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Trending topics that may impact the legal sector

As the world hits the floor running at the start of 2022, some are bracing for impending circumstances that have yet to fully unfold. In this article, we look into five trending topics and how they may impact the legal sector this year.

Like the rest of the economy, the legal sector has experienced a swift paradigm shift over the last few years. Whether these changes came from the aftershocks of Brexit, the Covid-19 pandemic or technological advances, they came in thick and fast. While we continue to navigate through these historic shifts, here are the top five trending topics of 2022 and how they may impact the legal sector this year. 

Inflation has been a trending topic for a while now. A recent article by the BBC reported that the average national pay is struggling to keep pace with the rate of inflation. The rising global price of energy and staff shortages brought on by Brexit and Covid-19 which prompted employers to raise wages to entice them back to the workplace create a perfect storm for rapid inflation rates. In December 2021, the Bank of England voted to increase the base rate to 0.25% from 0.1% in a bid to control inflation. 

So, what has this got to do with the legal sector? 

As a result of rising interest rates, some firms may choose to approach M&As more cautiously. After all, acquisitions may become more expensive through debt from a leveraged buyout. Conversely, it could be seen as a lucrative opportunity for firms with larger cash reserves to acquire smaller firms and their expertise. 

Ultimately, this does not take away from the importance of due diligence and acting on logic, rather than emotion in this scenario. Speaking to experts who can deliver a reliable process that aligns with your goals to ensure that any mergers or acquisitions made during this time are logical, methodical and conducive to creating better relationships with newly formed teams. 

A 2020 study by Solicitors Regulation Authority indicated that three quarters of law firms reported being a target of a cyberattack. Two thirds of the targeted firms lost more than £4m of client money as a direct result of the attacks.

In a statement released last October, GCHQ reported that the number of ransomware attacks of British institutions doubled. Cyber attacks account for half of all crimes across the UK and with advancement and reliance on technology, this trend is going to continue to accelerate exponentially. 

With the amount of sensitive information entrusted to law firms, cybersecurity breaches are not just costly to remedy, they can cripple the reputation of the affected firm as clients may lose trust in their data security measures. 

In 2022, astute legal professionals will look to reinforce their cybersecurity measures with the goal to boost data protection from cyber criminals. 

Microsoft’s 2021 Work Trend Index indicated that 40% of the global workforce contemplated leaving their employer by the end of the year. While precise numbers have yet to emerge from this projection, more law firms have explored hybrid working models to improve staff satisfaction, productivity and work-life balance. 

As more legal professionals seek out hybrid working arrangements, law firms will benefit by considering a number of factors to ensure workplace agility does not compromise on team cohesion, work quality and data security. 

The advancement of AI technology has not left out the legal sector. Artificial intelligence (AI) has proven invaluable to numerous law firms in managing massive data volumes swiftly and efficiently. 

One stand out aspect in which AI applications are performing well is contract management. Due to AI’s capabilities in processing, indexing and analysing large volumes of data swiftly and accurately, this technology presents very promising opportunities in the coming future. 

On a similar tangent, workflow automation is fast becoming a huge trend for businesses – law firms included. Due to benefits towards time and cost efficiency, more legal firms are looking at ways to build robust automation processes. 

The Alternative Legal Service Providers (ALSP) sector is currently valued at approximately $14 billion. As a growing part of the legal landscape, ALSPs are fast becoming a force to be reckoned with. 

A report by Thomson Reuters in partnership with The Center on Ethics and the Legal Profession at Georgetown Law, Saïd Business School at the University of Oxford stated that 80% of law firms and more than 70% of corporate departments are using ALSPs. They are no longer just cost-saving options, they are now viewed as true, tech-savvy partners in delivering expertise and new ways of doing business in the current post-pandemic crisis. 

Captive ALSPs (created internally within law firms) have shown immense promise in growth rate despite commanding the smallest market size of the three distinct types of ALSPs (independent, captive and Big Four). 

This presents an effervescent potential for the legal sector to further evolve with the times. 

2022, at the end of the day

While the first headlines of 2022 may seem to bring an air of uncertainty for times ahead, there is no doubt that the cultural and technological shifts are likely to continue swiftly shaping the legal sector for years to come.

Being mindful of these trending topics can help make level headed and educated strategic decisions.

Ortus Group has more than 17 years of experience in the legal sector with mergers, acquisitions and executive search. The team is trained to provide systematic guidance in what can be a fraught process to ensure smooth transitions for all parties involved and has advised on more than 50 completed mergers.

For more information on how the team can help, please do not hesitate to reach out to us.

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