What's in store for the Legal market over the next twelve months? We take a look...
The Legal market is coming into 2018 on the back of a strong year. As one of the country’s most profitable sectors, employing more than 306,000 people and contributing around £24.4bnto the UK’s coffers over the past year, the Legal sector enjoyed worldwide market growth everywhere from London to the Middle East, and shows more signs of growing further this year.
However, as we move into 2018, the coming months also look to pose significant challenges to Legal firms across the globe: significant political events like Brexit, followed by new regulations in the form of the GDPR, have created market uncertainty for the more than 1,000 law firms operating in the UK. And with significant changes in the way that we do business fast approaching the market in the form of the rising influence of the Middle East, job automation and the innovative new Fintech start-ups which are coming to challenge the way in which more traditional firms do business, it’s clear that 2018 will be an interesting year for people working within Legal.
Here are our predictions for the year ahead.
What will happen within the market?
The rapid rate of market growth in 2017 looks set to slow down as we enter the early months of 2018. Last year, a more stable economy and good market conditions meant that at least70% of law firms in the UK achieved fee income growth, though this was limited to an average of between 2.3-3.7%, and it’s been predicted that the market itself will grow by 4% this year.
However, there are also challenges facing the Legal sector: whilst these market conditions may benefit large law firms, smaller ones are struggling to compete with their bigger counterparts, and as a result many of these smaller companies were sold during 2017. Indeed, the high rate of Mergers and Acquisitions look set to continue transforming the market over 2018, with many UK Legal firms looking to merge with European and US practices to expand their market offering to create a global law service over the coming years.
This isn’t all: the rise of these ‘superfirms’ within the market has also given rise to a demand for senior partners, as companies look for experienced, talented staff to manage their expansion plans. We’re also expecting to see a rise in demand for roles related to Property, Finance, Real Estate and Construction as the market continues to grow, alongside growth into more niche Legal areas like the budding Life Sciences sector.
Competition for talent
This wealth of demand for new jobs has created a job rich market, where top Legal firms are striving to attract the best quality candidates for their roles. Perhaps as a result of this, the average Legal salary has skyrocketed over the past year, as firms sought to attract the best talent- and compete with Magic Circle firms in America raising their salaries for the same reason.
However, this is expected to stabilise this year- though salaries will remain high- and many companies are instead turning their attention to candidate retention, for instance by innovating their Employee Benefits packages. This year will likely see a shift towards flexibility and agile working structures, to appeal to seasoned employees and especially millennials, 93% of whom say that ‘managing a healthy lifestyle’ was crucial when considering their future career.
Regulatory challenges
Legal firms will face difficulties this year in keeping up with increasingly complex levels of regulations in the European market. Britain’s decision to leave the European Union on 29th March 2019has provided many lawyers with fresh business, as companies from across the market look to make sense of the regulatory changes ahead, but it also brings with it its own set of challenges. Indeed, many Legal firms are considering making the move to, or opening satellite offices in places like Dublin, Frankfurt and Paris, in order to retain access to trade and operate freely in the EU.
The GDPR also looks set to shake up the way in which business is done. Aimed at increasing data protection for consumers and customers, this legislation will be effective across the whole of the EU, and requires businesses who control and process sensitive data to change the way in which they handle it.
The result? There will be a surge in demand during 2018 for regulatory and compliance-related roles, and a sea change in the way business is done: after GDPR, a business strategy based around customer permission will be key and Legal firms are adapting to this.
Eyes on the Middle East
The Middle East has risen to prominence over the past few years as a worldwide Legal hub, and this trend shows no signs of letting up anytime soon. Due to its central location, and high levels of investment from countries like Saudi Arabia, Lawyers from all over the world are moving to the sandy beaches of Dubai and Abu Dhabi to practice law.
This investment is opening up new markets- especially in real-estate, thanks to the area’s building boom- and incorporate and commercial law. Indeed, Dubai has one of the highest concentrations of British expat Lawyers in the world. As this area develops further, we’ll see a huge demand for quality Lawyers at every level as more and more internationally recognised law firms make the move to this newest Legal hub to grow their business.
For more information on this, check out our blog on why the Middle East is so popular.
Technology is changing the market
The rise in technology has transformed the Legal market over the past few years, and the pace of change will not let up this coming year. To thrive today, Legal firms need to be efficient, and offer a technology-based, customer-focussed service, especially in a market where technology has given rise to an expectation for instant consumer satisfaction.
This of course heralds change: automation today is capable of skimming through- and building- time-consuming contracts, or scanning databases and picking out relevant clients- and it’s predicted to take 114,000 Legal jobs within the next twenty years.
There’s also been a 41% rise in Legal firms using technology to enhance their client experience, and for good reason: the market is starting to welcome new, technologically-based start-ups which are transforming the sector. These start-ups like Ravn, which searches unstructured data to retrieve and summarise specific information, or Lexoo, are providing a new, instant service to customers that traditional firms are scrambling to keep up with: indeed, many large companies like Linklaters are starting to partner with these start-ups, resulting in a more efficient, customer service-oriented business model that will surely become the norm in coming years.
We’re looking to the future.
The next twelve months will bring a lot of change to the Legal market. With the rise of the Middle East enticing Lawyers away to the sandy beaches of Dubai, and Lawyers increasingly turning to technology to attract and engage new customers, we’re expecting to see demand rise for a variety of jobs across the board, from technology-based roles to senior partners with the expertise necessary to help firms expand their offerings in new countries.
Whatever comes, we’ll be looking forward to it- and working hard to match the best Legal talent to the best vacancies around the world.
