Jury’s out: Transforming legal services
From IPOs to tech investments, the legal services market is rife with strategic moves to improve the competitiveness of its participants. In this round-up of law firm news, Kathryn Hobbs looks at the main themes driving transformation in this previously most traditional of sectors.
This week, listed legal services business Gateley Plc made its largest acquisition to date and revealed an 8% increase in revenue to £84m. Having listed at 95p in 2015, Gateley shares have risen steadily to reach a high of 169.50 following news of its latest acquisition – of GCL Solicitors LLP for £4.15m.
Meanwhile, newly-floated Rosenblatt Group has settled into the AIM market. Talking about why legal services need to change, Rosenblatt chief executive Nicola Foulston said, “Law is one of the last bastions of industry that hasn’t moved with the times. They don’t engage on fees, or budgeting, or process, then they just send a bill.”
How law firms interact with their clients and how they develop their businesses to better serve those clients is bringing change to legal services. For many of the bigger firms, moving legal support and business services staff to less expensive locations outside London has been a way to lower their overheads and pass the benefits on to clients.
Magic circle firm Freshfields is to recruit its first qualified lawyers in Manchester. Originally opened in 2015 as a back office and legal support centre, Freshfields’ Manchester base is now home to around 700 staff. Although its initial plans are modest for a firm with more than 2,800 lawyers, this move represents an interesting evolution.
Also in the legal press is news that Herbert Smith Freehills (HSF) will move almost 500 London staff – including the majority of its UK business services staff and its London alternative legal services team– to a new office in Canary Wharf. According to reports, HSF is creating an environment to enable agile working rather than drive down costs.
As with any multi-site business, fostering a common culture and collaboration will be critical to creating a coherent and consistent approach. However, if a survey by property company CBRE is any indication of the future, law firms could need much less office space as a result of artificial intelligence (AI).
In its annual report on law firm real estate in London, CBRE found that almost half of the firms surveyed believe that AI will reduce headcount. Five per cent of respondents said that they expect cuts of more than 20%.
AI is already in many law firms, albeit used within specific and often narrow parameters. Curium’s AI and robotics report, ‘From science fiction to business fact’, considered the opportunities and challenges facing law firms when implementing new technologies. Our next MBA project with the University of Birmingham will focus on legal services and AI.
Technological innovation is a major trend in legal services. Backed by the Law Society and firms including Allen & Overy, Clyde & Co and Gowling WLG, Barclays has launched a legal technology hub. The hub will target law-tech start-ups and scale-up businesses projecting at least 20% growth.
Barclays UK general counsel Stephanie Pagni said: “This initiative will help trigger a transformation in law-tech with significant potential.” Partnering law firms will provide feedback and guidance to help entrepreneurs develop, test and refine their products, with the potential to implement new technology into their firms.
There is no denying that law firms are changing. The question is how well and how quickly are they able to change? That will depend on the ability of law firm leaders to make the case for change to partners and employees. Unless they see the need to and benefits of change, they are likely to carry on as before.
For the time being, the jury’s out.