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The legal sector tomorrow: change is ahead…

Posted by
26 Jan 2015
There have been many significant events during the last three decades, which have played a crucial role in shaping the legal sector and in turn the wider world, coupled with changes to the political backdrop that have impacted the way law firms and legal teams operate and deal with new cases.

In our final blog, I'm taking a look into the future to understand how things might look in another ten years.

A brave new world?

In 2014 a report entitled 'The New World of Legal Work' suggested that in years to come legal firms will employ fewer permanent lawyers, meaning that private practice solicitors will have a more entrepreneurial role working on an 'as-requested' basis.

The study found that agile working will become the norm in law firms, which will give the sector further opportunity to adapt in areas such as business processes and technology.

Although it is difficult to guess exactly what is in store for the legal sector it seems that growth is certainly on the cards. Forecasts from the Law Society suggested that turnover will have reached 3.8% by the end of 2014, rising to 4.9% in 2015, compared to just 1.5% in 2012. The main factors driving growth will be the improvement in the performance of the UK business sector, along with activity in the UK housing market.

Growth within private practice is likely to be achieved through the Alternative Business Structures model, which whilst opening doors to the profession for non-legal businesses like The Co-operative and EY, has also seen top firms like Irwin Mitchell launching an ABS arm of the business in order to keep up with current legal trends.

Mergers and acquisitions are also likely to remain key for growth. Legal firm DWF acquired five firms, including Cobbetts in recent times and are now a Top 20 firm. This trend could see smaller firms becoming more competitive in the market, whilst ensuring the war for talent in the sector will be as fierce as ever.

Routes to qualify

While the legal industry has always been rather traditional in the manner with which it selects the best candidates, it is thought that times could soon be changing.

The Solicitors Regulatory Authority (SRA) recently vowed to introduce new regulations allowing LPC candidates to qualify as a solicitor without having to complete a training contract, this seems to be in response to an increasing number of students finding it impossible to secure a contract.

Although the amendments have been met with some criticism from already-qualified solicitors reticent to the change, others favoured the idea, understanding the struggle many face to secure that all important contract. Of course there is wide concern that newly qualified solicitors simply won't have the knowledge of those with a two year training contract under their belt - potentially creating a two tier system of talent.

Despite the announcement, many think it is unlikely to have a significant impact. We surveyed 50 lawyers at the end of last year to find out what they thought about this change, almost 80% thought the preferred route to qualify would continue to be with a training contract.

However, the rising cost of university fees could potentially effect the number of graduates entering the profession. The cost of training is already substantial, and with many graduates leaving university with debts of £30K+ it will be interesting to see if numbers of new entrants are reduced, particularly for those from lower income backgrounds.
 
Qualified solicitors will also see changes to their training modules as the SRA begin to remove the mandatory need for CPD points for lawyers this year. Again, many are concerned that without this requirement the consistency of knowledge across the profession could be impacted, as solicitors are no longer committed to spending 16 hours training a year. The responsibility has shifted from solicitor to employer, and the SRA believe this will improve the relevance of the training to the individual. This is certain to be reviewed in detail over the coming years.

It's a crime!

Legal aid continues to be a minefield for the profession with further cuts announced at the end of 2014, leading to the Law Society seeking a Judicial Review on the duty tender process.

Jonathan Black, president of the Law Criminal Courts Society Association, said:

"We're now in a position where again we have to resort to judicial review. In the current climate, it's the best hope we have of preserving essential access to justice. Over 1,000 contract holders would be set to lose their duty contracts for on-call work in police stations and magistrates courts - the lifeblood of any law firm doing publicly funded criminal work. Hundreds of firms would go under. A disaster not just for the profession but also for people who need fair representation.”

This is in addition to the cuts made in 2013, which virtually out ruled the availability of legal aid in civil cases. That round of cuts were of particular concern to victims of domestic violence, with approximately 40% finding themselves restricted from claiming family law legal aid and a technicality of the process means that many remain in danger from their partners.

This could see a shortage in lawyers specialising in criminal law. When I spoke to recently qualified Dean Hulse about the areas of law people are drawn to he said;

"I couldn't tell you the most popular area of law for newly qualified solicitors, but I can tell you the least popular - crime because of the legal aid cuts.”

The future for legal aid will of course be impacted by the result of the general election in May, as will legal positions in the public sector. The cuts to local authority budgets have already increased workloads for lawyers, and teams are more reliant on locums to cover short term projects than ever.

This could well lead to further outsourcing by local authorities, as seen in numerous local authorities. By offering a legal service to other UK councils through a commercial business, they are able to successfully generate income, which ensures their level of service is not reduced. 

Data, data everywhere…

Cyber-attacks are a threat to all businesses today and law firms are a particularly attractive source of information.

Alarmingly, just 39% of UK Board members saw cyber risk as an operational risk when comparing it to other threats their companies face. This is a clear indication that Boards have some way to go to understanding the consequences that a cyber-attack can have on the brand and bottom-line.

Lawyers were warned about the need to keep personal data secure by the information watchdog yesterday after 15 breaches in the past three months.

A statement from the Information Commissioner's Office highlighted the risks facing solicitors and barristers when handling personal information. It said that lawyers often carried around large quantities of information in folders or files when taking them to or from court, which increased the risk of a breach of data protection rules.

Christopher Graham, the information commissioner, said that material handled by barristers and solicitors was often so sensitive that it could meet the threshold at which a financial penalty of up to £500K could be imposed on individual lawyers. He said:

"The number of breaches reported by barristers and solicitors may not seem that high, but given the sensitive information they handle, and the fact that it is often held in paper files rather than secured by any sort of encryption, that number is troubling. It is important that we sound the alarm at an early stage to make sure this problem is addressed before a barrister or solicitor is left counting the financial and reputational damage of a serious data breach."

Timothy Hill, technology policy adviser at the Law Society, which represents UK lawyers, said the profession was concerned.

The Law Society urges firms to join the government's Cyber Security Information Sharing Partnership (CISP) in order to exchange cyber threat information and receive support from expert security analysts. Membership of CISP is free and the Law Society can sponsor firms to join.

"With cyber-attacks now one of the greatest threats to UK security, it is important that firms work together in sharing information to make businesses more secure. To help facilitate that, we have launched an information hub for all developments in this area”.

Diversity and balance

The diversity of the legal sector is certainly one of the recent good news stories, the 'old boys club' still in existence just 20 years ago seems almost a distant memory with more women than men now entering the legal profession.

In private practice and in-house senior appointments, there is still some way to go as just 18.6% of equity partners in the Top 20 law firms were women at the end of 2013, though I am confident that this is set to change over the next decade.

Government initiatives like the introduction of shared parental leave will hopefully see a way to changing this, and law firms like Clifford Chance, Ashurst and Eversheds signing up to The 30% Club, or announcing aggressive female legal partnership targets like Pinsent Masons and Linklaters, the signs are promising for ensuring women within private practice are encouraged to take on leadership roles.

Whilst the public sector continue to pioneer by offering flexible working to their employees, there is a growing openness to new ways of working within the private sector. According to the Law Society, those firms offering a flexible approach were securing the best talent - something for businesses in general to consider. In our survey of legal professionals, we found flexible working was the most important benefit to those questioned, higher than bonuses and holidays at 32%. 

Life in a Northern town?

The North/South divide continues to dominate headlines in business press, with proposals of improved transport links from HS2 and HS3, as well as an increased interest from government to devolve power away from London creating a Northern Powerhouse, within which the legal profession will be certain to thrive.

Manchester is rapidly becoming a key location for law firms, demonstrated by the number of Top 20 firms with bases in the city. Nabarro recently opened new offices in the financial district and global law firm Latham & Watkins are set to open this year. Job search site Indeed have found that Manchester is the second most common UK location outside of London for those seeking legal roles, with Leeds and Liverpool also appearing in the Top 10.

The attraction of Northern cities is clear. From the variety of roles and large pool of talent to the attractive metropolitan cities which are culturally able to compete with London, the North offers opportunity as well as quality of life, by being significantly more affordable than the capital in terms of house prices and business rents - wins for both employer and employee.

But of course London is an unstoppable force and really the only UK city to compete with international financial hubs like New York, Beijing and Tokoyo and it is anticipated that this is unlikely to change regardless of the infrastructures and investment that are put in place.

Salaries and benefits in the capital are unmatched anywhere else in the UK and opportunities for the legal professional keen to make their mark unparalleled. The draw of the City will see us at Sellick Partnership opening our first London office this year, in order to keep up with the demand from our legal clients in the South East. It's an exciting time for the Sellick Partnership legal team, and means that now more than ever, we are best placed to support your legal career for the decades to come.

What do you think? Are there any major trends that we've missed? Join the discussion below and don't forget to take part in our legal survey.
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