We have now moved firmly into the new year, and businesses across the board will be taking time to regroup and plan for 2023, thinking about how best to start the year off with a bang.
In the UK legal sector, there is a particular feeling of optimism and willingness to invest. A report from the Thomson Reuters Institute last year found that the UK legal market was ‘experiencing its highest level of spend optimism in five years’ and that ‘UK legal buyers are anticipating their overall legal spend will grow in the coming months’. This also tallies with the Institute of Directors’ recent Economic Confidence Index, which indicated that 55% of leaders in business are anticipating increased revenues within the next 12 months, and roughly 30% are expecting higher business investment and rates of employment.
In a broadly optimistic market for both legal and wider business, one of the key trends we are observing is that law firms in the UK are continuing to sink their teeth into the rapidly growing legal services market, rather than just focusing on black letter law.
Recent research from Statista showed that the UK’s legal services market is worth at least £37bn. When we talk about ‘legal services’, we are talking not just about those activities that come under legal services regulation; from legal project management and commercial and corporate work, to professional advice, document review and other forms of unbundled services, legal technology consulting, and a wide array of other outsourced legal processes.
Law firms are incredibly well placed to provide these broader legal services, such as managed legal services, legal process or legal technology consultancy. Through years of working with clients on complex legal matters, they have had the opportunity to see their clients’ needs and the issues that matter most to them evolve. In the modern age, legal and PR risks are more pronounced than ever before and can be found in just about every single strand of a business’s activity. It is not always just about deals and cases. Legal issues can be found in almost every department of a business.
Moreover, in the face of an increasingly challenged economy, businesses are under further pressure to do ‘more with less’ and be as commercially efficient as possible. This is particularly true for areas of a business such as the legal function. As budgets become more tightly constrained, all functions within a business are under pressure to become value generators and not just cost centres.
Over the years, Pinsent Masons Vario has naturally extended its expertise across areas such as legal tech, diversity and inclusion, project management and managed legal services by helping clients to grapple with these issues. It only made sense to bring this expertise together under one banner.
Businesses could, in theory, use law firms to help with legal matters while using a separate professional services consultancy to help them use tools such as legal project management and legal technology. But the real question to consider is why a business would not want a partner that can do both.
A law firm is the best-equipped by far to analyse the flow of legal work through businesses – particularly if they have had experience assisting those businesses in their legal matters. Additionally, it is usually the case that all work undertaken by different departments in a business is in some way connected, and it should not be treated as though it were in a silo.
For example, one piece of legal work might require traditional corporate or planning law expertise. But at the same time, there may be issues relating to that legal matter that could benefit from the expertise of a legal tech consultant, a Lean Six Sigma consultant or a forensic accountant. Working with a partner that can handle the legal side of that matter and related areas is arguably much more efficient than trying to bring in separate advisers for each. And from a cost and time perspective, it is likely to be much more attractive to a client.
While a business could work with an expert project management or technology consultancy and benefit from this, an important question to ask is whether those partners have as much expertise in legal matters as a law firm would. Take project management as an example. This has been a mainstay of other sectors, such as construction, for many decades, whereas it is comparably new to the legal sector. The ways in which project management techniques are applied to legal functions can be very different. This is not just a cut-and-paste job, and in fact how this is used in the two sectors can be very different culturally, even down to the language. Legal professionals are likely to interact with and buy into project management very differently to professionals from other disciplines, and businesses want to work with partners that understand this and can speak their language.
So what is the takeaway for law firms and their lawyers? Make no mistake, law firms are the businesses best-placed to offer a broad spectrum of legal services to their clients. It is often a natural progression from the legal work they already do. Firms should have confidence and leverage their decades of knowledge about their clients and their sector to diversify their offering and compete with newer entrants to the legal services market. And win.
With 2023 now off to a flying start, a number of businesses will be considering for the first time how to create new efficiencies and leave their businesses in as strong a position as ever by 2024. As they consider how best to modernise their legal functions, they ought to be looking towards law firms. From our perspective, it is a no-brainer. But we have to show our clients why this is a natural move for them to make.
Matthew Kay is a partner and group head of Pinsent Masons Vario
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