(An edited version of this post first appeared in The Times‘s The Brief on 8 January 2016)
As 2015 slides inexorably into 2016, we can ponder what differences this might bring to the world of legal services. The sands are definitely shifting, and the foundations of ‘old law’ continue to crumble as ‘new law’ takes greater hold. Let me explore three themes: demand, supply, and independence.
Demand for legal services presents serious challenges. For commercial firms, concerns about global economics, oil and commodity prices, and currency and stock markets, leave demand fairly subdued. There is still not enough work to keep all commercial law firms busy, and clients’ relative bargaining power puts pressure on lawyers to deliver even more for even less. Nevertheless, a handful of elite firms continue (and will continue) to do very well indeed, both at home and globally.On the other hand, for consumers and small businesses, there remains significant unmet need for legal advice and representation. Changes to legal aid and claims for personal injury continue to feature in government-led squeezes on the market. At the same time, perceptions of lawyers and the cost of legal services keep many ordinary people away from professional advice.
These twin failures to match supply and demand demonstrate that we are still far from achieving an efficient market for legal services. Regrettably, this seems unlikely to change much in 2016.
The supply side is characterised by too much competition for commercial work (over-supply of firms), and too few cost-effective solutions for consumers and small businesses (under-supply of services). In both cases, this is being sustained rather than addressed by the predominant business model.
The structure and culture of professional partnerships becomes increasingly inappropriate for maintaining, governing and financing the effective delivery of legal services. In 2016, firms need to make decisions that improve their innovation in structure, delivery and funding, and lead to more and better investment and efficiency.
The market will continue to change incrementally, particularly as new entrants and consolidators re-shape it through mergers and acquisitions, the reach of their brands, and their use of technology. However, this is not the year of artificial intelligence and robots in law (though it is certainly time for a better understanding of their application and potential).
Much still needs to be done to secure the independence, quality, competitiveness and cost-efficiency of legal services, and access to justice, that society rightly expects. In a welcome move, the Government has signalled its intention to take stock of legal services regulation.
Greater independence of regulation from representation is apparently high on the agenda. Rightly so: but we also need the assurance of the independence of lawyers and their regulation from the state so that the UK can maintain its pre-eminent position in global commerce, legal services and dispute resolution.
The reformation of legal services will not be complete by the end of 2016, but we will have made further strides.
So, to sum up by mixing metaphors: this year will see some law firms continue to have their cake and eat it; others will be rearranging their deckchairs; most will (borrowing from Lewis Carroll’s Red Queen) need to run ever faster just to stay in the same place; and maybe more than a few will not make it to December.