According to statistics divulged by the profession’s regulator, the number of practising solicitors in England continues to grow. Surprisingly, in the aftermath of the global financial crisis in December 2009, there were nearly 112,600 practising solicitors, a figure that climbed to nearly 135,000 as of April this year. This was an increase of about 20% and in less than 10 years.
Despite these somewhat encouraging numbers – one would imagine that the increase would be due to a demand in the market – there are several issues that law firms are currently dealing with.
Everything isn’t coming up roses
The reality isn’t as rosy as the numbers make it out to be. General practice law firms are now facing decreased business opportunities due to less legal aid eligibility, shrinking fee rates, reforms to personal injury claims and an increasing presence of market disruptors such as high-volume alternative businesses owned by non-lawyers.
Additionally, there’s another factor that’s impacting city law firms – outsourcing. Business often gets outsourced to either offshore providers in India, South Africa or the Philippines, or nearshore providers in Manchester, Glasgow or Belfast.
Law firms fear the next wave of disruption, brought on by artificial intelligence and automation. Some say that in 10 years time one robot lawyer will deal with the tedious task of reviewing documents that is traditionally done by 10 associates. Sounds like great productivity, doesn’t it? Plus, robots don’t need holidays, breaks or basically any ammenities that normal employees would need.
On top of all of this, PwC, EY and KPMG have been granted alternative structure licenses, which means that they are now classified as law firms in England and Wales. PwC and EY in particular, have done considerable recruitment drives in London, attracting lawyers from traditional law firms.
Law firms: dust off your wings
Burying your heads in the sand when change occurs within your market is the wrong approach. Change needs to be embraced and seen as an opportunity to evolve, rather than a threat. Law firms need to modernise and specialise. Specialisation is particularly important in this age when law firms can no longer afford to be everything to everyone. To succeed, law firms need to know exactly who their clients are, their needs and the best way to deliver the solutions they need.
Once law firms realise the answer to these questions, it is important to remember that none of this is set in stone; change is quick and firms need to be nimble. The best way to do this is to focus on a handful of sectors, as it’s more likely that firms will deliver better service when they live and breathe their clients’ business.
Don’t be afraid of technology
As with any other sector, technological change is happening at a fast pace (see the robot lawyers mentioned above) and law firms will do well to adapt to the times and adopt new technologies that will help improve their efficiency and competitive edge, along with the rest of the world. According to PwC’s 2015 Annual Law Firm Survey, 95% of the law firms plan to increase investment in IT in 2016 to do just that.
Embracing new technologies and customer-driven transformation, however, always comes with new challenges. These can rotate mainly around decision making processes. There are bound to be team members who are more resistant to change and when they’ve been practising in the same way for years, it can become a real problem. Another problem area can be communications; clients now expect to be able to contact their solicitors whenever they want and wherever they are by using a variety of devices.
Again, the millennials…
Another driver of innovation in the law sector is people and in this case, millennials. Those born between 1980 and 2000 are coming of age and integrating into the workforce. They bring with them the experience of growing up with exposure to a vast amount of dynamic change, particularly in technology, and expect the most innovative solutions to achieve the best advantages possible.
Along with being technologically savvy, these millennials are bringing collaboration into their offices. Competitiveness is taking a backseat as workers realise they achieve better results and are happier when they collaborate. As such, progressive law firms are developing collaboration relationships with other law firms and other alternative legal service providers as a way to have a more efficient and effective approach.
Facing the challenge
Law firms have a reputation for being traditional and change averse, but as with any other business these days, they face the choice of innovating or dying. Fortunately, there are significant signs that the sector is open and able to evolve. For example, in 2016 Wazoku has registered an increase in Law firms’ interest in innovation and idea management software. It’s now time for the rest of the sector to dust off their wings and join the future.