Five challenges facing the legal sector in 2023

2023 presents plenty of challenges – and opportunities – for the legal profession. Our partner, Access Legal, sets out five of the biggest pressures firms are facing and explores possible solutions.
A man sits at desk in an office, in front of a laptop and paperwork.

Last year, we identified the 10 biggest challenges facing the legal profession to provide clarity to legal professionals on common challenges and opportunities for the sector.

Many of the challenges highlighted still apply in 2023 and are high up on the agenda for firms.

We look at five more areas legal professionals need to consider in 2023, the impacts they could have and opportunities for firms to tackle these challenges.

Economic pressures

The UK economy has been volatile in 2022 and this is expected to continue in 2023.

Rising interest rates and cost of living has slowed some practice areas, and clients are now even more price conscious when choosing a law firm.

An industry survey of 200 partners found 44% are facing client pressure to reduce fees in the face of increasing costs, while 46% said clients are moving to less expensive competitors.

With costs for businesses, as well as clients, increasing and further price pressures, firms are having to look even closer at how to work more efficiently and reduce costs.

The invasion of Ukraine is one of the factors causing the increased cost of living and inflation.

The war isn’t expected to stop anytime soon, unfortunately, and knock-on effects will continue to be felt by the UK economy and legal sector in 2023.

Continued stringent checks for anti-money laundering (AML) and source of funds is needed while firms are banned from doing transaction work for Russian clients. This is particularly prevalent in conveyancing, but it applies to all areas of law.

There is also an expectation for greater cybersecurity and verifications for online activity as IT professionals are wary of increased risks of cyber attacks.

There are opportunities for law firms amongst the economic pressures.

The need to work more efficiently to increase utilisation rates and reduce wastage means firms can interrogate current processes to see where they can streamline or automate tasks.

Integrating a case management system with other internal areas, such as legal accounting. online payments and website quotation tools, and external third-party systems, such as government portals or identity verification services, for example, can provide value to firms and the end client.

In regards to increased cybersecurity, moving to a hosted environment can provide significant security benefits as well as performance improvements.

Our blog on the hosting options for legal practice management software covers the options available.

Shifting conveyancing market demand

In 2021, the conveyancing sector saw the highest volumes of transactions for over a decade, with the number of residential transactions breaking the 1 million mark.

With significant demand, conveyancers were under pressure to complete transactions in time for clients to benefit from stamp duty land tax holidays.

Fast forward to now, interest rates are the highest since 2008, which has led to mortgage interest rates averaging from 5.35% and 4.85% for a two- and five-year fixed rate deals.

High property prices – although these are predicted to fall by around 5% – and high costs of living has led the market to slow down, meaning reducing demand for houses and work for conveyancers.

While competing with other firms will be a challenge, some argue this is a welcome period of calm for conveyancers who have been overworked the last two years.

This levelling out in demand might provide a period of ‘normality’ for the sector and give conveyancers the opportunity to focus on client experience, digital journey and improving processes before it ramps up again.

Our article on modernising the conveyancing process looks at how conveyancers can take their services to the next level and streamline processes.

Integrating legal software

Integrating law firm software and systems is not a new challenge, but it’s increasingly important as firms strive for increased profitability while improving client service and experience.

Many firms have disparate systems that don’t share data, which can lead to inefficiencies and problems, from manual data entry and poor data quality to cybersecurity and reduced automation.

To operate efficiently, firms could encourage more collaborative working between team. The foundations of this stems from the systems being used.

Integrating legal accounts, customer relationship management (CRM), human resources (HR), case management and more creates a digital ecosystem that can better manage workload and client engagements.

We explore the opportunities that can be realised in our article: is fully integrated software better than separate software packages?

Building a positive culture while remote working

Talent attraction and retention in the legal sector will continue to be a significant challenge in 2023.

Cost-of-living pressures again play a role, as legal professionals consider moving jobs to increase salary, and remote working allows for greater flexibility and availability of roles.

Remote working can create challenges in maintaining or building a positive culture and keeping staff engaged with the values of the firm.

There are many benefits to remote working, including a better work-life balance for staff, reduced office overheads and attracting wider talent pool.

But being at home, often alone, means some people lose that sense of community, which makes working collaboratively with colleagues more difficult.

Some may even start to feel isolated, which can have a negative impact on wellbeing.

Looking at culture, there are opportunities for firms to foster a positive and productive remote working environment.

Firstly, communication within the firm, both internally and to clients, needs to establish norms to ensure everyone is clear.

Sharing best practices, response time and email protocols will prevent people getting too many messages, reduce interruptions and make communication easier.

HR teams can then focus on sharing content with staff which talks to the firm’s values, celebrates achievements and gathers feedback to improve their experience working from home.

The second opportunity is to leverage technology to support staff to work remotely with ease and securely.

Providing hardware – such as laptops, keyboards, mice and comfortable chairs – and appropriate software to assist communications, productivity and cybersecurity are key to making the move from the office seamless.

This is where solutions such as browser-based or cloud-hosted case management are worth their weight in gold!

At our Access All Areas virtual conference, we ran a CPD-accredited panel discussion with industry experts on how to attract and retain the best talent while building a positive culture, which provides tips and case studies to support your firm.

Driving new business

An age-old challenge for law firms that has continued prominence this year is how to drive new business and be more competitive.

With client’s sensitivity to price and more legal services being made available online, competition in the sector is growing and it’s difficult for firms to stand out.

It’s not always sustainable or appropriate to cut prices to be the cheapest. Firms need to consider other ways to differentiate themselves.

Another challenge is that solicitors are legally trained, rather than trained in sales or marketing, so may lack some of the skills required to engage prospects and follow up with potential opportunities.

There are some quick wins to help surface new opportunities.

One is to use an automated online quotation tool that allows prospects to receive an estimate anytime they want while you capture contact information to follow-up.

Better still, if you can integrate the quotation tool with your case management system, details can be passed directly into a case file, saving time, improving accuracy and making it easier to follow up.

Other useful activities include:

  • attending local community events to network and build your profile
  • using marketing initiatives, such as social media and email marketing
  • collating positive feedback from existing clients to evidence the value your firm provides
Explore our seven tips to market your firm, which provides advice to support your business development.
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Access Legal is a partner of the Law Society, offering legal case and practice management software. 

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