Technology concerns and Brexit fears keep law firm leaders up at night
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In-house automation likely to reduce the need for external lawyers, survey finds
As advancements in technology and changing client demands continue to disrupt the legal services marketplace, and fears over Brexit’s impact on the sector continue, law firm leaders have been told to become ‘bolder’ to maintain their competitive advantage.
A poll of managing and senior partners from 51 national and international law firms found that 98 per cent of law firm leaders are concerned over how the impact of technology is changing the pace of the legal industry.
The ‘Law Firm Leaders Survey’ from accountancy and business advisory firm BDO says disruptive market challenges will dominate the sector over the next five years.
The findings of BDO’s survey show that technology is expected to have the greatest impact on legal businesses in the short term, with four out of five partners seeing it as a major factor to their practice’s success over the next five years.
Partners at UK firms expect businesses to take more work in-house, where automation is likely to reduce the need for external lawyers in routine and high-volume areas.
While technology is considered a strategic priority for 94 per cent of national and global firms, changing client demands, generational change, and competition are the next biggest threats.
Almost half (44 per cent) of partners said cultural change will be a big challenge in keeping up with new technology. Of those, the majority (59 per cent) believed it was a firm-wide issue, while the remainder said partnership resistance could be the biggest problem.
Respondents drawn from the top 200 UK law firms considered their US counterparts, new market entrants, and the Big Four accounting firms as competitors they needed to watch.
Matthew White, international practice leader of the professional services group at BDO, said: ‘In this new world where technology and changing client demands are causing firms to reconsider how legal services are delivered, is it feasible that law firms can continue to provide legal services in the same way they have done for decades?
‘Law firm leaders must accept that if they want to maintain competitive advantage they will need to be much bolder in their approach to overcome these disruptive market changes.’
When asked about their Brexit concerns, one in three global firms and one in four UK firms said an exit from the EU would have the greatest impact on the industry over the next five years.
While some argue lawyers will benefit from a temporary uptick in regulatory work as regimes and rules change, more are pessimistic about the potential long-term impact on workflows.
John van der Luit-Drummond is deputy editor of Solicitors Journal