Today, the Law Society publishes 'The Future of Legal Services', a report which brings together new and existing evidence to identify the key drivers for change, together with the opportunities and potential threats, in the legal services market over the next five years.
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 Competition and Markets Authority study of the legal services market and the government’s consultations on opening up the market to more alternative business structures (ABS) 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.'
The five key drivers are:
1. Global and national economic business environments.
While top UK and US firms have benefited from globalisation, large law firms from emerging markets are creating a meaningful presence in their own countries and western markets. Foreign investors from countries, such as China, Russia and India, have significantly changed the global business landscape. In addition, the uncertain nature of the UK's relationship with the EU may affect London's position as a financial centre, with knock-on effects on the legal services industry in England and Wales.
2. How the public and corporate clients buy legal services.
Corporate buyers are increasingly focused on value – requiring fixed fees, and greater transparency on pricing. They are also increasingly buying legal services à la carte – choosing different providers for different tasks. This unbundling of legal services is likely to continue.
As a profession, solicitors will need to continue to differentiate from other legal service providers (some of which are unregulated) on the basis of quality, specialisation and value.
Clients are uncertain about the different types of lawyer. It is difficult even for relatively knowledgeable clients to tell which provider is the most appropriate and whether they are providing a regulated service which offers them protection.
There is a group of potential individual clients who are struggling to afford legal services, especially as a result of the withdrawal of civil legal aid for many types of legal advice. Problems can escalate when expert legal advice is not obtained at an early stage, which can result in increased financial and human cost.
3. Technological and process innovation.
Technology is allowing certain types of legal work which is more procedural to be undertaken using technology. This is changing client buyer behaviour.
Process-driven legal services are being commoditised through automation. In time, with cheaper computing power and better software, increasingly sophisticated services may be automated. Artificial intelligence, 'big data' and communication are areas where revolutionary change is taking place.
The effective use of technology has the potential to widen access to justice, by reducing the costs of accessing legal services. However, not all clients will be able to access or use technology and many clients will still require expert legal advice for example, when using an on-line court.
4. New entrants and types of competition.
Three forces are likely to have an impact on firms' profitability over the next 3-5 years: changing buying behaviours, threat of substitute suppliers/services and greater competition among the Top 200 and large corporate firms.
5. Wider political agendas around funding, regulation and the principles of access to justice. Specifically, the proposals announced by HM Treasury and the Department for Business, Innovation and Skills on regulation and competition and the impact of the Legal Aid Sentencing and Punishment of Offenders Act.
Catherine Dixon continued:
'Our report is evidence-based and provides the context for the future competitive and regulatory environment. It is also 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.
'The Law Society will support solicitors through this period of change by upholding professional values, ethics and standards, raising awareness of innovative ways of operating and promoting the value of using a solicitor to the public.'
The report findings come from a literature review and three 'futures panels' covering business to business, business to consumer and Law Society committees.
Notes to editors
Download a copy of the Future of Legal Services.
Read about the Competition and Markets Authority study.
Law Society press office: 020 7320 5764