the furlough scheme during the pandemic.

While the wider Covid-19 recession has been compared to the 2008 crash, the impact on the legal sector has thankfully been nowhere close to that level of severity – firm closures have not been widespread, and less than 10% of firms have made staff redundant.

Nonetheless, PwC reported profits and profit per equity partner (PEP) were down across the Top 100, although this was a trend occurring even before Covid-19, and S&W found confidence in the business outlook for the year ahead was down on 2019 (though still at a relatively high 80% - compared to under 50% in 2008). Diverse and well-hedged firms have generally weathered the storm better, as the first lockdown hit some sectors (for instance, real estate) much harder than others.

The impact on client businesses has been noticeable, and their recovery – with the accompanying challenges for law firms – will be a major ongoing challenge in 2021. Lock-up, the amount of time taken to convert a firm’s work in progress (WIP) and debts into payment from clients, is at a five-year high. LSE estimates almost 15% of UK businesses are at risk of folding, and small and medium enterprise (SME) clients have been particularly badly affected by lockdown, although the Supreme Court’s recent ruling on business interruption insurance may offer some relief.

Aside from Covid-19 itself, the lockdowns have also highlighted several challenges (or arguably, opportunities) from existing trends as we move into 2021:

Flexible working/work-life balance

A change in the way lawyers work has been on the cards for a while. The requirements of lockdown have, in many ways, forced firms to adopt ways of working that they were nervous to experiment with under normal conditions. For most if not all lawyers, 2020 saw remote working replacing the office, more decentralised teams, and more flexible hours.

While these experiments were often overshadowed by lockdown and the pandemic, they were also in many cases successful. As the country returns to some semblance of normality, the question for firms and chambers will be whether to go back to the way things were before, or retain some of their newfound flexibility.

The arguments for flexible working have been made for years, long before the pandemic. For firms, less office-based working can mean lower costs for business premises and utilities, particularly in London where real estate costs are steep. For individual lawyers, a more flexible setup can mean the end of long and expensive commutes, more flexibility for childcare arrangements, and less difficulties for lawyers with disabilities staying in the profession.

Certainly, the results of S&W’s survey suggest flexible working is not going away any time soon. The main areas of tech investment for firms were “remote working”, “video conferencing software”, and “collaboration and communication”, and those investments will remain after lockdown ends.

At the same time, firms will likely need (and want) to retain at least some office presence, and 2020 has also shown that extended work-from-home without colleagues can have its own impacts on wellbeing – though how much these impacts are due to the wider pandemic remains an open question.

With so many legal professionals forced to pay more attention to their working habits from home, there is also likely to be renewed discussion about work-life balance. PwC noted that work from home had coincided with a reduction of chargeable hours in the “vast majority” of bandings, with the reduction most significant in Top 10 firms.

Their survey also found that in Top 10 firms, the main thing hindering the improvement of governance was, according to their own management, “lack of time/capacity to deal with volume of work” – and it was not particularly close.

Remote justice

Much like law firms, courts and tribunals (as well as ADR providers) have been forced to contend with new ways of working during lockdown. By April 2020, HMCTS data showed 90% of all hearings were being conducted by audio/video technology, tripling from under 1,000 in the last week of March 2020 to around 3,000 a week in mid-April.

As with remote working, this is an idea that has been circulating in the legal sector since long before Covid-19. Particularly in civil litigation, where there has been a steady push over the years for more pre-trial steps to be conducted by way of telephone hearings and video conferences, remote hearings have been advocated as a measure to expand access to justice and as a cost-saving measure.

However, the push towards remote justice has not been without criticism, particularly during lockdown. Judges have voiced concerns about connectivity and technical issues during hearings, distractions in attendees’ homes, and a particular phenomenon of “emboldened” litigants who, from the security of home, behave in ways they might not in a courtroom. One district judge’s experience – although given anonymously – makes for interesting reading on the subject.

Jury trials are another issue. After an initial suspension, jury trials have resumed under socially distanced conditions since May 2020. The humans right charity JUSTICE carried out their own pilot of a virtual jury system, but HMCTS has remained committed to in-person juries, including resisting calls by the Law Society to suspend trials again in January 2021 due to “escalating safety concerns”.

This is perhaps understandable, given that the criminal courts were at the time reported to be dealing with a backlog of 54,000 cases in the Crown Courts, and 457,000 cases in total, which HMCTS will have to clear over the coming year, possibly delaying some criminal trials into 2022.

For barristers and litigation solicitors, adjusting to remote hearings means adapting skill sets. Client management, witness handling, and advocacy are all subtly different in remote settings. Dealing with those judges and clerks who struggle with the new technology has also become part of the repertoire. It seems likely that the push for remote hearings will continue, particularly in civil litigation, and lawyers will need to adapt their skill sets accordingly.

Wellbeing

We discussed the challenges of stress and wellbeing to the industry in last year’s round-up. After a year of working from home, in and out of lockdown, we feel that opinion has been somewhat vindicated.

Recent government research on mental health during the pandemic found “average mental distress” increased by 8.1% last year, and the increase was considerably worse for young adults and women. A survey by insurance firm Protectivity likewise found that the legal sector continues to struggle with wellbeing compared to other professions, with 63% of legal professional reporting daily stress – the second-highest figure in the country.

The latest figures from the Health and Safety Executive report show just short of 18 million working days were lost across Great Britain due to work-related stress, depression or anxiety in 2019/20, and the statistics for 2020/21 are likely to be even worse due to the pandemic. Rather than something secondary to the needs of the business, wellbeing is a business issue, and a lack of wellbeing support can lead to poorer productivity, burnout, and stress, which in turn leads to higher rates of serious physical and mental illness.

Good wellbeing support means more resilience and better productivity, even in challenging conditions like we saw in 2020. The challenges of Covid-19 have shown the importance of integrating wellbeing support as a core aspect of the business, but as with many of the topics discussed in this article, this is a long-term challenge that was present before Covid-19 and will continue to test the industry after it has passed.

Competition and “profit pressure”

Competition for business was, as ever, one of the main concerns for the senior management surveyed by PwC and S&W. This is not a unique development for 2021, although the impact of Covid-19 may have made things worse. Rather, this is a pressure firms have been feeling for several years now, contributing to a general sense that there is an industry “squeeze” on the way at some point in the near future. 75% of S&W’s respondents felt competitive pressure had increased over the last year, 32% saying it had increased “significantly”.

Perhaps surprisingly given how much the English legal press sometimes focuses on the threat of the large US firms, just 22% of the Top 100 firms surveyed by PwC and S&W considered international firms a main source of competition, compared to 87% for direct UK competitors, and 30% who saw major competition from in-house counsel.

This profit pressure – along with the impact of Covid-19 – can also be seen geographically, with S&W reporting 65% of firms surveyed did not expect to expand through M&A or hire new teams in the next year. This suggests many firms are sensing less room for expansion and taking a risk-averse approach as we begin to emerge from lockdown.

SQE

Particularly of interest for law students and would-be solicitors, 2021 will see the introduction of the SRA’s new Solicitors Qualifying Exam (SQE) to replace the old Legal Practice Course (LPC).

Under the SQE, the Legal Practice Course will be replaced by a national licensing examination in two parts (SQE1 and SQE2), and solicitors will need to have two years’ “qualifying work experience” instead of the traditional training contract.

The SRA’s aim is to improve standards by centralising examinations, and improve access by including time spent in a paralegal or volunteering role as “qualifying experience”. The current qualification scheme has always allowed for this through the “equivalent means” route, but this is often neglected in practice. Much has also been made of addressing the LPC bottleneck, where many students gamble on an expensive postgraduate qualification with no guarantee of qualifying as a solicitor on the other side.

However, the SRA’s new “super-exam” has also faced criticism. Some firms and professional groups raised early concerns about the quality of training provided by the new exam, which consists entirely of multiple-choice questions and only covers the current LPC core areas, with no elective areas. While the SQE itself will be much cheaper than the LPC at £3,980, it will likely end up like the current QLTS for foreign-qualified lawyers: technically possible to pass with self-study, but with most applicants shelling out for prep courses which are likely to cost thousands of pounds on top and may not be eligible for post-graduate loans.

Likewise, while the SRA’s stated aim is to improve access, there are worries that the SQE could create a two-tier system, with the largest firms creating bespoke training programs along with education providers (international firm DWF have already partnered with BPP for such a program). While “qualifying work experience” can now come from up to four providers, it seems likely that most firms will prefer trainees who have spent two years in their organisation.

For firms, the challenge will be when to adopt the new system, and how to restructure existing training contracts for the SQE. For example, the SRA “strongly suggests” that candidates sit SQE2, the vocational exam, after their two years’ experience. For firms, however, this raises the possibility of spending two years investing in a candidate who then fails the licensing exam.

For students and young professionals, the challenge is which route to take. The SRA has put transitional arrangements in place for those currently on the LPC track to qualify up to 2032, but if firms decide not to take trainees through that route (and universities consequently cease offering the LPC) then they may be shut out of certain parts of the profession far sooner, whatever the SRA says.

Diversity & Inclusion

Worthy of a much longer discussion (or several), but as an upcoming piece will be dealing with some of these issues in detail, only an honourable mention here.

2020 saw more steady progress across the legal sector in terms of representation. The percentage of female lawyers at the partnership level is up (around a 20% increase in most bands), and at the bottom of the ladder, female trainees continue to outnumber male trainees by some way (57% at the Top 10 firms and as high as 66% in the other bands). BAME representation was also up among trainees in the Top 25 and at partner level in the Top 10 firms (now at 7.6%).

Interestingly, PwC surveyed board priorities for Top 100 firms over the next 2-3 years, and Diversity & Inclusion was far and away the biggest priority for Top 10 firms, with 82% of respondents listing it as one of their top priorities. Whether this signals real change ahead remains to be seen.

Cyber risk

Another honourable mention, often overlooked. Much of what was said back in 2020’s piece remains relevant, and cyber-attacks continue to be a significant risk for law firms of all sizes given the quantities of client money and sensitive information they hold. Every single respondent to PwC’s survey in 2020 suffered some form of security incident, and cyber risk may become even more of an issue if remote and home working remains prevalent after lockdown ends.

Phishing – a type of social engineering which attempts to obtain sensitive information by spoofing a trustworthy entity, usually by email – continues to be the main threat facing law firms. However, the major story of 2020 was a growing trend of ransomware attacks, where attackers steal and/or encrypt an organisation’s data before attempting to extract a ransom payment.

Firms continue to invest large sums into cyber security, but there are still a significant number of Top 100 firms that do not run crisis management exercises for these scenarios, and do not have individuals at a board level reporting on cyber risks.

New legislation

The last few years have been notoriously devoid of big legislation, with most political energy devoted to Brexit. With the UK’s exit, we may start to see more legislation, more substantive policy changes, and more items being checked off from the government’s election manifesto.

Two areas (among many) where change may be coming are criminal justice and property law.

On criminal justice, the Johnson government has distinguished itself from pre-Brexit Conservative governments, moving away from the promises of criminal justice reform under David Cameron to a much more "tough on crime" stance. The Prime Minister has previously promised to increase prison spaces, expand stop and search, and “come down hard” on criminals, speaking of "reversing the balance of fear". Whether this will be accompanied by appropriate funding for HM Prison Service and the chronically underfunded Crown Prosecution Service remains to be seen.  

In property law, the government has thrown its weight behind leasehold reform for long-leasehold property, with upcoming legislation to cap or eliminate ground rents, extend rights to lease enfranchisement, and push Australian-style commonhold as a replacement for leasehold flats - a package of reforms which the government ambitiously refers to as “the biggest reforms to English property law for 40 years.”

Conclusion

2021 is an interesting time to be a young lawyer. The very youngest generation of trainee solicitors and pupil barristers have only ever experienced legal practise in a post-pandemic world. Entering the profession now can feel suspiciously like witnessing the end of the old way of doing things.

We could be wrong about that. The old ways of doing things may prove more resilient than expected, and we’ve certainly been wrong before. Perhaps aptly though, Smith & Williamson’s report on the legal sector in 2020 was titled: The end of normal?

2021 will see the UK settle into a new international regime and a post-lockdown (though probably not a post-Covid) world. Lawyers are having serious discussions about how and where we work, how we can change the industry to better reflect modern Britain, and how to improve access and training for the next generation of young lawyers. Technology continues to march on, bringing both opportunities for innovation, and major risks. As the backdrop to all of this, the industry is becoming more competitive than ever, with the possibility of a major contraction on the horizon.

We wait with interest to see what the new normal will be in 2021.

For the latest articles straight to your inbox, you can subscribe for free. Alternatively, follow @KeepCalmTalkLaw on Twitter or Like us on Facebook.

Tagged: Brexit, Commercial Awareness, Courts, European Union, Justice, Legal Business, Legal Careers, Legal Education, Parliamentary & Elections, Technology

Comment / Show Comments (0)

You May Also Be Interested In...

The Biggest Challenges Facing the Legal Profession in 2020

14th Jan 2020 by Peter Lennon

The Biggest Challenges Facing the Legal Profession in 2018

2nd Jan 2018 by Keir Baker

Commercial Awareness: The Fortnightly Round-Up (w/b 28th August)

3rd Sep 2017 by Jack Turner

Commercial Awareness: The Fortnightly Round-Up (w/b 31st July)

6th Aug 2017 by Jack Turner

Commercial Awareness: The Fortnightly Round-Up (w/b 27th March)

2nd Apr 2017 by Jack Turner

Commercial Awareness: The Fortnightly Round-Up (w/b 13th March)

19th Mar 2017 by Jack Turner

Section Pick January

The Biggest Challenges Facing the Legal Profession in 2020

Editors' Pick Image

View More

KCTL News

Keep Calm Talk Law: Moving Forward

3rd Sep 2019

Changing of the Guard: Moving Keep Calm Talk Law Forward

12th Aug 2018

An Anniversary or Two: Four Years of Keep Calm Talk Law

11th Nov 2017

Rising from the Ashes: The Return of Keep Calm Talk Law

18th Nov 2016

Two Years On, Keep Calm Talk Law’s Legacy is Expanding

11th Nov 2015

Twitter

Javascript must be enabled for the Twitter plugin to function. Click below to visit us on Twitter.

Free Email Subscription

Subscribe to Keep Calm Talk Law for email updates, and/or weekly roundups. You can tailor your subscription on activation. Both fields are required.

Your occupation / Career stage is used to tailor your subscription and for readership monitoring.

Uncheck this box if you do not want to receive our monthly newsletter.

By clicking the Subscribe button, you agree to our privacy policy and terms of service. Please ensure you read these in full.

Free Subscription