The legal market is one often criticised by outsiders for being antiquated, regimented and arrogant. Yet on firms’ websites, many describe themselves as ‘innovative’, ‘diverse’ and ‘straight-talking’. It is true that over the last 15 years or so, legal professionals have realised that the legal market is not immune to the struggles suffered elsewhere in the business world. The financial crash of 2008 showed them that the wider economy can impact law firms more than they thought. Now, we are seeing the fruits of this change in attitude. The legal market as a whole is becoming increasingly more flexible and in this post, I will examine three of the main drivers of this development.
A ‘more for less’ attitude
Clients are no longer willing to pay extortionate billable hour rates for an end piece of legal advice which is 35 pages long, appears to be written in another language and has no concluding solution. Why? Because their customers are demanding more from them and so in turn, they expect more from their lawyers. A recent look at the financial data released over the last week from the world’s biggest companies shows the minimal room for error in a global market where profit margins are smaller than ever. This means that companies are decreasing their expenditure in other areas and the legal budget will be one of the first hit.
Law firms are now having to work harder to ‘add value’ to their clients’ businesses in other ways, for example, through being more proactive in looking for opportunities their clients could benefit from. The same is true for non-business clients, with the hysteresis caused by the financial crash (which in turn caused mass unemployment and a drop in discretionary and disposable incomes) still being felt today. This leaves people less benevolent about footing an expensive legal bill, especially given that legal aid is practically non-existent now too.
Following on from my first point, the newly-emboldened attitude of clients has resulted in less loyalty to individual firms. The initial laissez-faire stance of some of the big legal players towards the new demands of clients resulted in many of these clients looking elsewhere. Nowadays, competition for a place on a panel appointment is fiercer than ever and it is rare for a client to give all of their work to a single firm. Combined with the effects of globalisation and technological development, it is also no longer imperative that larger clients source legal counsel from magic circle London firms. Regional firms are fighting their corner and ‘secondary’ offices outside of the City are now gaining an image beyond that of a place to get paperwork done more cheaply. In short, this means that clients are more willing to ‘shop around’ between law firms, further contributing to increased flexibility within the legal market.
This final development has been brewing for some years and bubbled to the surface again in November 2019, when the Solicitors Regulation Authority (SRA) relaxed regulations to allow more freelancing opportunities within the legal market. Freelancing offers more flexibility, both for the client and the free-lancer themselves, as a lack of overheads will often make their work cheaper and the nature of the job lends itself to fitting around other commitments. Some firms recognised this a while ago, forming online resource ‘hubs’ for free-lancers and in-house counsel. Others, such as Addleshaw Goddard (through ‘AG Integrate’) and Pinsent Masons (through ‘Vario’) have gone a step further, offering clients the benefit of freelance lawyers who are still backed by the power of a large international firm. By embracing this change, such firms live up to their ‘innovative’ mantras, and they also future-proof themselves by continuing to offer clients what they want.
Time will tell if this development will continue to grow in popularity or will fall out of fashion. Either way, this issue is certainly a good one to discuss when showing your awareness of the legal market and the challenges it faces!