Law firms need to embrace change to meet the challenges of AI and continued market uncertainty

September 22, 2023

What do clients want from their law firms today? Will Artificial Intelligence (AI) reduce the need for lawyers? How can UK law firms adjust to reduced profits caused by economic turbulence and geo-political instability? How can law firms best help their junior associates avoid burnout? Rachel McCorry, Senior Vice President of EMEA Legal Services at Williams Lea, joined a glittering panel of top UK law firm leaders, their clients, and industry experts at the Clifford Chance Conference Center for the Sandpiper Partners’ 11^th Annual London Legal Market Conference to discuss the current state of play and what the future holds for UK law firms. While AI was the most talked about topic of the day, other issues such as economic headwinds, and improving productivity and managing stress were not forgotten.

The key takeaways from the conference are below. If you want to hear more from top UK law firm leaders, technology experts, including guest speakers from Microsoft and Unwork , then join us for a live and in-person event on Tuesday October 10^th at Dentons, London for The Law Firm of the Future: A business services symposium.

Partnerships between law firms and their clients must focus more on value than cost

A panel of law firm client leaders all agreed that greater partnerships are necessary between clients and their law firms. Clients want their law firms to understand their specific issues and circumstances to ultimately deliver better outcomes. In the face of greater volatility and uncertainty, with geo-political tensions, economic headwinds, wars, and environmental, social, and governance (ESG) issues rising to the fore, clients need greater clarity from their law firms on navigating these challenging times. One of the panelists, a general counsel at a leading global investment bank, said, “For me, our relationship is about partnership. We’re not trying to pressure the law firm for the lowest cost. It’s about what value there is, and it’s a two-way partnership. Investing time with both the law firm and client stakeholders, and truly understanding the pressures on either side is really important.” Another panelist summed up the sentiment by saying, “The power is in the law firm and the client coming together to deliver better outcomes. Law firms now have an incredible array of talent that’s not just with lawyers. It’s the operations side, the technology, the innovation, the marketing, the communications, all of which can add incredible value to in-house teams who frankly now need law firms to help them solve business problems, not just legal ones.”

In order to succeed, law firms need to embrace change

Another large challenge confronting law firms is the fragile nature of the UK financial markets. Once among the top three stock exchanges in the world by market cap, London now struggles to make the top ten, falling behind Europe, India, China and Japan. A panelist pointed out that one company per week has been delisted from the UK stock market since 2016. This has led to a vast amount of corporate legal work shifting towards private equity and funds from international investors. Many of  which is not location dependent, and may take legal work away from London. However, one leader at a top UK law firm made the point that change is inevitable, “Essentially if we’re to succeed as commercial practitioners, we need to embrace change and think through what it means and how to respond. There is currently a market downturn for certain types of work, and that means that we need to think harder if we’re all to succeed.”  The panelist also said that lessons might be learned from the success of US law firms, “We need to look across the Atlantic and learn the lessons from US firms, which operate at the top end of profitability, roughly three times the level of corporate profitability we see here, which means a very high payout to individuals. They have more of a star culture model, they are less siloed, and less specialized with no pretense of fungibility of lawyers. And I think there are some very profound lessons to take from that.”

If used the correct way, AI will be a powerful enabler of law firms’ overall strategy

A panelist responsible for innovation at an international law firm believes that AI can help lawyers focus on complex work that requires judgement calls and critical thinking rather than more commoditized work. This is more aligned to what law firm clients want. “We’re still in the very nascent phases of AI. What isn’t possible now, may well be possible in a few years.” Said the panelist, “However, irrespective of that, one of the key benefits of AI will be telling clients that you can focus on the really good work, while the work which we’ll have to do from time to time, the repetitive, lower-level work, will be augmented by technology.” Another panelist, a partner at a magic circle law firm, also addressed some of the fear mongering from the media and recent articles that AI will reduce the need for the number of lawyers in the future, “I don’t buy into the narrative that there’s going to be 30% to 40% less lawyers in the market. Technology has never had the impact of reducing the number of lawyers. What it’s done is increase the productivity of lawyers to absorb a firehose of demand. The real issue is not whether AI technology can take jobs away. Clients don’t want AI from law firms, clients want to reduce what they’re spending per unit for the legal advice they get. That’s where the opportunity is, and that’s going to reshape business models. There are going to be winners and losers depending on which legal providers can use this technology in the best way.”

Junior lawyers are happy to work hard, but need greater support with non-legal activities

During a deep dive discussion into building a resilient law firm, a recent study was highlighted, where hundreds of associates at law firms were interviewed. One of the study’s key findings was that associates don’t mind working hard and they understand that long hours are part of the job. However, they are concerned that they’re being tasked with too much non-legal work. Williams Lea’s Rachel McCorry advised that taking a strategic approach to law firm support activities is the first step to helping lawyers do less non-legal work, “quite often we see a tactical manager in charge of the strategy for a functional area. If you look at the support provided at law firms, such as Document Production, PAs, Legal Admin, there are some great tools and technology available. But quite often the managers of these functions have risen through the ranks of the firm and as a result find themselves in a managerial position without access to strategic knowledge and guidance.  So, the first thing that we do is spend more time with functional managers, helping them on their journey on how they can move their support functions forward, and best use technology.” Rachel also pointed out that making better data driven decisions is also essential. “Data is important to optimize workflow and resource allocation within the firm, which in turn allows for better utilization of staff and technologies, leading to increased efficiency and productivity.”

This point was reinforced by a senior leader at a top international law firm, “Associates need to be doing legal work with strong mental health in a way that’s valuable to clients,” said the panelist, “When associates are working hours beyond what’s needed, and doing work that can be done better by other people, that’s inefficient for the law firm, not just the associate. Outside providers like Williams Lea are offering to take certain things away from the lawyer, and that counts as a value proposition.”

If you want to learn more on how technology and AI can impact UK law firms in the future, then join us on October 10^th at Dentons, London for a complimentary symposium on The Law Firm of the Future. At the conference, you can learn from Microsoft, top law firm leaders, and future of the workplace experts. Register here.