We look at the legal trends set to define the year ahead, including the rise of generative AI, the acceptance of alternative legal fees, exploration of new markets, and so much more.
The legal sector is evolving at breakneck speed. It is a highly competitive, complex sector, facing myriad challenges, such as the cost-of-living crisis, the increasing demand for specialist knowledge, the proliferation and disruption of alternative legal service providers (ALSPs), shifting client expectations, the growth and decline of practice areas, and so much more.
But the sector will adapt, evolve, and ultimately meet those challenges. Law firms and lawyers have shown, in the last few years, a surprising versatility, , and a general desire to adapt. In 2024, we expect the sector go even further, embracing the latest tech, accepting innovative payment structures, pushing into new markets, and so much more.
Law firms of the future will not simply accept, but embrace change. And, to that end, they should try to stay ahead. Here we explore five core legal trends set to define 2024.
Generative artificial intelligence (AI) platforms – ChatGPT, DALL·E, Jasper, Soundraw, and so on – proved to be the talking point of 2023. Not just in the legal sector, but across the entire economy, across the entire world. A recent ³ÉÈËÓ°Òô report, Generative AI and the future of the legal profession, aimed to understand the current awareness and application of AI in the sector. And, while the present use seemed minimal, with just over a third (36%) of respondents suggesting that they use the tech, the projected use seemed astronomical.
Lawyers are increasingly turning to generative AI to find solutions. They are using the tech to produce briefs, documents, and content. They are ideating with AI, improving processes, streamlining operations. They are drafting, negotiating, and analysing contracts. Lawyers are using trustworthy legal AI systems to drastically speed-up and improve their legal research. And they are using AI for everyday tasks, including the most basic forms of communication.
In short, AI has started to redefine the legal sector in 2023 and will become even more popular in 2024. The tech possesses an aura of inevitability – and the lawyers that fail to utilise the tech, the lawyers that fail to embrace the advantages it brings, will ultimately fall behind.
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The billable hour has been the default billing method for decades, but the model has come under increasing scrutiny, with clients suggesting it encourages inefficiencies, provides poor return on investment, leads to double billing, and creates perverse incentives.
A recent ³ÉÈËÓ°Òô report, Calling time on the billable hour, explored how clients are turning to alternative fee arrangements (AFAs). AFAs have been adopted by many platform law firms and ALSPs. Flat fees are the most popular option, with clients and firms agreeing prices ahead of projects, but other options include capped fees, fixed fee by phase, blended rates, and so on. Clients often welcome AFAs, as they save on costs and better reflect the work performed.
In 2024, the sector will accept AFAs. The acceptance may feel reluctant, at first, but will be pushed by the need to meet client needs and compete with parties already offering AFAs.
The ³ÉÈËÓ°Òô GLP Index predicts demand for the legal services sector will grow by +2% in 2024 when compared against 2023. That might seem like a positive trend. But 2023 saw 6% growth, meaning the sector’s growth has significantly slowed.
Reasons for slower growth are well-known. The geopolitical situation has damaged the professional services industry, the macroeconomic situation has provoked mass uncertainty, the fallout from the pandemic and regulatory complexity added fuel to an already raging fire.
are often ill-advised, but firms may suffer a revenue decline in 2024. Firms will have to find novel ways to meet that fiscal challenge, such as embracing AI and other legal tech to reduce costs and streamline operations, diversifying or expanding their service offering, or perhaps exploring the abovementioned AFAs to generate demand.
Read practice note: the impact of pricing on profitability
Global law firms are growing, both in size and number. For UK firms, entering the US market is the logical . And the benefits of entering that market are obvious: brand expansion and establishing a worldwide client reach, presence in key financial and business centres, ability to meet the expectations of multinational clients, and so on. But breaking into that market, , has proven extremely tough.
But there are signs of change. Magic Circle firm (A&O) and US giant have joined forces, opting for the name , or A&O Shearman for short. The merged firms together boast nearly 4000 lawyers, 800 partners, 48 offices across 29 countries, and a combined revenue of $3.4 billion.
Magic Circle firms have spent decades trying to break into the US market, with not much notable success. The arrival of A&O Shearman showcases an opportunity, bolstering the general appetite of UK firms . So it is likely 2024 will see more attempts of , either through mergers and acquisitions, or through forming strategic bonds with established US firms. And 2024 might be the year that firms find more success.
Growing a law firm is no easy task. But during a period of economic uncertainty, with the potential drop of revenue and new entrants disturbing the legal market, growth will prove profoundly difficult. But, as the recent ³ÉÈËÓ°Òô report showed, law firms still have bold ambitions for growth. And the focus, in contrast to previous years, is on the organic.
The report showed that, rather than opting for traditional methods of growth, small firms want to grow through organic means, such as building out their marketing and business development functions. Respondents to the report noted that holistic approaches to marketing strategies had proved successful, with online, social media, and public relations all centred around providing informative, engaging, and useful content.
Many firms will focus on establishing their brand, asking for referrals, networking, creating a user-friendly website, producing , maximising SEO, fine-tuning their comms, and generally improving their methods of organic acquisition. A focus on retention will naturally follow acquisition, with smaller firms keenly focussed on retaining clients: four-fifths (79%) of small firms said client retention was a major concern.
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So finding organic ways to acquire and retain clients will likely be a huge trend in 2024.
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