As 2024 stretches out in front of us, the legal sector is undergoing rapid evolution amid heightened competition and complex challenges, including the cost-of-living crisis, demand for specialized knowledge, and disruption from alternative legal service providers (ALSPs).
In the face of COVID, law firms demonstrated versatility and resilience; going forwards, we would expect to see more consolidation and mergers in the sector, the continued adoption and testing of advanced legaltech and AI, and shining a bright light on productivity, wellbeing and work-life balance.
Key trends for 2024 are expected to include:
1. Generative Artificial Intelligence (AI):
The legal sector is witnessing a surge in the use of generative AI platforms like ChatGPT, Google Bard, and DALL·E. This technology is reshaping legal processes, enhancing research efficiency, and transforming everyday tasks. Failure to leverage AI may result in falling behind, as it becomes an integral aspect of legal practice.
Alex Marsh, Head of UK Research at Chambers and Partners, adds: “AI is clearly an obvious trend. What this exactly means at a practical level will vary a lot. Some firms that claim to use AI to help write their contracts are really just using “a computer” more so than bona fide AI. The most elite firms will be doing something a bit more sophisticated. Either way, they will need to be careful how they present this to clients. A client could hear the word “AI” and may think “less human input – lower fees.” But the work AI will be doing will be the least prestigious work that previously will have been done by the least senior staff. So tempering clients’ expectations regarding just what kind of impact this will have on fees will be important.
I’m most curious to know what impact AI will have at the lowest end of the market. I think most clients can appreciate that it takes a human to think of the best strategy to employ when faced with a £1 billion merger. But if I’m moving house and I need routine conveyancing checks to take place: I’m not sure if I mind that much whether the entity that does that work has thoughts, feelings or a beating heart.”
2. UK Law Firms Breaking into the U.S. Market:
Global expansion remains a strategic goal for UK law firms, with attempts to enter the competitive US market through mergers, acquisitions, and strategic partnerships. The success of ventures like A&O Shearman may inspire more UK firms to pursue similar approaches in 2024. UK-headquartered international law firm, Addleshaw Goddard will see Andrew Johnston begin a four-year term as Managing Partner from May 1, 2024, stating: “My ambition is for AG to double in size by 2030.”
Alex: Regarding mergers we might not tell how successful A&O Shearman will be until after the end of 2024. Of all the big US/UK mergers in the last 10-15 years, the results have been quite varied. Some have been very successful, others have been like watching two mismatched jigsaw pieces be forced together until they crack. Further consolidation is very likely, especially among the firms that aren’t quite big enough to conquer the world alone but aren’t quite niche enough to be happy with their lot.”
3. Organic Growth for Smaller Law Firms:
In the face of economic uncertainty, smaller law firms are focusing on organic growth through enhanced marketing, business development, and client retention strategies. Emphasis is placed on holistic marketing approaches, online presence, thought leadership and client-centric practices to attract and retain clients.
4. Law firms will take even more measures against hackers.
More emphasis on protecting themselves against hackers. Last year, Allen & Overy confirmed it was targeted by hackers, making it the latest major law firm to become a victim of a cyberattack. Kirkland & Ellis, DLA Piper, Proskauer Rose, K&L Gates, Loeb & Loeb, and Orrick Herrington & Sutcliffe were just a few of the dozen-plus leading firms reported to have been targeted over the last year, according to Bloomberg Law.
The publicly listed Ince Group, a United Kingdom-based holding company with a core business in legal services, entered administration in April 2023 after a serious ransomware breach in March 2022, later revealed to have cost the firm £5 million. In 2022, the Ince Group ranked 47th in The Lawyer UK 200 list.
The clear and present dangers of cyber-threats faced by law firms was laid out in an April report by cybersecurity firm Checkpoint Research.
According to Checkpoint, the rate of global weekly cyberattacks rose by 7% in the first financial quarter of 2023, compared with the same period in 2022. Meanwhile, more than a quarter of law firms in a 2022 American Bar Association survey said they had experienced a data breach, up 2% from the previous year.
5. Data Overload:
Tracking and analyzing data is crucial and provides a competitive advantage. Data can be used for building the business development funnel, to adding value to clients, enhancing client relationships, and more.
In the wake of COVID, where law firms relied more on online than before, and with legal tech on the rise, law firms are bonbarded with data overload. Simply put – we are losing our focus in this digital world. Furthermore, unlike other sectors that gradually adopted the use of technology, the legal industry is rapidly adjusting. It is imperative for law firms to manage their data, in order not to drown in it. This requires clear objectives and defined methodologies. Legal marketing departments are swamped with work, and data could be a great resource, but also a burden if there is no planning.
