The following article is extracted from The Law Society Gazette website:
The Law Society has today published a landmark report on the future of legal services that pulls together predictions on how the market will change over the next five years.
By 2020, it suggests, the gap between successful and struggling firms will have widened further, speeding up consolidation.
An ageing solicitor population will mean more small and medium-sized firms struggle to close or fund runoff cover. And an ‘hourglass’ employment market will develop, in which mid-ranking workers are ‘hollowed out’ and employment contracts become more flexible for qualified solicitors and paralegals alike.
As technology evolves, existing firms will employ fewer solicitors as more of what they do is done by paralegals or machines.
By sector, there will be more solicitors working in business-to-business markets as more clients ‘unbundle’ work; and fewer working in a business-to-consumer sector, reflecting a decline in the number of people able to afford advice or get legal aid.
More solicitors may also exploit regulatory competition, relinquishing official use of the solicitor title and setting themselves up as non-lawyer providers.
‘Big four’ accountancy firms offering legal services will post a bigger competitive threat, including in overseas markets, as will legal technology companies.
The fast-growing in-house sector, meanwhile, is forecast to expand further, with more specialist solicitors from City and bigger commercial firms jumping the divide. In-housers could also exploit the opportunity to compete with practitioners by establishing outward-facing alternative business structures.
The report, The future of legal services, was compiled from a literature review and three ‘futures panels’ covering B2B, B2C and Law Society committees. It identifies the main drivers of change as:
- Global and national economic business environments;
- How the public and corporate clients buy legal services;
- Technological and process innovation;
- New entrants and types of competition;
- Wider political agendas around funding, regulation and the principles of access to justice.
Commenting, Law Society chief executive Catherine Dixon said: ‘Individuals and businesses seek and depend on excellent, affordable legal advice at critical times. Solicitors are innovators and are responding to changes in a highly competitive legal services market.
‘With the upcoming [CMA] study and the government’s consultations on opening up the market to more alternative business structures and the separation of the legal services regulators from legal professional bodies, it is timely to look at the factors driving change to stimulate debate among solicitors as they plan and prepare for the future.’
She added: ‘Our report is part of the Law Society delivering its strategic aim of supporting solicitors so that they can make informed decisions about the future.
‘As the government consults on the future of regulation and the market, we will call for a fair regulatory playing field for all legal services, and for the solicitor profession to set and work to professional standards which it sets for itself. This will set them apart from non-lawyer providers.’