The legal services market is currently undergoing a period of significant change. This comes on the back of a challenging 2018, where regulatory updates and increased competition for talent created a tumultuous environment for candidates and organisations alike. An increasingly digitised landscape has presented new opportunities for organisations of all sizes to progress, with a diverse and competitive legal market providing variety for consumers and the wider economy. We’re expecting to see a year of activity for the legal market in 2019, with predicted changes in the global economy reflected in the sector. Here are some highlights:
Digital technology takes over
The use of technology within the legal sector is no new development, but its impact has certainly increased in recent years. The digitised market place means legal firms need to keep up with technological developments - and the corresponding increase in expectation for immediate customer service - in order to remain competitive. Last year we saw automation play a part in skimming and building contracts and identifying clients, with a 41% increase in legal firms using technology to enhance the client experience. This type of activity will only intensify in 2019.
Firms are increasingly looking to technology and other innovative ways of delivering services to help address unmet legal need and grow their businesses. With60%of GDP predicted to be digitised by 2022, digital innovation across all enterprises will come under the spotlight, and the legal industry is no exception. We expect to see legal tech tools hosted on new apps and platforms, AI and machine learning being used throughout the client lifecycle and an enhanced focus on cybersecurity, particularly in the wake of GDPR.
Competition intensifies
Individuals and organisations are now choosing legal services from a wide range of providers who are delivering their services in new ways. In a market historically resistant to competition, there are many indicators of increasing competitive pressures, including the drive to deliver better value for money. While this pressure may be concerning to some within the legal industry, it also presents a key opportunity. A strong, diverse and competitive market is in the interests of consumers, as well as the wider economy. Businesses responding to competitive pressures will strive to become more efficient in how they operate and will use their resources to understand and meet consumers' needs.
Many factors influence the level of competition in the legal services market. This year we’re already seeing regulatory reform, increased use of technology and more flexible ownership models creating a more diverse and competitive market. However, many consumers still do not have clear, transparent information to help them choose a provider.
Mergers become commonplace
Law firm mergers are now commonplace, with 2018 seeing major activity such as ongoing Dentons cross-border mergers and the lateral step by Big Four goliath Ernst & Young to acquire Riverview, an alternative legal service provider. This is noteworthy as we’re seeing a growing market of alternative providers of legal services who are playing an increasingly significant role in meeting the legal needs of people and businesses.
There's a trend towards consolidation in the market, which means there are fewer law firms about, and domestic law firms are expanding across borders, collaborating with foreign counsel and forming intercontinental mergers. This is erasing the traditional boundaries around the geographical scope of law practice, which is likely to have implications around the reach of firms, services they offer and clients they compete for.
Brexit prepares to take hold
The last 12 months have seen ongoing discussion about the impact of Brexit on the legal services market, something we predict to continue in 2019. Brexit raises the possibility of changes to hundreds of laws, rules and regulations which govern how businesses operate and how the country is run – from IP and immigration to finance and food standards. Lawyers are in hot demand to explain to clients in every sector how they should position themselves for Brexit. As for how law firms themselves are reacting to Brexit, a common refrain we've heard from global and international firms is that their growing presence overseas will help shore up any stumbles in the UK. Firms including national outfit Pinsent Masons and US firm Covington have opened offices in Dublin while US firm Sullivan & Cromwell, City firm Macfarlanes and IP specialist Bristows have all set up in Brussels. Like most throughout the UK and Europe, we can only look on in anticipation as the final pre-Brexit months unfold.
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