While it is never possible to predict with 100% accuracy what will happen to the UK’s legal market in the coming year, by projecting ahead as much as possible, you can ensure your legal practice is better prepared, come what may. The expected emergence from the COVID-19 pandemic will hopefully mean that law firms that have had to direct their efforts to adapt to a new way of working since March 2020, can now focus more on achieving their longer-term commercial strategic objectives and preparing for the legal, regulatory, technological and consumer developments in 2022 and beyond. So what can we expect from the UK legal market in 2022?
Use of artificial intelligence (AI) expected to grow in 2022
In recent years, a number of technological trends have emerged, including automation and the use of cloud-based software, and we expect this to really accelerate in 2022. Artificial Intelligence (AI) will continue to provide opportunities for law firms to drive internal efficiencies while creating new products and services. Recent research by the University of Oxford in conjunction with UK Research and Innovation (UKRI), entitled, ‘AI-assisted lawtech: its impact on law firms’, highlights that AI-assisted law-tech is most used for legal research, due diligence, eDisclosure, and regulatory compliance.
Another finding from the research looking at how AI-enabled lawtech is impacting on lawyers’ work, is that the deployment of AI-enabled lawtech solutions often involves the “creation of new tasks, new working arrangements, a new delivery infrastructure, and an association with multidisciplinary teamworking involving both lawyers and non-lawyers.”
Legal consumers expect availability of remote communication in 2022
One of the lasting legacies of COVID-19 is that law firm clients are now much more willing to engage with lawyers and solicitors remotely. According to research by law technology firm Clio, in 2018 “only 23% of consumers were open to the idea of working with a lawyer remotely”. This figure has now risen substantially, with just under 80% of law firm clients saying that the option of working with a lawyer remotely (e.g. through Zoom, Teams, or Skype) is important and would play a part in determining if they would choose a particular legal professional to represent them. In most cases, people want the option to see a lawyer face to face or remotely. This means that law firms in the UK that do not already have a secure, reliable, and easy to use client remote communication platform may need to consider implementing one in 2022.
Law firms and solicitors may face larger fines due to SRA breaches in 2022
In November 2021, the SRA launched a consultation on their approach to issuing financial penalties to law firms and solicitors due to breaches of professional expectations. The consultation closes for responses on 11th February 2022 and its aim is to seek views on initial proposals to:
- Increase the maximum fine the SRA can issue to £25,000
- Take into account the turnover or income of firms and individuals when setting fines
- Introduce a schedule of ‘fixed penalties’ of up to £1,500 to enable lesser issues to be dealt with more easily for all concerned
The SRA say that raising the maximum fine would allow them to deal with a wider range of disciplinary matters without needing to refer to the SDT. Given that the SRA’s fining regime was originally introduced a decade ago, it is reasonable to anticipate changes to be made in the near future once the consultation is received and reviewed.
More large law firms to go public or opt for Mergers and Acquisitions (M&A)
According to a survey in December 2021 by litigation funder Harbour, around one-third of law firms with more than 200 partners at practices with at least 50 lawyers, are “actively considering” placing their firm on the stock market. This is backed up by Robert Plant of investment banking firm Panmure Gordon who believes that IPOs are now seen as increasingly attractive as a means of raising a firm’s profile with both clients and recruits while providing a likely cash injection; “It [IPOs] can provide the proceeds for higher investment, especially in areas such as technology, and to move into areas outside of traditional legal work such as corporate finance”.
Some law firms may prefer to branch out from pure legal services, generating new revenue streams; one example being Mishcon de Reya which set up a new £150m litigation funding arm in partnership with a third-party funder, in September 2021.
Furthermore, we expect to see a continuation of the M&A trend seen in recent years. A poll of 100 law firms by M&A broker Acquira has highlighted that nearly half of UK law firms are considering mergers and acquisitions during or after 2022 to expand their geographical footprints and scale up their businesses.
This article only covers the tip of the iceberg when it comes to the type of changes we may see in the UK legal market in 2022. Global and domestic politics, the economy, and the next stage of the COVID-19 pandemic, among many other factors, will all continue to shape the legal sector in this country. As ever, the firms that do best this year will be the ones that put in place a pragmatic, robust, and forward-thinking business strategy in readiness for the coming changes.
We have been helping solicitors and other legal professionals with disciplinary and regulatory advice for 25 years. If you have any questions relating to an SRA investigation or an SDT appearance, please call us on 0151 909 2380 or complete our Free Online Enquiry.