Despite a challenging economic climate the UK legal sector remains resilient and, according to the LexisNexis GLP Index, is poised for growth in 2024. Although a general slowdown is projected, the good news is that specific pockets of expertise remain in high demand. This presents opportunities that the more agile small and medium sized firms can exploit.
To stay ahead of the curve, Mark West, , highlights the importance of recognising and embracing market conditions, and urges law firms to focus on five key areas: resilience; service agility; automation; learning culture and developing a future focus (horizon scanning).
Customer expectations are higher than ever: In addition to faster response times; improved value; and greater transparency on price and efficiency – Thomson Reuters’ State of the UK Legal Market highlighted the premium clients increasingly place on expertise, strength of relationship, and business / commercial knowledge. Small firms are well placed to develop their client relationships, with their relative size and scale often helping to personalise the service they can provide.
Competition is intensifying: At the top end of the market, US firms continue to expand their footprint in the UK, whilst global legal revenues for the Big Four were reported at £1.25bn early in 2023. The Alternative Legal Service Providers segment continues to grow by over 10% year on year, whilst private equity investment in Legal Tech is fuelling an ever increasing number of smart and agile digital platforms.
Global is local: With the ongoing impact of global events, such as the potential general election, post-Brexit economic adjustments, a persistent cost-of-living crisis, and geopolitical conflicts, law firms need to remain agile, and critically, monitor and track the impact of these events so they can add value effectively for clients and anticipate the market.
Demand Peaks and Troughs: The legal landscape experiences volatility influenced by factors like consumer confidence, political interventions, and new legislation. Firms need to anticipate and capitalise on sudden surges or bubbles of opportunity driven by one-off decisions or deadlines.
Automation and Artificial Intelligence (AI): Embracing the race toward automation and AI adoption is imperative. Law firms must actively explore and implement technology solutions, leveraging data to drive value and enhance operational efficiency.
Resource Scarcity: PwC’s Annual Law Firm Survey highlights how firms are having to work harder than ever to attract and develop talent, with recruitment a major barrier to success. Firms need to strike a balance between offering competitive salaries and meeting client expectations around value. Alternative resource models, including working with an outsource partner, give firms an alternative and complementary way forward. Mark West, Knowledge Services Specialist at Auxilio remarks:
“Facing the challenges ahead, law firms must strategically navigate their course through the storm. Resilience is no longer a theoretical exercise; firms must continually test responses to diverse scenarios, fortifying themselves against external events.
Enhancing service agility is crucial to meet client expectations for both speed and quality. Many of the larger players have their own captive offshore service delivery centres, which are hard for small and medium firms to compete against in terms of cost and efficiency. However, by exploring alternative resource models and partnerships smaller firms can still maximise opportunities and adapt swiftly, this is an area where Auxilio can help level the playing field.
Automation should be at the heart of a firm’s strategy, with a clear roadmap, milestones, and ongoing evolution to align capabilities with service delivery. Cultivating a learning culture is paramount, with innovation fuelled by a trial, test, and learn approach, engaging all staff, and actively listening to customers. Additionally, horizon scanning is essential, recognising the value of knowledge in monitoring external developments. It goes beyond legal, regulatory, political, and economic factors to track wider social and environmental changes.
Ultimately, firms need a forward-focused approach, anticipating challenges their clients will face and proactively identifying the path their business should take.”
Written by Mark West, Knowledge Management, Legal Tech and Digital Transformation Consultant at Auxilio
