What are the 5 biggest challenges facing the legal profession in 2023?
Last year, we wrote an article, The 10 biggest challenges facing the legal profession in 2022, to support and provide clarity to legal professionals covering some of the common challenges, and opportunities, for the sector in 2022. Many of the challenges highlighted in that article are still very applicable in 2023 and will still be high up on the agenda for many law firms.
In this article, we look at five more areas, we believe, legal professionals need to consider in 2023, the impacts they could have and some opportunities for firms to tackle these.
1. Integrating legal software
Integrating law firm software and systems is not a new challenge for the sector however it’s one that’s becoming increasingly more important as law firms strive for increased profitability while improving client service and experience. Many firms have disparate systems being used across their firm which don’t share data with one another, leading to inefficiencies and problems, from manual data entry and poor data quality to cyber security and reduced automation. To operate efficiently, firms could encourage more collaborative working between teams and the foundations of this stems from the systems being used. Integrating legal accounts, CRM, HR, case management and more, creates an digital ecosystem which can better manage workload and client engagements.
For more information around this and details on the opportunities which can be realised, view our recently published article ‘Is fully integrated software for law firms better than separate software packages?’.
2. Will the conveyancing market have fewer transactions?
In 2021, the conveyancing sector saw highest volumes of house transactions for over a decade with the number of residential transactions breaking the one million mark (see our Conveyancing Data Trends Analysis report). With the large amount of demand, conveyancers were under pressure and strain to complete transactions in time for clients to benefit from the SDLT holidays. Fast forward to now, interest rates in the UK are the highest they’ve been since 2008[1] which has led to mortgage interest rates averaging from 5.35% and 4.85% for a two- and five-year fixed rate deal. This accompanied with high property prices, although these are predicted to fall by around 5% in 2023[2], and high costs of living has led the market to slow down meaning less demand for houses therefore less work for conveyancers than the previous couple of years.
While competing with other conveyancing firms will be a challenge, some will argue that this is actually a welcome period of calm for some conveyancers as many had been overworked the last two years. This levelling out in demand might provide a period of ‘normality’ for the sector and gives conveyancers the opportunity to focus on client experience, digital journey and improving processes before it ramps up again.
For more information on this please read our recently published article which covers this in more detail: Modernising the conveyancing process.
3. What impact is the economy going to place on legal firms?
As eluded to in the above conveyancing demand section, the UK economy has been very volatile in 2022 and this is expected to continue in 2023. Rising interest rates and the cost of living has slowed the some areas within the sector, e.g. conveyancing, and clients are now even more price conscious when choosing a law firm. One industry survey of 200 law firm partners found 44% are facing client pressure to reduce fees in the face of increasing costs, while 46% said clients are moving work to less expensive competitors[3]. With costs for businesses, as well as clients, increasing and further price pressures, firms are having to look even closer at how they can work more efficiently and reduce costs.
The war between Russia and Ukraine is one of the factors causing the increased cost of living and inflation. The war isn’t expected to stop anytime soon unfortunately and the knock on effects will continue to be felt by the UK economy, and subsequently the legal sector, in 2023. For law firms, continued stringent checks for anti-money laundering (AML) and source of funds is needed as are firms banned from doing transaction work for Russian clients[4]. This is particularly prevalent in the conveyancing space but it does apply to all areas of law. There is also an expectation for greater cyber security and verifications for online activity as IT professionals are wary of the increased risks of cyber-attacks[5].
There are opportunities for law firms amongst the economic pressures. The need to work more efficiently to increase utilisation rates and reduce wastage means firms can interrogate current processes to see where they can streamline or automate tasks. Integrating a legal case management system with other internal areas, such as legal accounting, online card payments and website quotation tools, and external third party systems, such as government portals or identity verification services, for example, can provide value to firms and the end client. In regards to increased cyber security, moving to a hosted environment can provide significant security benefits as well as performance improvements. We’ve created a blog, What are the hosting options for legal practice management software?, which covers the options available.
4. How can law firms build a positive culture while remote working?
In the article which covered challenges to consider last year, we talked about the challenge of talent attraction and retention in the legal sector and this will continue to be a significant challenge for firms this year. The costs of living pressures, again plays a role here, as legal professionals consider moving jobs to increase salary and remote working allows for greater flexibility and availability of roles.
The challenge which follows on from remote working is maintaining or building a positive culture and keeping staff engaged with the values of the firm. Being at home, often alone, means some people lose that sense of community which makes working collaboratively with colleagues more difficult and some may even start to feel isolated, which can have a negative impact on well-being. On a positive note, there is many benefits to remote working including a better work/life balance for staff, reduced office overheads, attracting wider talent pool and many more.
Looking at culture specifically, there are a few opportunities here for firms which could help foster a positive and productive remote working environment. Firstly, communication within the firm, both internally and to clients, needs to establish norms to ensure everyone is clear. Sharing best practices, response time and email protocols will prevent people getting too many messages, reduce interruptions and make communication easier. HR teams can then focus on sharing content with staff which talks to the firms values, celebrates achievements and gathers feedback to improve their experience working from home.
The second opportunity is to leverage technology to support staff to work remotely with ease and securely. Providing hardware such as laptops, keyboards, mice, comfortable chairs, etc, and appropriate software to assist communications, productivity and cyber security, are key to making the move from the office seamless. This is where a browser-based or cloud hosted legal case management software is worth its weight in gold!
At our recent Access All Areas Virtual Conference, we ran a legal CPD accredited panel discussion with industry experts titled How to attract and retain the best talent while building a positive culture which covers this topic in more detail and provides some great tips and case studies to support your firm.
5. How can law firms drive more new business?
We finish this article with one of the age old challenges for law firms and one that has continued prominence this year, how can law firms drive new business and be more competitive. With client’s sensitivity to price and more legal services being made available online, providing more choice for consumers, competition in the sector is growing and it’s difficult for firms to stand out. It’s not always sustainable or appropriate to cut price to be the cheapest therefore firms need to consider other ways to differentiate themselves. Another challenge is that lawyers, solicitors and fee earners are legally trained, not sales or marketing trained, so potentially lack some of the skills required to engage prospects and follow up with potential opportunities.
There are some quick wins to help surface new opportunities. One is ensuring you have an automated online quotation tool which allows prospects to receive an estimate anytime they want and you capture contact information to follow-up. Better still, if you can integrate the quotation tool with your case management system, details can be passed directly into a case file, saving time and improving accuracy, and the person responsible for following up can do so in a timely manner. Other useful activities include attending local community events to network and build your profile, utilising marketing initiatives, such as social media and email marketing, and collating positive feedback from existing clients to evidence the value your firm can provide.
We’ve created an article, Law Firm Marketing: 7 Top Tips to Market your Firm, which provides some really simple tips to support your business development.
[1] https://www.forbes.com/uk/advisor/mortgages/mortgage-rates-20-12-22/
[2] https://www.reuters.com/world/uk/uks-nationwide-sees-5-house-price-fall-2023-2022-12-20/
[5] https://www.ncsc.gov.uk/news/organisations-urged-to-bolster-defences
