The changing face of the legal services industry

The traditional legal services market is changing. Many factors are playing a part in this change, including technological advancements, the way in which companies most effectively operate and the fast paced, ever-changing landscape of the life sciences and pharmaceutical sectors.

According to a recent report from Thomson Reuters Institute on the State of the Legal Market 2022, The past year marked another extraordinary one for the legal industry as law firms began to emerge from the worst of the pandemic and moved toward some semblance of normalcy.

The report found the demand increase experienced over the year led firms to increase associate and other professional staff hiring quite aggressively. As a result, hiring across the market grew at levels unseen for a decade. This hiring surge was accompanied by dramatic increases in associate compensation, resulting in significant growth in direct expenses for firms in the second half of the year.

Unfortunately, the effects of this hiring surge were also tempered by a dramatic rise in associate turnover, with firms seeing their associate turnover rates increase to record levels. As a result, by year’s end, many firms found themselves locked in an expensive war for talent that was complicated by unprecedented problems of retaining the talent already in house.

Thomson Reuters Institute highlighted that these problems of recruiting and retaining both legal and other professional staff may well prove to be among the biggest post-pandemic challenges confronting law firms in 2022, which is something I have seen first hand.

The historic business model of law firms and the traditional approach taken to providing growing businesses with support, often doesn’t reflect the needs of the industry. The importance of specialist legal and compliance advice from appropriate legal experts has remained a constant, yet this support needs to be structured and available immediately for the needs of the business as the demand and workload can vary from month to month in many cases.

In my own research of the industry, I have witnessed that many large companies are looking for legal support which can be turned on and off or up and down as required. The job market and the skill gaps that are appearing across most companies’ legal organograms would benefit from such a model. I have seen a hike in clients wanting to ensure no areas of the business are exposed or without proper advice. The aforementioned model of agile, demand-lead legal support lends itself to remedying the resource challenge that many companies are facing.

In an industry where specialism is paramount and understanding intricacies of the life sciences and pharmaceutical sector is essential to the role, offering tailored legal advice from subject matter experts is proving beneficial.

There is certainly a demand for a network built by lawyers for lawyers within the life science and pharmaceutical sector to help them build the best teams possible. Fueled in part by a skills shortage and also a need for an appropriate level of expertise on much quicker turnarounds than the legal sector has seen before. Legal departments are reshuffling the pack in order to find an agile and streamlined solution.