The biggest challenges and opportunities faced by law firms

The legal industry has faced considerable change in recent years, due to new technology, market disruptors and evolving client demands. This continues to impact legal services delivery against a backdrop of sustained political and economic uncertainty.

Preparing for the implications of Brexit remains high on the agenda. In addition, other challenges include cyber security, data protection, implementing AI and ensuring the efficiency of modern law firms.

So what are the main challenges faced by UK lawyers today? And more importantly, what opportunities are there to thrive?

Challenges facing the legal sector

New business models are required to compete against a range of demands. Pricing pressures, the growth of outsourcing and increasing mergers are changing law practice. However, here we outline three major challenges.

Data protection and cyber security

Law firms are attractive targets for hackers due to the large amount of confidential and valuable information that they hold. Ensuring that client data is securely protected is a crucial but difficult task, as the number of threats increase and attacks get more sophisticated.

The Annual Law Firms’ Survey 2018 by PWC UK reported that ‘cyber security remained a concern for 82% of the top 100 firms.’ In the same survey, 60% of the firms reported to have suffered a security incident in 2018; illustrating exactly why it it’s a major concern.

Any breach could leave firms open to claims of professional negligence, in failing to secure data. It would also have severe repercussions for the firm’s reputation, causing short-term risk and long-term damage. Now that the General Data Protection Regulations (GDPR) has come into effect firms must ensure that all data handled by the firm is compliant with the obligations.


Brexit will create mixed fortunes for legal firms as we approach October 2019. Exiting the EU could mean dramatic changes for legal providers in the UK, causing uncertainty and risk for the industry. The flip side is that it could create opportunity too.

The Law Society reports that UK legal services have actually been ‘relatively buoyant’ since the referendum, due to a combination of Brexit-related work, ongoing business from UK clients and further work from overseas clients taking advantage of the pound.

In the short-term, Brexit may actually provide a boost as firms are engaged to explain the effects of exiting on existing contracts and transactions. Yet the long-term picture is unclear, and depends on the terms of exit and whether the UK retains access to the Single Market or an equivalent.

The Law Society predicts 2.2% average annual growth from 2019-2025 with a soft Brexit; but this drops to just 1.5% with ‘harder’ Brexit such as a Canada-type free trade agreement. In the medium to long term, Brexit is likely to have a significant negative effect on the legal sector. This is largely due to the knock-on impact of Brexit on the wider economy.

New technology

The legal sector has been a late adopter of technology, led by clients rather than innovating. This is set to change however, and firms who drive innovation will lead.

Now that technology solutions are maturing, law firms need to embrace their potential. From data capture and analysis to AI and client portals, IT is an essential priority for firms. For example, client portals provide clients with fast and secure 24/7 access to up-to-date documents and case information.

While new technology may mean adapting ways of working, technology brings benefits to firms and their clients. Implementing the right technology to do the basic yet important tasks can substantially improve law firm efficiency.

Opportunities to thrive

In the face of numerous challenges, it is clear that today’s law firms cannot stand still. New strategies and innovations must be made to ensure the survival of firms. Here we summarise three ways that could help firms to succeed.

‘New generation’ structures

As we have seen the many challenges affecting the sector are bringing transformation, new ideas and uncertainty to the market. Being able to quickly adapt to client needs will be critical. Instead of working in the same way and offering the same things, new models enable firms to work collaboratively.

Workplace culture is changing. In 2018, there was a 29% increase in the number of lawyers rejecting the typical 9am-5pm career and choosing more flexible working hours. An agile firm is quick to adapt to the shifting marketplace, accommodating both client and staff demands.
Small and mid size firms in particular can try new systems and provide flexibility more easily than their big law counterparts.

Offer greater value

In line with cost and business efficiencies clients are seeking to work with fewer firms over multiple disciplines. Consolidation will lead to longer-term, deeper relationships with firms, who as a result can offer greater value.

To achieve this, firms will need to withstand rigorous procurement processes from clients to be named exclusive provider. However consolidation and closer working means that firms will gain insight across a client’s business. This knowledge will enable a strategic partnership between the firm and client, extending relationships across the business.

Efficiency in legal services delivery

In an era of digitisation, high competition and rising client expectations, efficiency, process and quality are essential. This creates a need for operational efficiency and cost control.

This is why more firms are recognising the value of procurement teams, who can enable greater efficiency while lawyers focus on their role. Legal teams rely heavily on key suppliers for support services which can be essential for service delivery. For example, when a court gives a deadline to deliver papers it is absolute. Therefore services like couriers are relied upon, putting service above price.

Procurement teams are well placed to assess supplier services and benefits, but also to review processes for efficiency. With their input law firms can ensure better cost control and move toward streamlined service delivery, helping the firm’s bottom line survival.

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For an in-depth look at the UK legal sector, download our whitepaper – The Legal Sector in the Digital Age.

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