The changing landscape of UK law

UK law is changing. Often seen to be stuck in a time warp, as new trends begin to emerge, digitisation creeps in and educational shakeups take hold, the legal profession is beginning to evolve.

Over the years the transatlantic titans have tempted many from the magic circle, with salary being boosted by a third across the pond. This has had a knock-on effect with NQ (Newly Qualified) solicitor salaries rising year-on-year.

Meanwhile, technological innovation is also taking centre stage. Artificial Intelligence (AI) is gradually becoming interwoven into the fabric of law firms, with 40 of the 100 biggest UK firms using AI by the end of 2017. Increasing digitalisation has also seen a significant rise in the number of virtual law firms.

Changes to the educational framework will also come into fruition in 2021, with the introduction of the Solicitor’s Qualifying Exam (SQE), which has been called one of the most important changes to the legal profession in recent times.

And, while the job pool is diversifying, and law firms are taking on more graduates from non-Russell Group Universities, big firms are taking on fewer trainees.

UK lawyers fly the nest

In recent years, more and more UK lawyers have decided to defect to US law firms. And it’s not hard to see why. Historically US firms are known to pay their lawyers significantly more than their UK counterparts.

However, US firms have upped the ante when it comes to salary wars, even managing to attract those from the magic circle. Recent transfers, like the one made by private equity heavyweight David Higgins, when he moved to Kirkland & Ellis for $10m, have seen this trend snowball.

On a hiring spree to adopt as many magic circle lawyers as possible, US firms with London offices offer more money and impressive links to the US market in relation to private equity and white-collar crime. There are also more international opportunities and lawyers are offered better career progression prospects.

According to the Financial Times, in addition to securing David Higgens, since 2015, Kirkland & Ellis have managed to swoop up at least nine partners from the magic circle. Other US firms who have successfully secured prominent UK law talent include, Cooley, Latham & Watkins and White & Case.

UK law firms fight back

That being said, in an attempt to compete against US giants and retain UK talent, UK law firms have adjusted their previously rigid pay structures. This includes firms such as Clifford Chance, and Freshfields, who have significantly increased their lawyers’ pay packets.

There has been a trickle down effect from this too. Allen & Overy, Clifford Chance, Freshfields and Linklaters for example, have all increased NQ salaries to £100,000. Magic circle player Freshfields Bruckhaus Deringer also boosted its NQ lawyer pay packet to six figures, with an 18% increase.

Commenting on the 2019 pay changes, a spokesperson for Freshfields, said: “We have increased associate salaries with effect from 1 May. Our pay offering is a critical part of our talent strategy and reflects our continued commitment to attracting and retaining the very best talent in the legal market. We regularly review our compensation and benefits across the firm with this in mind”.

However, their efforts may not be enough. Acritas, a global company providing legal market research data, found that in 2019, 30 lawyers from the top 100 UK Star lawyers that transferred, went to US firms. Many of whom graduated from associates to partners. In total, it was found that US firms increased their “UK lawyer headcount” by 5.8%.

Increasing digitisation

Accompanying significant changes to salary, UK law firms are also beginning to embrace evolving technologies to increase efficiency. Whether it’s using predictive coding software for a more rapid e-disclosure process, tools such as Lex Machina for legal research or, Uhura AI for document assembly, AI will play a big part in the future of law.

It will also be involved in the development and roll-out of online dispute resolution (ODR). Back in 2019, for example, iCan Systems became the first company to use a “robot mediator” to resolve a dispute. This is set to become a trend for small financial claims.

However, many within the industry argue that human mediators will still be required for more complex cases. Commenting on the need for a human touch, speaking to the Financial Times, Ben Carroll, a Disputes Resolution Partner at Linklaters, said:“In the case of disputes worth huge amounts of money you need the skills of an experienced negotiator to persuade people to do things they don’t want to do”.

Despite this resistance, a report by The Law Society recently predicted that by 2038, 67,000 legal jobs will be replaced with automation, revolutionising legal processes.

Moreover, research recently conducted by Hazelwoods, found that the number of lawyers working in virtual law firms has significantly increased. Rising 22% from last year, there are currently 1,270 lawyers working in virtual law firms and it appears that this is a trend that will continue to grow.

Not only have law firms seen the need to adapt due to the coronavirus pandemic, but so far, virtual law firms appear to be increasingly profitable too. Using this alternative model, top 100 firm Keystone Law, now has 350 lawyers and in 2019, saw a 35.1% increase in revenue to £42.7m.

Changes to the educational framework

Many argue that the most significant changes are yet to come, especially when it comes to the educational framework of UK law.

The Solicitors Regulation Authority (SRA) recently announced that from autumn 2021, those who wish to qualify as a solicitor will have to pass SQE. The current Legal Practice Course (LPC) sees numerous exams set and marked by over 100 organisations. Julie Brannan, Director of Education and Training, says that this is a “significant problem” which means that “It is hard to have full confidence that all qualifying solicitors are meeting a consistent, high standard”.

The SRA says the SQE will change that. The new exam is a two-part national assessment which is both set and examined centrally, and independently.

There has also been a slight change in which universities law firms are recruiting from – well, a minor change. Although Oxbridge and Russell Group graduates still manage to bag the best jobs, making up 76.5% of trainee solicitors, there has been a shift. The Chambers Student Guide found that this is down 5% from 2013/2015 and 3% overall in the last nine years. Further to this, outside of London, 36% of trainees were from non-Russell Group universities.

It also appears that, slowly but surely the talent pool is diversifying. The percentage of female trainees in UK law firms has increased from 57% in 2014, to 61% in 2018. Meanwhile the number of female partners jumped 3% to 27% in 2018.

However, this progress is not mirrored in ethnic minority representation. In 2016, the number of ethnic minority candidates landing trainee roles was 20%; this fell by 4% in 2018, with only 16% securing trainee positions. This is despite the fact that almost 40% of students commencing a law degree in 2017/18 were from ethnic minority groups. The statistics are not much better for law partners. In 2014, the percentage of lawyers from ethnic minorities entering partner positions was 5%, which increased to only 9% in 2018.

On top of this, over the last 10-15 years, elite law firms have gradually reduced the number of trainees they take on. When assessing developing trends, Chambers Student found that while back in 2008, silver circle law firms were looking to take on 305 trainees to start in 2011, now firms expect to take on only 195 for 2021.

Ultimately, all of these industry changes will bring both challenges and opportunities. Both aspiring lawyers and those already working within the profession will need to adapt to keep up with the inevitable evolution of the industry.