Law firms of all sizes must embrace technology, reinvestment and new ways of working.
In 2017 the legal sector will not be immune from the growing forces of socio-political change, but with these challenges come opportunities for those willing to let go of the existing paradigm, innovate, invest and adapt.
Global political and economic change will lead to opportunity and further volatility. This year could see nationalism and regionalism re-established as dominant forces against globalisation, creating a challenging environment for business and government. This will require a greater need for problem-solving skills and risk management, as well as strategic legal advice to help calm the potentially choppy waters. The most successful lawyers will seize this opportunity to be more advisory and less transactional.
A shift towards problem-solving outside the strict confines of the legal system and more advisory roles will also have an impact on people and skills. Junior lawyers seeking to climb the career ladder must think about what non-legal skills they need in a changing market. To help them, equity partners must consider how they create an environment that focuses less on profit and more on what will create value.
This should lead to the LLP model being challenged, with law firm owners questioning business models and the way they are individually remunerated. These are hard questions that will not go away.
From the client perspective, the death of the billable hour has long been heralded – perennial discussion highlights the need to consider alternative options that satisfy changing expectations. This will only contribute to the debate about how value is captured and built in future law firms. But the real question is how do we value the new wave of technology and data-driven services that lawyers will shepherd? Beyond that, what is the value of lawyers?
This sounds simple, but it requires a fundamental shift in the way law firms operate.
In operational terms, developing flexible and portfolio-style working relationships with staff is one example of change that can have a huge positive impact. Alongside flexible working, putting a greater emphasis on flexible workspaces is not only motivational but, with the right technology and tools, will also improve communication and collaboration.
Flat trading conditions throughout 2016 led to subdued investment. Mid-sized firms must start reinvesting profits to keep pace with international firms. Small firms must do the same to keep pace with the innovations introduced by unregulated entities entering their markets.
At any point in the market, investing in new technology is essential, but such investment should not eclipse the importance of branding, team growth and potential restructuring to maintain and scale thriving businesses. As firms focus less on making short-term profits, 2017 could be the year that we see significant reinvestment in the sector.
Legal technology will continue to be a driving force. The demand for legal tech solutions is driven by both our changing client needs and the needs of in-house lawyers who work more efficiently and profitably by harnessing technological innovations. While this will have a knock-on effect on the way firms operate, it does not mean that ‘robot lawyers’ will replace humans. But it could fundamentally change what lawyers do for clients, and lawyers need to take personal responsibility for the skills they will need to be effective.
With the growing use of technology and reliance on data rather than experience comes another potential shift. Businesses may decide that the law and lawyers are not the only answer to risk. In a fast-moving global economy with complicated cross-jurisdictional rules, insurance against bad outcomes could be more attractive than either contract risk allocation or litigation.
Lawyers must start taking insurance seriously as a component of risk management alongside contractual solutions. Furthermore, insurance companies could start to invest more in product development and rely on legal tech and burgeoning data about risk to make premium decisions.
Matt Meyer is chief executive of Taylor Vinters