The Law Society

2009 and the challenges ahead: leading law firms through the global downturn

Law firms face major challenges in remaining competitive in the global economic downturn. The impact of the recession is being felt at every level of the legal services market, from the high street to the biggest international law firms.

Lord Myners, the Financial Services Secretary, has recognised the fundamental importance of the contribution of the legal services sector to the resilience of the economy as a whole and emphasised the government's commitment to ensuring that the sector remains strong and thrives. He has remarked upon the great dynamism and adaptability demonstrated by the legal sector throughout history.

Alderman Ian Luder, the Lord Mayor of London, acts as an Ambassador for the City around the world, emphasising the breadth and quality of the professional services sector in London. The high value-added services available in the City are underpinned by a commitment to values of honesty, integrity and fair dealing. The Lord Mayor has said that while events over the past year may have tarnished the reputation of the financial services sector, rebuilding the City brand will require a recommitment to these fundamental values.

Managing businesses

While acknowledging that for many firms the short-term focus is on surviving the recession, David Morley, Senior Partner at Allen and Overy LLP has encouraged firms to be mindful of the long-term consequences of decisions made in the current climate. Investment in training and retaining quality staff will help to ensure that firms will be well placed to take advantage of improved economic conditions in future.

History has demonstrated that the most innovative businesses find opportunities in the most difficult market conditions. The current recession is likely to encourage the emergence of new models of legal service delivery, particularly as the opportunities created by the Legal Services Act take shape.

Changing face of regulation

The perceived failure of regulation to prevent excesses in the financial sector may have changed regulatory discourse forever. The phrase 'light touch regulation' is unlikely to be heard again. The Lord Mayor drew on his accountancy background in arguing that practitioners know where regulatory gaps and pitfalls exist and have a duty to share this knowledge with regulators as part of the reform process. This will enable the development of regulation that is intelligent, focused and appropriate - protecting consumers without stifling business development.

In a similar vein, David Morley encouraged law firms to participate in the Law Society's current review of regulation, describing it as an historic opportunity to help in shaping the right regulatory framework for the sector. The regulatory regime must be sufficiently flexible to enable world-scale firms to operate simultaneously in many jurisdictions.