FOCUS FEATURE
LEGAL SERVICES This could, however, have a significant impact on law
firms in the years ahead as more lawyers decide to go it alone, which could put upward pressure on average wages within the sector and lead to further fragmentation as even more smaller, specialist law firms start to emerge.
STRUCTURAL CHANGES The number of firms evolving into professional services companies, rather than purely legal service providers, is forecast to rise. This practice is commonplace for firms listed on the
Stock Market, but there is also a growing trend for larger companies offering complementary services, such as personal injury, insurance, accident management and medical advice, to merge. This is not the sole domain of the big law firms either as
across the UK, the sector has continued to rationalise with smaller law firms becoming a part of accountants and estate agencies to offer a one-stop-shop approach to issues like property purchase, pensions and retirement planning or finance. In terms of traditional law firms, fewer senior solicitors
are entering partnerships. Instead, they are seeking employment within the wider private sector, at larger organisations such as banks and financial services providers which are able to appoint in-house lawyers rather than outsource. This does have an impact on the legal sector at large, as
it reduces the number of experienced lawyers working for partnerships, with top talent being poached by larger organisations that can offer higher levels of remuneration. Again, this is a trend that will continue, which may open
up opportunities for less-qualified or experienced legal professionals to advance their careers.
A CHANGING LANDSCAPE As British businesses looking to relocate their operations to countries within the EU, their demand for conveyancing, employment and corporate law services may go with them. Once any new agreement with the EU is agreed, it’s
likely that many existing EU laws and regulations will be rolled back after the transition period ends, which could result in a spike in new legislation being drafted and passed by Parliament to get onto the statute book, which legal services providers will need to get up-to-date with. And in the aftermath of the 2019 election, we could see
legislative changes in areas like taxation, the environment and criminal justice, as the new Government looks to sure up its position by bringing forward policies which may prove popular with voters. While this may bring the short-term challenge of law
firms getting up-to-speed, longer-term, it should result in increased demand for their services.
‘Businesses are likely to face significant changes in the way they trade, both in Europe and across the world’
THE B-WORD Although Brexit has now concluded, with the UK officially leaving the EU at the end of January, in reality, our exit was the end of the beginning, not the beginning of the end. We are now in an 11-month transition period, during
which decisions made during the next phase of negotiations will influence the business environment for decades to come. Businesses are likely to face significant changes in the
way they trade, both in Europe and across the world, and the legal sector will not be immune to that. PwC’s annual survey of law firms for 2019 found that
Brexit was the main concern for top 50 firms in the UK. Interestingly, though, the top ten law firms were more concerned with automation and legal technology. Although the Conservative Government’s huge working
majority brings certainty about the scope and timing of this next phase of negotiations, we still don’t really know what the outcome might be at this stage.
78 business network March 2020
Freedom of movement will continue to apply until
December 2020 and the UK will continue to abide by EU rules while it negotiates. The spectre of no-deal also lingers if a partial trade deal
cannot be agreed in the next eleven months, while the contents of the much-vaunted potential trade deal with the US are yet to materialise. The impacts of this on the legal sector are two-fold. First, if UK businesses remain hesitant to invest, spend,
and grow while the next phase of negotiations pan out, then demand for legal services could suffer in the longer term. Law firms may also find it more difficult to expand into
new markets, or recruit and retain talent from outside the UK. The other Brexit-related issue that law firms may need to
consider is the impact that any changes in the wider economy may have on the legal sector. If the economy slows or shrinks over the next 12-24
months, this could translate into a drop in demand for legal services, and also in the price that clients are willing to pay for them. Again, smaller, more agile firms may hold an advantage
here, as they can deliver a more tailored service at a lower cost, because they don’t have to cover the same overheads as the larger firms do. As with all major changes throughout history, there will
be challenges as well as opportunities. In the short-term, there may be some pain, but longer-
term, legal firms which remain pragmatic, sensible and adaptable should be able to navigate these uncharted waters safely and help the sector to emerge stronger at the other side.
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