LEGAL SERVICES


FOCUS FEATURE


The legal industry is always in a constant state of change, creating new roles, new services and new innovations to meet the ever-evolving demands of consumers and business clients. Yet while it remains a significant creator of wealth, jobs and economic growth, there are some challenges ahead, which the sector will have to overcome to maintain its momentum. Business Network takes a look at the obstacles – and opportunities – that lie ahead.


The UK’s legal sector is rightly held in high regard around the world. It’s a huge source of employment across the country,


with a large proportion of its workforce at the higher end of the skills scale. It’s a strong exporter of services around the world, with


businesses from other countries often looking to the UK to provide the legal expertise, consultancy and leadership that they may lack domestically. It’s a significant creator of wealth and economic growth,


helping to not only keep the wheels of industry turning, but ensure they are running as smoothly as possible. It’s also a pretty good bellwether of the general health of


the economy… if there are spades in the ground and cranes on the horizon, you can be sure there will be an army of lawyers beavering away behind the scenes to make sure that deals are getting done properly and generally taking care of business. So, there can be no doubting the legal sector’s role as a


key cog within the machinery of British business, but regionally, what sort of role does it play and, in the brave new world of post-Brexit Britain, what does the future hold?


THE LEGAL SECTOR IN NUMBERS According to the Law Society’s latest annual statistics report, published in October 2019, there were 143,167 solicitors with practising certificates (PCs) in the UK and a further 188,868 individuals on the Roll of Solicitors. In the East Midlands, there were 4,945 PC holders,


around ten per cent more than there were ten years ago. The report also said there were 495 private practice law firms across the region – 429 of these had fewer than five partners. The sector remains one of the most competitive


industries to break into in terms of employment, with a reported ratio of 28 law graduates to each legal sector job vacancy. Because of this shortage of opportunities, many legal


graduates are looking for different routes into employment, with the number of freelance solicitors and qualified solicitors working for unregulated practices both increasing. While there are concerns that a lack of regulation in such


circumstances could lead to lower professional standards, this development could, in theory, widen the choice of services available to consumers and could also result in lower fees being offering from smaller, more agile law firms being able to operate with much lower overheads than their bigger competitors. In a separate report on the state of the UK legal sector, published by Business Wire last year, the UK legal services market was valued at £35.1bn, a 6.3% increase on the previous year. Revenue growth for the top 100 law firms in the UK was


higher than the average across the overall legal market, thanks in part to the scale of business acquisitions made by the top 100, the larger corporate contracts these firms were able to secure and the significant overseas revenue they were able to generate. It’s interesting to note, however, how smaller firms are adapting in this increasingly-competitive marketplace by opening new niches, offering a more bespoke and flexible service and embracing the opportunities that emerging technology brings. Nationally, there are around 12,000 law firms registered in the UK, but the number of new firms following the


traditional partnership model is declining, reflecting the adoption of different practices and new specialisms, particularly regarding the emergence of technology, data protection and online crime. The largest and most lucrative segment of the legal


market is for business and commercial affairs, including commercial property, which accounts for almost half the total market revenue. Again, most of the high-value work undertaken in this


segment is by the larger law firms. On the consumer side, however, personal injury, accident


and medical negligence work accounts for about 11% of revenue, despite legislation changes resulting in declining claims numbers and the impacts of a ban on referral fees. The report forecasts strong year-on-year growth of


between five and six per cent between now and 2022. All signs show that the sector is retaining its position as


a huge creator of revenue in the UK. But, in order to maintain its strong performance, what


are some of the challenges the sector, as a whole, may have to overcome?


‘Recent changes imposed by the Ministry of Justice are designed to make it easier for consumers to find and procure legal services online’


EVOLVING TECHNOLOGY Technology, as you’d imagine, is having a huge impact on the sector, not only in the way that law firms big and small are having to adopt the latest technologies in order to compete, but also in the way it’s changing consumer and commercial behaviour. Recent changes imposed by the Ministry of Justice are designed to make it easier for consumers to find and procure legal services online, which is expected to reduce the amount of people seeking legal advice in person, by enabling them to do so using digital resources. While this is something that bigger law firms may be


able to invest more heavily in, smaller firms and sole traders with innovative online solutions may be able to steal a march and add value by offering a more enhanced level of personal service. Price transparency is also set to improve for consumers


and businesses alike, due to new regulations which require legal service providers to disclose prices on their website. And with the small claims limit set to be lifted in April


2020, the number of consumers attempting ‘DIY Law’ looks set to increase. Again, this is another area which smaller firms and


freelance practitioners may be able to exploit. The rise in flexible working within the sector is also being


driven by technology, with a 29% increase in the number of lawyers choosing to work flexible working hours in 2018. There are now more than 1,000 of these so-called


‘platform lawyers’ working remotely in the UK, which allows a more flexible work-life balance and also enables them to manage other business interests as part of a career portfolio. As highlighted previously, with employment in the sector


becoming increasingly competitive, more and more qualified legal professionals could go down this route, which brings down overheads and enables lawyers to keep a greater percentage of their fees.


business network March 2020 77


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