We caught up with Tom Oliver from PwC and took a look at the future of the legal profession.
Below you can find a transcript of this episode of Innovation Insights with Tom Oliver, a Senior Associate at PwC, discussing the future of the legal sector, and what part innovation can play in it.
Innovation in the legal sector
Tom Oliver: Innovation is a buzzword at the moment and a big topic, everyone is talking about it. I think the history of that is quite varied, it really starts post 2008, after the financial crisis. Many legal firms were finding that their clients, while they still needed legal services were finding that they needed to cut costs, so that introduced a bit of a downward pressure of costs for them. And at the same time, obviously technology has been rumbling along, new developments in artificial intelligence and robotic process automation, and some of the core knowledge systems that legals had for a long time, like automated document production – that’s carried on. So at the same time as clients have been introducing cost pressure, innovation is becoming more and more important.
What does the future look like for law?
T. O: I think that we will see more and more law firms having specific roles within their groups – you’ll have technical legal specialists, you’ll have people who are very good at running matters, managing matters, understanding the process – whether that’s the legal process or the project process. We will probably also continue to see firm conversions and the size of firms growing – that has been the trend for the last 8 years and I think it will probably continue into the future, as firms continue to try and be able to service their clients all around the world – it’s natural that firms will continue to come together. I think we will also see some firms looking to specialise more, we’ll see firms looking to rally around really core areas of expertise, whether that’s a particularly strong tax advisory practise, corporate finance, or banking, whatever it might be. I think we will see some smaller players really specialising and then working more collaboratively and more closely with big full service firms to provide that service.
Will we see any new job titles?
T. O: I think one of the first areas of those will be that differentiation of finesse – fieriness having different parts, different roles. We have already seen a growth in specialists in firms, particularly within the business support functions. For example, pricing specialists are becoming more and more prevalent, more and more firms are getting procurement specialists now, especially as IT is becoming more important, you need people who understand how to procure IT service contracts from an operational perspective rather than just a legal perspective.
Will there be any new challenges in the future?
Tom Oliver: I think firms are going to have a new challenge, or a continuing growth of a current challenge in terms of regulation – most big law firms’ clients are being heavily regulated, and that is increasing and increasing. Obviously this is a great opportunity for law firms, as it gives them an opportunity to advise on regulations. But it does mean that for some firms, the fee split may start moving more towards the advise on regulation and away from more process-driven practise areas that are high value – things like litigation and mergers & acquisitions, which make big chunks of fees in lots of firms may start being less dominant, as regulations are becoming more important and higher up on the agendas of the buyers of legal services.
Pricing models in law firms
T. O: Fixed fees are becoming more and more prominent as it allows both the firm and the client to enter that particular matter knowing: this is the price the work costs and therefore we need to use resources in whatever ways we can to deliver the work for that price. That’s a win for the client and a win for the firm, because it gives transparency and a clear sense of what is available to deliver the work.
In most cases, it has been a client-driven agenda to move away to move away from “time and materials”. “Time and materials” is very attractive from a professional service or legal service providers’ point of view, because it means that you can deliver a Rolls Royce service, you can pull out all the bells and whistles and do a fantastic job, and the price is the price, as that is what is required to deliver that piece of work.
What do lawyers need to do now to remain relevant in the future?
T. O: I think the first thing to say is that in the world of global business lawyers will always be relevant and there will always be a market for them. But since 2011, when the Legal Services Act came into force, people who aren’t legal firms can deliver legal services. That clearly has reduced barriers to entry and created a threat for some law firms. At the moment – that’s a very small part of legal services market and hasn’t made big revenue so far, but it is something that is on most firms radars. And faced with that challenge, firms are realising the need to think about client experience and collaboration with clients so that their proprietary advantage in being great lawyers is augmented by the ability to deliver a service in a way that is engaging and interesting and often educates and informs the client, as well as just delivering a service for them.
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