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As legal professionals position themselves to endure the peaks and troughs of an ailing economy, a number of different trends have emerged in the legal industry in recent past. Most of these trends help law firms and organizations become more competent, dynamic and competitive in a global market. Other trends result from changing demographics, attitudes and work styles. Today clients insist higher service levels for lower fees. As a result, law firms continue to face pressures to strip out inefficiency and cut costs and the partnership model is being re-evaluated as the sector faces up to new market entrants.
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WINDS OF CHANGE FOR LAW FIRMS IN 2012
Presented By:- Rajni Minhas Operations Head-Legal
Draft n Craft
BIGGEST CHALLENGES TO BE FACED BY LAW FIRMS IN NEXT TWO YEARS
1. UK Economy
2. Legal Services Act
3. Introduction of Alternative Business Structures
4. Mergers and Acquisition
5. Legal Aid, Sentencing and Punishment of Offenders Act(LASPO)
6. Renewed focus on legal costs- Jackson Report
7. Rise of Fixed fee
UK ECONOMY
First 'double-dip' recession since the economic turmoil of 1975
The economy shrank 0.3 per cent in the final quarter of 2011. Another 0.2 per cent in the first quarter of 2012
UK needs £50bn of extra cuts – IMF
More wealthy Britons 'set to flee‘
London 2012 Olympic games can restore winning feeling to fragile UK economy
The Confederation of British Industry downwardly revised its forecast for economic growth in 2012
Sustained period of above-potential growth from 2014
Opens Doors for Supermarkets, Banks, Other Non-Law Corporations to Own, Manage Law Firms
High Street firms struggling from all-comers
MORE THAN,RBS, the Co-op, HBOS, NatWest, DAS, Allianz and Abbey Santander - Launched Legal
Services
Opportunities for Law Firms
LEGAL SERVICES ACT
• Premier Property Lawyers became the first ever ABS in England and Wales on 6 February 2012, licensed by the Council for Licensed Conveyancers
• DLA Piper investing in a prospective ABS called LawVest
• Irwin Mitchell intending to become an ABS and seek external capital
• Proposed takeover of Russell, Jones & Walker (RJW) by Slater & Gordon
• The legal arm of the Co-operative becoming an ABS at the earliest opportunity
• Staffordshire law firm Knights has struck a deal to accept investment from the private equity Company
MERGERS AND ACQUISITION Global M&A activity for 2011 totaled $2.17tr and is up by
2.5% from 2012
Improved size structure
Better opportunities post LSA
Helps solve succession issues
Manchester headquartered DWF and Scotland’s Biggart Baillie have confirmed that they will merge to create a near £120m firm
Top 20 British firm Pinsent Masons merged with leading Scottish firm McGrigors
Shoosmiths is merging with Edinburgh’s Archibald Campbell & Harley
LEGAL AID, SENTENCING AND PUNISHMENT OF OFFENDERS ACT(LASPO)
The Act:
• Delivers structural reforms to the administration of legal aid, and prioritises limited financial resources to target legal aid to those who need it most and for the most serious cases
• Tackles the excessive costs of no win no fee cases in civil litigation and bans the payment and receipt of referral fees in personal injury cases.
• Makes it an offence to threaten people with a knife in public and at schools, with offenders receiving a minimum prison sentence (6 months for adults and a 4 months Detention Training Order for 16 and 17 year olds)
• Makes prisoners work harder, longer and on meaningful tasks, earning money for victims
• Makes it a crime to squat in people’s homes
• Creates a new offence to appropriately punish drivers who seriously hurt others by driving dangerously
RENEWED FOCUS ON LEGAL COSTSJACKSON REPORT
The abolition of recovery of CFA success feeThe abolition of recovery of ATE premiumsAn increase of 10% in personal injury general
damagesA ban on referral fees in PI casesFixed costs for fast track PI and in future for all
fast track casesLegalisation of contingency fees
RISE OF FIXED FEE
MAJOR PRESSURE FROM CLIENTS?
Fixed pricing
Reduced costs
Credit terms and billing
Higher Service Levels
Improved electronic communication
Speed of response over face-to-face contact
CONCLUDING REMARKS Increase in Client demands gives rise to better
services Number of competitors is likely to increase Partnership model is being re-evaluated as the
sector face new entrants Non-lawyers to invest in law firms in England
and Wales Outsourcing set to Increase- to help combat
costs and fight off compensation
THANK YOU
Rajni Minhas,Operations Head- [email protected] l www.draftncraft.com
Draft n Craft Legal Outsourcing Pvt. Ltd.India: +91 11 2341 4576 l USA: + 1 516 515 3510 l UK: + 44 20 3318 3559
