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Three issues that will shape the legal industry in 2017
3rd January 2017
The New Year always brings with it new opportunities and challenges, and the continuity of life’s only certainty – change. This is more so the case in the legal industry than perhaps any other profession, so we have decided it is time to step back and take a look at the issues which will most likely shape the sector more than any others in 2017.
Unless you have been living under a rock for the last year, it will not have escaped your attention that rather a lot of headlines have been generated about the British people choosing to leave the European Union in the referendum that was held on 23 June.
Brexit, of course, will have an effect on virtually every industry, and legal professionals should not forget this. However, it would be fair to say that many of those in a range of private practice or in house legal positions may see a substantial increase in their workload over the next few years, as they begin the incredibly complex task of extricating the UK from the EU, with all the rewriting of rules and regulations that this will entail.
Whilst there is much to celebrate from the perspective of law firms in relation to Brexit, however, it is also the case that commercial lawyers may struggle to find quite as much work as they did in pre-referendum Britain, at least in the short term. The economic uncertainty which is an inevitable side effect of such a seismic change in how the country works will continue at least until the formal process of leaving is complete, during which time businesses will be understandably cautious about making any big decisions which would require the counsel of lawyers.
However, this Chambers Student article notes that it is not all doom and gloom, quoting one City-based partner as saying that ‘things are considerably better than we’d expected’ following the vote to leave. ‘Things haven’t fallen off a cliff since 23 June’.
Freshfields, one of the biggest law firms in the UK, put it quite succinctly but accurately in this article: ‘Brexit has blasted its way to the top of the boardroom agenda’. As the piece goes on to say, these are uncertain but not necessarily bad times; there is, according to the Magic Circle firm, ‘the possibility of dramatic change’, which may be ‘fraught with risk’ but is also ‘rich with opportunity’.
2) The economy
Not unrelated to the issue of Brexit are developments in the economy in general. Obviously, economic changes affect the running of every business up and down the country, but law firms are particularly susceptible to any fluctuations; if their clients start to struggle in any downturn, then requests for counsel are less likely to be forthcoming.
We should not forget that Brexit is far from the only issue having an impact on the performance of the world economy, and this will not change in the coming year. The Eurozone as a whole is still very far from safety – just ask the people of Greece and Italy – whilst surprise economic slowdowns in the powerhouses of China and, to a lesser extent, Brazil are also making waves throughout the financial world. Once again, though, the picture is not entirely negative.
As Legal Week explain in more detail here, the UK’s biggest law firms are continuing to increase their revenues and profits, with total revenue for the top 50 practices rising by 4.5% in 2015-16. The legal sector is nothing if not resilient, and the finest minds which dominate it will continue to find ways to beat the trend and keep the balance sheets on track, no matter what headwinds they have to deal with.
This does not mean that lawyers should be complacent about the scale of the challenges ahead in 2017, however. Success in economically challenging times is about learning to adapt to changes, rather than soldiering on with your old tactics and hoping for the best. More than ever, law firms have to prove their worth to clients in order to get repeat work, and the best recruiters will want you to demonstrate that you are able to do this.
3) Mergers and acquisitions
High profile mergers and acquisitions are becoming increasingly common in the legal sector and are another example of how the profession is changing more now than has ever been the case before. There are a number of different reasons why mergers take place; sometimes they are simply desired as a way of growing both businesses involved, whilst just as often they are necessary to save a struggling law firm. One thing is for sure, though – it is highly unlikely that we have seen the last of the big name mergers being completed. 2017 is set to be another year where more law firms decide to consolidate their resources and client base in order to operate more efficiently and profitably.
One potential consequence of a merger is that it may mean a change in the number of trainees being taken on by the relevant practices. This means that you may have to work even harder in order to be considered, let alone accepted, for a place at that firm you have had on your eye on since graduating!
With every challenge comes an opportunity, however, and you can be fairly sure that firms which have just merged are likely to be in a better position than they were in their last days as a solo entity. Whilst it may therefore be more difficult to get that job at the firm of your dreams, the experience and rewards that will come with working there will be even more worthwile.
Of course, there are many issues which will have an impact on how the legal sector performs over the next 12 months which we do not have time to go into here. Changes in public spending, the growth of the Legal Services Act and more will also play their part in your firm’s chances of success in 2017, so be sure to keep on top of our news and blog for all the latest developments during what will no doubt be another unpredictable year.
Image Credit: Images Money