Looking to the future: identifying the drivers of change

3.5     In a recent and valuable scenario building exercise, the Law Society (2012b) has identified four future scenarios (Table 3.1). The scenarios, which also draw on the earlier Law of the Future scenario planning exercise undertaken by the Hague Institute for the Internationalisation of Law (HiiL)(2011), are not predictions but attempts to identify plausible futures. Focusing on a range of drivers for change that are likely to have high impact and also high uncertainty in terms of possible outcomes, the developers of the scenarios identified a cluster of factors based around global and domestic economic and business performance and purchaser behaviour that were considered key. These were then used to create possible versions of the legal services environment as it might appear in 2025.[1]

 

Table 3.1: The legal services market in 2025: Law Society scenario overviews

 

‘The Law is an App’	Highly interconnected, global economy High global and domestic economic growth Global legal environment marked by growth in international rules and institutions, which runs alongside growing dominance of private-public governance mechanisms ‘Leading buyers’ play an active role in shaping the services they want, supported by strong and active civil society organisations Innovation has transformed the market Smaller number of lawyer-owned entities, but opportunities for all sorts of providers and individual lawyers if they can meet the high expectations of buyers
‘Wise Counsel’	Rapid economic and socio-cultural globalisation together with increased complexity High global and domestic economic growth Increased internationalisation of law and legal institutions of a predominantly public nature ‘Receiving’ buyers present very limited stimulus for providers to change Innovation is enhancing rather than transformational Solicitor-managed enterprises remain the largest block of providers and retain a substantial share of the growing pool of work
‘Mini Clubmen’	Global markets have levelled out – nation states are more inward-looking and protectionist Low global and domestic economic growth Global legal environment is fragmented – legal borders have thickened and the former trend of expansion of international rules is in reverse ‘Receiving’ buyers present very limited stimulus for providers to change Innovation has enhanced rather than transformed The market for legal services is smaller overall, but the ‘solicitor’ title is often preferred to alternatives, so their share of this smaller market is protected and is relatively stable at 2018 levels.
‘Bleak House’	Low growth globally and nationally – wealth, effort and profit tend to be generated at the local level Processes of legal internationalisation are in reverse leading to a fragmented global legal environment – regional legal pluralism; ‘thickened’ legal borders; protectionism is rife. The importance of private legal and governance regimes is on the rise ‘Leading’ buyers shop around, search for and use information, have high expectations of delivery and service and are prepared to be actively involved in the resolution of their problems Innovation in the legal services market has been stifled Traditional forms of law firm persist, but their share of the total market – in terms of turnover contribution – is at an all time low; overall, their numbers are in decline in the face of competition for a reduced volume of legal work.

 

3.6     The four scenarios demonstrate a wide range of possible outcomes for legal services generally and the solicitors’ profession in particular in 2025, outcomes that could easily be extended to the sector at large with relatively minor additions and variations. The four scenarios are built around an axis of high vs low economic growth. Continued low growth for much of the period to 2025 would have radical consequences for the sector as a whole, reducing, perhaps quite substantially, the volume of legal work, increasing competition but also limiting innovation. It is notable that, even if there is a return to pre-2008 levels of growth (or better), none of the scenarios simply predicts a return to pre-2008 ‘normality’, though the ‘Wise Counsel‘ scenario probably comes closest in this respect. It is significant that this is the only one of the three scenarios that sees solicitor-managed enterprises retaining a dominant share of the market. Change in buyer behaviour is also an important external variable. The scenarios distinguish between markets that are dominated by ‘leading’ or ‘receiving’ clients/consumers – the ‘receiving’ concept is closest to the status quo – an environment in which information asymmetry between lawyers and clients remains high, particularly in the private client sphere, and where access may be mediated by knowledgeable intermediaries (eg, the role of in-house counsel). A market shaped by ‘leading’ purchasers, in contrast, will be characterised by more empowered and knowledgeable buyers, who are less inclined to see the purchase of legal services as different from the purchase of other goods and services. There is limited evidence for the latter at present, though regulation and technology, as the scenarios suggest, both have the potential to transform the demand side of the market.

3.7     For present purposes, the immediate value of this analysis lies chiefly with the range of key variables identified. These can be summarised as:

• changes in the global forces shaping international and national markets, politics and civil society;
• the impact of key political, economic and regulatory changes, including market liberalisation strategies and changes to the regulatory and funding environment on the sector;
• consequent technological, role and process innovation within legal services;
• changing behaviour among buyers of legal services, shaped by economic, technological and demographic influences.

3.8     These variables will be used to inform discussion in the next sections of this chapter, and to consider how such environmental factors might shape not just the legal services sector, but the LSET system on which it draws.