Crystal ball: Will the future of the legal profession be heavenly or hellish?
27 November 2013 | By Richard Simmons
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Degree. LPC. Training contract. Qualification. It’s been the standard route to law for years – but will it be in the future? Lawyer 2B gazes into the crystal ball…
The legal profession is being shaken up like never before – and it is not just down to the economic downturn. There have been recessions before and there will be again, but this time other factors are coming into play.
Reforms first suggested a decade ago are now taking effect and the rise of new technology and the increasingly globalised world we live in are having unexpected repercussions for law firms.
In the following feature, we run through the major trends affecting the profession and ask industry experts to predict how legal training might look in the future.
Why are things changing?
The background: A period of prosperity came to an abrupt end in 2008 with a major crisis in the banking sector. Large chunks of the world were plunged into recession, and the impact on the big law firms was profound.
In the boom years they had concentrated heavily on corporate and finance work: their clients were banks and major companies. As the recession hit, work dried up. 2009 was a truly awful year for lawyers – many sat around in the office doing nothing and hoping not to be made redundant. Many were.
The question: Training contract numbers dropped sharply in the wake of the recession and it is open to debate over whether they will recover again.Things are a bit better now. There is more work to go around than there was back in 2009, but firms are still keeping their belts tight. Clients do not have as much cash to splash and are demanding that firms charge them less. They are questioning whether low-level work which does not require legal knowledge has to be done by trainees – who despite being at the bottom of the ladder, are well-paid compared with paralegals.
Reforms to legal education
The background: The training contract and pupillage routes into the profession have existed for years, albeit under different names. Given their ancient state, it was recently decided that the way lawyers are trained should be examined to see if changes should be made.
The Legal Education and Training Review was published in summer 2013. It did not make radical suggestions, basically stating that the current system of training was fit for purpose.
One of the recommendations it did it make was that there should be a way in which non-graduates could enter the profession. In other words, school leavers should be able to undergo an apprenticeship and qualify as a lawyer that way.
Some apprenticeships already exist. An increasing number of firms run schemes that allow school leavers to train as chartered legal executive (CILEx) lawyers. However, the vision is that eventually there will be apprenticeships that lead to full solicitor status.
The question: Given the increase in undergraduate tuition fees and the high cost of law school, might apprenticeships prove an attractive option?
Reforms to the profession
The background: Nearly 10 years ago, a report was published by Sir David Clementi on the way the legal profession should be structured. It came about because of complaints that law was anti-competitive – that solicitors and barristers should not have a monopoly on the provision of legal services. Clementi suggested that non-lawyers should be allowed to have a stake in solicitors’ firms (at the time, to be a partner in a law firm you had to be a qualified lawyer). What’s more, he recommended that non-lawyers should be allowed to invest in firms.
The implications are enormous. Instead of being run by lawyers, most of whom never actually get any formal training in how to run a business, solicitors’ firms could bring in professional managers as chief executive officers. If they wanted to expand, they would be allowed to get a cash injection from, for example, a private equity fund, although the lenders would want to see a return on their investment.
The Government agreed with Clementi’s recommendations. It passed the Legal Services Act of 2007 which laid the groundwork for the creation of alternative business structures (ABSs) to allow all these things.Also, non-legal businesses could enter the market. Joe Public could potentially have Tesco sorting out his will or house move, while accountancy firms such as Deloitte or PwC could handle both a company’s accounts and its disputes.
A number of non-legal companies have already taken on ABS status. For example, the Co-operative has launched a legal services arm, and hopes to create 3,000 legal jobs by 2017. The AA is also offering legal services: it can draft complaint letters, powers of attorney, tenancy agreements and wills. Other companies will surely follow their lead and enter the legal market. This will put pressure on smaller high-street firms that will not be able to compete on name recognition nor on price.
The question: What effect will the arrival of ABSs have on recruitment? Will the likes of the Co-op drive high-street firms out of business, and will they start to offer training contracts in large numbers themselves?
The background: The world has become smaller. It has never been easier to do business across countries, even continents. The largest UK law firms are taking advantage. They are opening offices overseas and merging with firms in Australia, Canada, the US and even China. They are working on international deals.
These firms are looking for the best students from across the world – regardless of whether or not they are British. Linklaters, for example, runs vacation schemes for Indian and Australian students who are interested in working in the UK.
In the past few years, outsourcing – sending work to be done more cheaply in other countries – has also grown in popularity. For example, Allen & Overy has partnered with legal process outsourcing (LPO) provider Integreon, which handles the magic circle firm’s basic litigation document review through teams in New York and Mumbai.
Firms have traditionally operated a ‘pyramid’ model, with lots of junior lawyers at the bottom doing the bulk of the mundane legal work, supporting a small number of partners who bring in the business. But outsourcing may mean the pyramid structure will change.
The question: How will British students fare when faced with competition from around the world? If low-level tasks can be outsourced to India for a fraction of the cost of a trainee, will firms continue to hire them en masse? And will the trainees that do get hired receive better work because of the outsourcing of low-level tasks?
The background: The guru of legal futurology is Professor Richard Susskind. He has written multiple books on the subject of how the profesison will develop, with particular focus on the role new technology will play.
In Tomorrow’s Lawyers, published in 2013, he cites Moore’s Law – a prediction made by the founder of Intel that the processing power of computers would double every two years but its cost would halve. This means that by 2050 the average desktop machine will have more processing power than all of humanity combined.
“You may call me radical,” Susskind writes wryly, “but it seems to me that if we can see the day in which the average desktop machine has more processing power than all of humanity combined, then it might be time for lawyers to rethink some of their working practices.”
The question: Why would anyone pay a lawyer vast amounts of money to do a job that could be done for nothing by a computer?
Prediction 1: The training contract will survive at the big City firms
At the top firms, training contracts will probably survive. “It seems to me we’re entering a world in which regulation is king,” argues BPP Law School dean Peter Crisp. “We have so many layers of it: depending on what state you’re in, it can be federal, national and super-national. Businesses are still going to need highly competent people who can do the technical legal work.”
Crisp points out that despite a reduction in the number of training contracts since 2009, there are still more available than there were in 1996. “Most of the big firms are still taking the same number of trainees they were two or three years ago. At the moment that model is not changing.”
University of Westminster professor of law and sociology John Flood agrees. “I can’t imagine the City firms rejecting the training contract,” he says. “It’s a very good filtering device – basically you’ve got two years to look at somebody without any commitment to having to take them on.”
However, he forsees change at the bottom end of the market. “For a lot of small firms – the high-street solicitor so on – there might not be so much need for it. They might just want somebody who’s done a bit of CILEx or somebody who’s basically an administrator to do the less legal, form-based work.”
Prediction 2: British students will have to think globally in the face of increased competition from abroad
As the top law firms become ever more global, degrees that allow students to get qualifications in two countries will become more valuable and more common.
Flood anticipates the rise of multi-jurisdictional qualifications that allow students to graduate with a US JD qualification as well as an LLB.
“About 12 schools in the US already have double programmes,” says Flood. “They have tie-ups with places in Canada and Australia, and students spend a bit of time in both schools but in effect end up having degrees in both countries.”
The UK has been slow off the mark, but the most innovative law schools are starting to run similar degrees, such as King’s College London’s LLB/JD in English and American law. The students that do them will look very attractive to the large international firms.
Prediction 3: Outside the City, apprenticeships will take off
At the moment, the word ‘apprenticeship’ has a touch of snobbery surrounding it. It’s something that’s all right for plumbers and electricians but not to be considered by academic types. If proper legal apprentices come to exist, say the critics, they will always be seen as second-class lawyers, coming behind graduates who became solicitors via the training contract route.
But with university becoming more expensive, the chance to qualify as a solicitor without paying huge tuition fees will start to look very attractive. Stories are already emerging about school-leavers who have turned down places at university in favour of apprenticeships in law firms.
“The apprenticeship route means that people will be able to work and study at the same time, get paid, and graduate with a degree if they decide to go all the way,” says Peter Crisp. “That’s what we’re planning to do with our programme. I imagine the apprenticeship route will have two paths within it: everyone will start together but at a certain point some will go down the paralegal route but others go on to qualify as solicitors.”
Crisp does admit that for some firms the apprenticeship model would not work. “For many,” he says, “the training contract model, though expensive, fits them very nicely.”
But, he adds, there are others that could take advantage of it, for example those with large numbers of paralegals in their litigation departments.
Prediction 4: Different ways of entering the law will emerge, creating exciting new opportunities for young people prepared to think differently
“We’re putting off a lot of kids from doing law because of the negative stories that say we’ve got too many lawyers, but that trend will reverse when students see the opportunities in the new legal services market – in the emerging legal services providers, the ABSs and the global law firms,” says the president of the University of Law, Nigel Savage.
They may be very different from the opportunities of the past but the jobs will still be there.
“I think we’ll move away from the duopoly of solicitors and barristers,” says Flood. He predicts greater fragmentation of the market, where there will be more need for people with specialist skills focusing on a particular area – “the sort of thing that a legal executive could do. The extent to which law-trained graduates are required, well that’s going to be an interesting one.”
Is all this worrying? If you’re married to the idea of becoming a ‘traditional’ solicitor in a ‘traditional’ firm, yes. But in Tomorrow’s Lawyers, Susskind outlines nine new potential employers in the legal sector, and there will be plenty of opportunities for those savvy enough to spot them.
The high-street chains such as the Co-op who are dipping their toes into law are only one potential recruiter. Another major employer of lawyers in the future could be LPOs. We’ve already mentioned Integreon, Allen & Overy’s outsourcer of choice, and in fact we’ve interviewed Kate Robinson, who now works for Integreon having started out in private practice at CMS Cameron McKenna.
More potential recruiters are the big accountancy firms, legal publishers such as Thomson Reuters and online legal service providers.
“If I was a student knowing what I know, would I want to become a partner in a firm?” asks Flood. “Perhaps, if I want to make bundles of money and I thought I could get that far. But would I rather become a director of a new ABS that might really be going places? Well, actually, that might be better, because I end up getting shares in a company and, with the ABS I know all its financials will be quite transparent and I can plan where I want to go.”
How soon will all this happen?
Not immediately. If you are at university now, it is likely that your route to qualification will still be via the old training contract route.
So why are we talking about this? Because by the time today’s first-year undergraduates qualify, many of these changes will be starting to take effect. Even if you have qualified through the traditional route, as a lawyer of the future you will need to negotiate the new legal landscape.
ABSs, global megafirms and online-only legal advisers will be a big part of your life – who knows, in 10 years time you may even find yourself working for one.
Tomorrow’s Lawyers by Richard Susskind
“Cost pressures, liberalisation and the internet are conspiring to transform the lives of lawyers. Before long, it will be common for legal work to be broken down into component tasks, with routine elements undertaken in very different ways.
Handcrafting, hourly billing and conventional law offices will give way to systematisation, fixed-fee work and sourcing from low-cost service facilities.
In turn, new jobs and disciplines will emerge, such as legal knowledge engineering, legal process analysis, legal project management and legal risk management. While some leading law firms are embracing such changes, remarkably few educators are adapting their curricula to reflect these new ways of working. Most law schools, for example, seem intent on breeding 20th century and not 21st century lawyers.
I believe we will see more change in the world of law in the next two decades than were witnessed in the past two centuries. The future of law is neither John Grisham nor Rumpole of the Bailey. In the long run, it will be online dispute resolution, automated document assembly and intern et-mediated legal guidance.
This is grave news for today’s lawyers if they are not prepared to change. But for tomorrow’s lawyers, if innovative and entrepreneurial, there will be unprecedented opportunity to be directly involved in reshaping the legal marketplace.”
Professor Richard Susskind, author of Tomorrow’s Lawyers
Three potential employers of the future
Online legal service providers
An example of an online legal service provider that already exists is website roadtrafficrepresentation.com. It offers free legal advice for road traffic offences, asking online questions to determine whether the user has a case. As the site itself says, its automated systems replicate the process that a solicitor would ordinarily go through, “but in much less time and without cost to you, all at a time of day or night that suits you. Our ‘virtual office’ never closes!” For a small fee, the site can arrange telephone advice and can instruct a barrister to represent the user in court.
Roadtrafficrepresentation.com is a direct challenge to traditional solicitors but it, and other sites like it, will still need people with some level of legal training. They just will not necessarily be people who have completed a training contract as we understand it now.
Publishers might not seem an obvious provider of legal services but some are already taking their first steps into the market. Thomson Reuters bought up legal know-how business the Practical Law Company in early 2013. Even more recently, Jordan Publishing, which produces legal textbooks, has launched an alternative business structure – Jordan Corporate Law Ltd – which will provide legal advice to corporate clients and accountants and act as a legal process outsourcer to law firms. “As far as law firms are concerned, we are enhancing their offerings, not competing with them,” Jordans director of legal practice Debbie Farman told us. She says Jordan will provide ‘white-label’ volume legal services for accountants, law firms and other companies.
“Currently we have two solicitors and five BPTC or CILEx-qualified paralegals, but I am recruiting for a head of commercial – someone close to partnership but looking for a slightly more entrepreneurial role – and two other lawyers for the next financial year.”
The accountancy firms
At the beginning of August, KPMG dropped a strong hint that it was interested in becoming an alternative business structure (ABS). Rumours have also been floating around that PwC has been pondering an application too.
“I’m not surprised by KPMG’s announcement,” Lisa Cameron, EY general counsel for the UK and Ireland, told The Lawyer. “We’re constantly rung up by the Law Society asking us what we’re thinking. We’d expect that all the big four would consider the opportunities.” Cameron maintains, though, that if any of the accountancy firms did bag an ABS licence, the move would not be as cataclysmic for international law firms as might be assumed.
“I imagine that any big four firm that did get an ABS licence would be looking to practise law in discreet areas, tax for example. Some of that work can be similar to the advice already being given by those firms. International mobility could be another area – legal support to complement the work already being done by the big four.”