The personal injury (PI) legal sector in the UK is undergoing significant changes, influenced by regulatory reforms, economic pressures, and evolving client expectations. For both employers and jobseekers in the sector, understanding these key trends is essential for staying competitive and adapting to the new landscape.

Here we explore the major issues and personal injury legal sector trends in the UK, and provide insights for law firms and legal professionals looking to navigate this evolving market successfully.

1. Impact of the Whiplash Reforms

One of the most significant changes to the personal injury landscape in recent years has been the introduction of the Whiplash Reform Programme. Implemented in May 2021 as part of the Civil Liability Act 2018, these reforms were designed to reduce the number of fraudulent and exaggerated claims, which had been driving up motor insurance premiums.

The key changes include:

• A new online portal for low-value road traffic accident claims up to £5,000.
• Fixed tariffs for whiplash injuries lasting up to two years.
• A ban on settling whiplash claims without medical evidence.

For law firms, this has meant a sharp decline in the profitability of low-value claims, with many firms needing to rethink their business models. This shift has led to a consolidation in the market, with smaller firms struggling to compete and larger firms absorbing more of the work.

Jobseekers need to be aware of the impact of these changes when exploring opportunities in personal injury. There is a growing demand for legal professionals who can diversify their expertise into higher-value or more complex cases, such as catastrophic injury or clinical negligence claims. Showing adaptability and a willingness to work across various types of PI claims can significantly enhance your employability in this sector.

2. The Rise of Technology and AI in Case Management

Technology continues to reshape the legal sector, and personal injury is no exception. Law firms are increasingly adopting Artificial Intelligence (AI) and case management software to streamline workflows, reduce costs, and improve efficiency.

For employers, this presents an opportunity to reduce the time spent on routine tasks, such as document review and claim submissions, allowing fee-earners to focus on more complex work. However, it also raises questions about the future role of junior staff and support roles, many of whom traditionally perform these tasks.

For jobseekers, digital literacy and proficiency in legal tech are becoming essential skills. Candidates who can demonstrate experience with leading case management software or familiarity with AI tools used in legal practices will stand out in a competitive job market.

Moreover, while tech is streamlining some aspects of PI work, human skills such as client communication, negotiation, and empathy remain invaluable – especially in dealing with individuals going through traumatic experiences.

3. Post-Pandemic Claims Backlog

The COVID-19 pandemic had a profound impact on the court system, leading to significant delays in hearings and a growing backlog of personal injury claims. Although courts are now operating more effectively with the integration of virtual hearings, the delays are still being felt across the sector.

For law firms, this backlog means an extended time between case intake and settlement, affecting cash flow and resources. Many firms have had to adjust by offering flexible payment terms or contingency fee arrangements to manage their finances.

Jobseekers should recognise that this backlog also creates opportunities. Firms are seeking professionals who can help manage large caseloads efficiently and work under pressure. Lawyers with strong organisational skills and the ability to push claims forward quickly will be highly valued.

4. The Cost-of-Living Crisis and Changing Client Behaviour

The rising cost of living in the UK is impacting both clients and law firms. With household budgets stretched, many potential claimants are less willing to pursue personal injury claims due to concerns about legal costs and uncertainty about the outcome. Even though most personal injury cases are handled on a no-win, no-fee basis, potential clients may be more cautious about engaging legal services.

For law firms, this shift in client behaviour requires a focus on client engagement, transparent communication about costs, and efficient case resolution. Firms that can reassure clients about the financial aspects of pursuing a claim, while managing expectations, will likely retain more business during this difficult time.

For jobseekers, the ability to communicate effectively with clients and address their financial concerns will be a valuable asset. Law firms will increasingly look for professionals who can handle client objections and build trust through empathetic and clear communication.

5. Shifts in the Clinical Negligence Sector

Alongside whiplash claims, clinical negligence is a significant area within personal injury law. However, this sector is facing its own challenges. The NHS is currently grappling with a substantial rise in claims, placing enormous pressure on resources and leading to calls for reform in how clinical negligence claims are handled. The government has also suggested that it might introduce caps on legal fees for lower-value clinical negligence cases, similar to reforms in the general PI sector.

For employers, this uncertainty requires careful planning and perhaps a greater focus on building expertise in higher-value clinical negligence claims. Law firms may also need to rethink their fee structures if caps are introduced, which could reduce revenue from smaller claims.

For jobseekers, developing experience in clinical negligence can be a lucrative career path, but it’s vital to stay updated on regulatory changes. Candidates who can demonstrate expertise in this niche area – particularly in high-value claims involving complex medical evidence – will be in high demand.

6. Regulatory Changes and Fixed Costs in Personal Injury Cases

In addition to the whiplash reforms, as of October 1, 2023, fixed recoverable costs (FRCs) in the UK were extended to cover a broader range of personal injury and other civil claims, specifically those valued between £25,000 and £100,000. Previously, FRCs mainly applied to lower-value cases in the fast track, capped at £25,000.

The recent expansion creates an “intermediate track” for more straightforward cases under £100,000, aiming to provide greater cost predictability in these cases by setting a cap on the legal expenses that can be recovered from the losing party​. This reform aligns with the government’s broader efforts to improve access to justice while controlling legal costs across civil litigation, ensuring that the costs of bringing or defending a case remain proportionate to its value.

For law firms, the expansion of fixed recoverable costs (FRCs) will likely continue to pressure law firms, especially those focused on smaller claims, as capped recoverable costs reduce the profitability of cases valued up to £100,000. Smaller firms might find it increasingly difficult to remain competitive, potentially accelerating industry consolidation. Firms may start prioritizing higher-value or more complex cases that can absorb the limited cost recovery under FRC, leading to a strategic shift away from lower-value claims. This change will require many firms to evaluate their case portfolios and potentially adjust fee structures to maintain financial stability in this new cost landscape.

For jobseekers, these reforms create a mixed landscape of both challenges and new opportunities. With fewer roles centered around low-value claims, jobseekers may need to pivot their skills to remain relevant. As firms increasingly focus on higher-value cases, candidates with experience in handling complex litigation—particularly those with strong case management skills—will stand out. Flexibility and a readiness to engage with diverse, high-value personal injury claims will be advantageous for candidates aiming to secure a foothold in a more competitive market shaped by these reforms.

7. Increased Focus on Mental Health and Wellbeing

The personal injury sector is inherently stressful, particularly given the nature of the work and the emotional toll it can take on both legal professionals and clients. In recent years, there has been a growing focus on mental health and wellbeing within law firms, with many employers recognising the importance of supporting their staff.

For employers, offering mental health support, flexible working arrangements, and a positive work-life balance is no longer a “nice-to-have” but a necessity. Firms that can demonstrate a commitment to employee wellbeing will not only attract talent but also retain it, particularly in a sector where burnout can be prevalent.

For jobseekers, it’s important to consider how potential employers prioritise wellbeing. During the interview process, don’t hesitate to ask about the firm’s approach to work-life balance, mental health resources, and how they support employees in managing the pressures of personal injury work.

Navigating this changing landscape

The UK personal injury sector is at a turning point, with regulatory changes, economic pressures, and evolving client expectations reshaping the market. For employers, adapting to these changes by embracing technology, refining business models, and supporting staff wellbeing will be crucial to long-term success. For jobseekers, staying informed about these trends and developing a broad skill set will help you stand out in an increasingly competitive market.

Whether you are an employer or a legal professional looking to grow in the personal injury sector, Clayton Legal can help you find the right talent or the right opportunity. Contact us today to learn more about how we can assist in navigating these industry changes.

About Clayton Legal

Clayton Legal has been partnering with law firms across the country since 1999 and during that time has built up an enviable reputation for trust and reliability. We have made over 5,000 placements from partners to legal executives, solicitors to paralegals, and legal IT personnel to practice managers.

If you are looking for your next career move, we can help.

Mediation and other alternative dispute resolution procedures (ADR) are going to become ever more important within the UK civil justice system going forward. Following government consultations and the success of the use of ‘negotiation dispute resolution’ (NDR) in family, housing and consumer cases, we can expect to see alternative dispute resolution procedures integrated in wider civil and commercial litigation.

This is primarily due to the ongoing backlog of cases being experiences across the UK legal system. It is estimated that the reforms already committed to will free up nearly 5,000 sitting days per year, which will reduce waiting times for more complex cases. But the adoption of ADR procedures is also designed to make mediation and other types of dispute resolution more accessible and to simplify the processes for civil cases, making them quicker and easier to resolve.

Which Cases Will Be Affected

As previously mentioned, in civil cases up to the value of £10,000 alternative dispute resolution procedures will become compulsory with 180,000 parties being referred automatically to free telephone mediation sessions during the first rollout of reform. However, personal injury and unspecified money claims will not initially be included.

These reforms go further than what was recommended by the Civil Justice Council which supported using alternative dispute resolution procedures only for cases up to the value of £500 and will require expanding the Small Claims Mediation Service (SCMC).

The Law Society has expressed reservations about the compulsory nature of the reforms, stating that “While mediation and other forms of alternative dispute resolution (ADR) should be used wherever appropriate, we do not support the compulsory use of mediation where it may be detrimental to either party, or prevent access to justice.”

Types of ADR

There are several methods of ADR available for resolving cases outside of traditional court proceedings. For civil cases in the UK, the preferred method will be mediation, where a neutral third party helps disputing parties negotiate a mutually acceptable resolution. But there are other methods litigants may want to consider if mediation may be detrimental.

Arbitration involves a neutral arbitrator or panel making a binding decision based on evidence presented by both sides. Another option is adjudication, where an independent adjudicator makes a temporary decision that parties must abide by until a final resolution is reached. Finally, conciliation involves a third-party facilitating communication between parties to reach a settlement.

Alternative Dispute Resolution Skills You Should Be Hiring For

With mediation becoming compulsory for civil cases up to the value of £10,000 in the UK, legal teams are increasingly seeking individuals with specific ADR skills to navigate these changes effectively. Here are key skills and attributes that you should prioritise when hiring new talent:

• Mediation Training and Certification
  Look for candidates who have completed formal training and certification in mediation or those who can demonstrate a foundational understanding of the mediation process, including communication techniques, negotiation strategies, and conflict resolution principles.
• Strong Communication Skills
  Effective communication is key in mediation, as it encourages productive dialogue and helps parties articulate their interests and concerns. Seek candidates with exceptional verbal and written communication skills, including active listening, empathy, and the ability to convey complex legal concepts in clear, accessible language.
• Negotiation Expertise
  Look for candidates with experience in negotiation roles and proven negotiation skills, including the ability to identify common ground, propose creative solutions, and manage conflicting interests diplomatically.
• Conflict Resolution
  Successful mediators can navigate emotionally charged situations and facilitate constructive dialogue between disputing parties. Look for a track record of resolving conflicts in diverse contexts and the ability to demonstrate patience, impartiality, and resilience in challenging circumstances.
• Cultural Sensitivity
  Mediation often involves parties from diverse backgrounds and cultures, requiring mediators to navigate cultural differences sensitively. Seek candidates with cultural competence, awareness of diversity issues, and the ability to foster an inclusive environment conducive to productive dialogue and mutual understanding.

By prioritising candidates with these ADR skills, you’ll be better placed to adapt to the mandatory mediation requirement in civil cases and any further dispute resolution reforms.

Clayton Legal has over 25 years’ experience helping clients attract and retain legal talent across practice areas that include Property, Personal Injury, Family, Criminal, and Costs law as well as Legal IT and Civil and Commercial Litigation.

If you are building your legal team, we can help. Call us on 01772 259 121 or email us here.

Once considered a niche practice area for British corporate law firms, private client services are increasingly central to many firm’s growth plans thanks to their resilience in a turbulent market – the sector grew 17% in 2021. Recent dips in activity could be reversed if predicted changes to income tax thresholds and adjustments to the non-domicile regime are announced in this year’s pre-election Spring Budget, with more taxpayers finding themselves in need of advice.

What’s Behind the Private Client Services Boom

This shift in popularity can be attributed to several key factors that are reshaping the landscape around financial law. A growing interest in personal wealth management has caused firms to broaden their service offering. Offering financial and tax advice to high-net worth individuals alongside their corporate services has proven to be popular, prompting them to expand their teams.

Technology has also increased the accessibility of financial planning and wealth management information and resources through the likes of digital trading platforms, investment apps, and online will and probate services. A wider range of individuals seeking advice in a challenging economic environment has meant an expansion of the client base for private client services. Greater accessibility has its downsides as it creates more opportunities for financial abuse against vulnerable parties, however this can lead to more work for private client legal teams.

The rise of digital assets and the complexities surrounding inheritance and estate planning in the digital age have further heightened the demand for specialised legal expertise. Even though the legalities and tax implications around digital currency remain vague many individuals are keen to seek advice in this area adding an additional layer of complexity to the field.

Private client services are also an increasingly popular choice for young law graduates or those looking to expand their skillset and shift into a new practice area.

Why Private Client Services Appeals to Early Career Talent

For early career solicitors, private client services present a unique and attractive opportunity to engage with a diverse range of clients and navigate the challenges of modern wealth management. For those looking for an interesting, potentially lucrative, and dynamic legal career it makes an attractive choice.

Working in private client law allows emerging talent to build strong relationships with their clients and help individuals personally. It also intersects well with other areas of legal practice giving young graduates the chance to work closely with colleagues in family law, corporate and civil litigation, and legal IT amongst others.

Attracting and Retaining the Next Generation of Private Client Talent

If you are considering expanding your private client services team, you need to attract and retain the very best talent. You can ensure that you appeal to both early and mid-career private client professionals by:

Providing Training & Professional Development

Look at tailoring the training and professional development programs you offer towards the skills and expertise needed for private client services. This could include workshops on the latest developments in wealth management, estate planning and digital assets. If you have existing senior professionals with private client experience, you might consider offering mentorships.

Supporting Work-Life Balance

Implement policies and procedures that recognise and support the importance of work-life balance. Offering flexible work arrangements and promoting a culture that values personal well-being can be instrumental in attracting and retaining talented individuals in a competitive legal landscape.

Investing in Technology

Invest in cutting-edge legal technologies to streamline workflows and enhance efficiency in private client services. The integration of digital tools can not only attract tech-savvy lawyers but also contribute to a more dynamic and engaging work environment.

Creating a Culture of Diversity and Inclusion

Fostering a culture of diversity and inclusion within your firm will help you attract a broader pool of talent and contribute to a vibrant and collaborative team. Those different perspectives will then help you in addressing the unique needs of a diverse clientele.

Offering Competitive Compensation and Benefits

Acknowledge the specialised expertise required in private client services by offering competitive compensation packages and benefits. This includes not only financial incentives but also healthcare, retirement plans, and other perks.

Clayton Legal has over 20 years’ experience helping clients attract and retain legal talent across practice areas that include Property, Personal Injury, Family, Criminal, and Costs law as well as Legal IT and Civil and Commercial Litigation.

If you are building your legal team, we can help. Call us on 01772 259 121 or email us here.

The paths of residential and commercial property transactions in the UK are at a moment of divergence. While residential transactions are declining, commercial property transactions seem stable, even on the rise. Yet property lawyers are reporting shrinking caseloads, with some firms handling 25% fewer cases in 2023. Improving the conveyancing process, particularly through the implementation of digital conveyancing could create a better, faster conveyancing market that encourages buyers and sellers to take the plunge.

The Current State of Real Estate in the UK

Figures from HMRC show that December 2023 saw the fourth consecutive month-on-month drop in the number of residential transactions, marking a 20% decline from December the previous year. Yet at the same time, commercial property transactions are increasing, albeit slowly.

Many commentators are predicting a smoother, less fractious property market in 2024 that won’t be marked by the mini boom and bust cycles we’ve seen since 2020. However, what’s stopping the market from taking off is the continued sluggishness of property transactions. The average time for conveyancing on a residential property is around 22 weeks and for commercial property can be slower  – a long way from the ideal transaction time of 8-12 weeks.

These long conveyancing times are a major contributor to the national fall through rate on property purchases of 34%.

Is Digital Conveyancing the Solution?

Property transactions, far more than property prices, are a great indicator of the health of the market. Making property transactions faster and easier has the potential to encourage both sellers and buyers and creating a more stable property market in the long-term. So, how can we achieve better and faster conveyancing and a system that works for both buyers and sellers?

One oft cited solution is digital conveyancing. Digital conveyancing involves implementing electronic transactions for the transfer of legal documents and funds and making land search details such as tenure, title, and lease length accessible instantly. Digitalisation would:

• Make the current conveyancing system more streamlined and transparent
• Go a long way to achieving faster conveyancing times
• Reduce the likelihood of error and the need for extensive checks and land searches
• Make the system more accessible and make long-distance transactions easier

Countries such as Norway have achieved great success with digital conveyancing systems, in some cases reducing transaction times to a matter of days. However, making such a system possible in England could prove more difficult. Bringing conveyancing solicitors, the land registry and real estate agents into alignment would require robust data security measures, compliance regulation and technology implementation. It is also likely to be costly.

It seems unlikely that the government will agree to the high-level conveyancing rule changes that would make wholesale digitalisation of the system possible. Meaning that without industry-wide desire for reform the technology is likely to be implemented patchily, with some sectors such as commercial real estate more reluctant to embrace change.

Another possible solution is providing buyers with more upfront information regarding property, in the form of a return to home information packs (HIPs), Scotland’s home reports or even Buying and Selling Property Information (BASPI) questionnaires. Transaction times when HIPs were introduced were around 12 weeks and Scotland has seen a 60% reduction in fall throughs since adopting home reports. And, consumers are happy to pay for this information, with 65% willing to pay £300 for information that would speed up their transaction times.

What Should You Be Doing to Prepare for Digital Conveyancing?

As we’ve heard recently, a stable market means many conveyancing firms are looking to drive recruitment. But how can you make sure your latest recruitment drive considers the future of conveyancing?

1. Attracting the right talent:
   Your hiring strategy should be focused on building and maintaining a talent pipeline that sustains your business long term. Focus on developing a strong, online employer brand that appeals to candidates, improving the candidate experience to make applying for roles smooth and seamless, and creating job descriptions that reflect the attributes and skills you need.
2. Hiring for digital skills:
   Speaking of skills, when evaluating candidates be sure to consider their digital skills and abilities alongside their other competencies. Digital literacy will be increasingly important for the legal profession with or without the digitalisation of conveyancing. Skills-based hiring can also be used to pinpoint other key competencies like communication which are key in creating better and faster conveyancing.
3. Retaining critical knowledge:
   Embracing the future of conveyancing will be impossible if business critical knowledge is lost. Improving employee retention not only keeps that knowledge in-house but allows you to pass that on to new employees though mentorship and professional development schemes.

Clayton Legal has over 20 years’ experience helping clients attract and retain legal talent across practice areas that include Property, Personal Injury, Family, Criminal, and Costs law as well as Legal IT and Civil and Commercial Litigation.

If you are building your legal team, we can help. Call us on 01772 259 121 or email us here.

Our latest market analysis for advertised legal roles has been featured in a number of publications including Bdaily, the Global Recruiter and Recruitment International.

It has revealed that vacancies for legal professionals across the North West have risen by 9% month-on-month. To learn more about the results, click the links above.

Whether you’ve been in the legal field for one year or for 25, you’ll know the value of being organised. However, in the modern ‘information overload’ world that we all live in, it can be challenging to remain on top of things. There are myriad different apps and programmes you can use to help organise your life and get ahead from your competition, however even cutting through the noise and working out what works and what doesn’t can be a major challenge. So what are the top tech tools for lawyers and how can they benefit your career?

Storage

Only the most technologically illiterate are likely to have not heard of Dropbox, the most advanced and robust file storage tool out there. As lawyers, you’ll be well aware that your existing storage space on your phone, tablet or desktop can get filled quickly with all the documents that you’re sent on a daily basis, and using a programme like Dropbox can provide extra storage as well as helping you to remain organised. It’s also a useful – and secure – tool for exchanging information online with your clients and colleagues.

Practice management

There are plenty of different types of practice management software out there, some of which are suited to firms of a certain size or specialism. However, it’s probably fair to say that the most widely effective platform is MerusCase, a tool that lets you manage and automate your cases, communication, calendar, court forms, templates and case files. And as the programme is cloud-based one of the main benefits is that everything is one place. It’s advisable to do your homework as different programmes will suit different firms and individuals, however it’s likely you’ll find that adopting the software will make you more organised and your files safer.

Security

Ensuring your data is secure should be an absolute priority, particularly with the spate of high profile hacks taking place in recent months. If organisations with the resources of the likes of Sony, Google and IHG haven’t been able to stop hackers, then the average legal firm doesn’t stand much chance, unless that is, it invests heavily in its online defences. However, most companies still have their head in the sand when it comes to data security, and it’s often down to the individual to ensure that they remain safe when operating online. Almost every app or programme requires a password of some sort and the ever growing list of phrases with or without a grammatical symbol, number or capital letter can be hard to keep up with. By far and away the best product is Lastpass as this means you need to remember just one password. It also offers a safe and secure place to store login and credit card details, for example.

Research tools

As you’ll all be only too aware, one of the more time consuming aspects of the average lawyer’s role is research. However, that’s about to change as there are now two tools which look set to shake up the status quo in the legal industry. The first is Casetext, which contains a programme called Cara that finds relevant case law files for lawyers who upload legal documents, allowing them to get the exact cases they need. And the second is Ravel Law, which gives lawyers insights into how judges have ruled on previous cases, allowing professionals to tailor their preparations ahead of their cases, both of which can potentially save you a huge amount of time.

Work/life balance

Don’t laugh, it is possible to achieve a work/life balance when working in the legal sector. Obviously, a lot of the pressure is out of your hands, however creating boundaries is an effective way of regaining control. By using Google Voice to separate your phone lines – for free – you can set up a separate number for your firm on your mobile and restrict its hours, meaning the days of late night calls will be a thing of the past. It also means that clients can call or text you without reaching you on your personal number or pursuing you when you’re busy. You can even read transcribed voicemails and text messages when you’re in court and, as if that wasn’t enough, there’s also an automatic timing function so you can bill clients accordingly.

Ignore the reports, technology is here to help make our jobs easier, rather than stealing them from us. If you’d like to speak to our expert team about their favourite tech tools for lawyers then get in touch now.

What are your favourite tech tools for lawyers?

Check out some of our other blogs on the impact of technology on the legal profession. And if you’re looking for a career move, take a look at our current jobs.

You’ve probably heard all about artificial intelligence and its growing use in a number of widespread industries. And if you haven’t observed its use in a business context then you will surely have seen it in films like ‘iRobot’, ‘Ex Machina’ and, well…‘AI’. But the idea that businesses could harness the potential of artificial intelligence in a legal setting and use it to their firms’ advantage was surely only a distant dream?

Wrong.

Legal firms have increasingly adopted artificial intelligence led programmes for a few years now, indeed we wrote an article for Totally Legal on that very subject only last year. However, until recently this advanced technology was the sole preserve of firms with vast resources – and deep pockets – but that all appears to be about to change.

AI priority for legal firms

According to recent, extensive analysis conducted by our team here at Clayton Legal, small and medium sized legal firms both recognise the importance of the use of AI, regard it as an opportunity to be embraced and do not feel threatened by its impact on their business.

As one of the respondents to our research project, Andrew Kwan – solicitor advocate at Clear Law – put it, “This approach allows us some advantages including being agile within a changing legal market. Therefore I can see the utilisation of AI as being an opportunity to deliver greater value to clients, both individuals and businesses, by removing some of the administrative elements of the process.”

And it’s not only senior professionals who are experiencing this optimism. Miriam Khan – a junior colleague of Khan at Clear Law, made the point that AI and human skill sets should complement each other rather than take opposing sides, “The profound purpose of AI is to save the need for time, cost and energy on manual labour and increase efficiency. Why do a job that a computer can do for you?”

Opportunity for skills development

Our own managing director, Lynn Sedgwick, also commented on the increased adoption of AI by small and medium sized firms. “While firms such as Linklaters and Clifford Chance have moved to use AI in several different areas, this is very much about driving efficiencies, rather than eradicating jobs. AI is becoming a priority for legal firms and the smaller practices that we spoke to are also hoping to generate higher fees and ensure that processes can be and will be outsourced to machines.”

“For employers, this has huge benefits but it also offers their people more interesting work, making the workplace a more satisfying place to be in, in a marketplace where retention is key.  For legal professionals at all levels, the introduction of AI represents an opportunity to develop new skills, and for those who are open to change, to increase their value in the marketplace. The interpersonal and technological skills required to adapt to the new AI infused working environment are likely to bring benefits to all that choose to engage with them.”

“The human element can’t, at least yet, be replaced by a robot. Andrew Kwan really sums it up when he says: ‘I do not see AI removing the elements where you are a compassionate human. You can’t remove this from a process and expect a great result for your client.”

We would love to hear you views on the role that AI has to play at small and medium sized firms – do you agree with Lynn that the introduction of AI represents an opportunity to develop new skills and increase individuals’ value in their marketplace? Or do you believe that AI could ultimately lead to jobs being cut?

For more legal insight check out our website

Or to see some of our other insights take a look at our blog

As we all know, the billable hour has been the de-facto payment structure adopted across the legal sector. In fact, according to Sean Braswell, a leading legal journalist, the practice dates back to 1975 and the American case of Goldfarb vs Virginia State where it was discovered that the prior ‘minimum fee’ structure was outdated and favoured richer clients. However, it appears as if this trend – and the idea of the billable hour as a whole – could be coming to end. But what does this mean for legal professionals and the firms they work for?

RIP billable hour

The trend of moving away from the billable hour gained momentum during the financial crisis when consumers started to look for more cost effective external legal guidance and began identifying alternative fee arrangements (AFA). These came in various forms including flat fees, request for proposals (RFPs) and reverse auctions over the once universally accepted hourly fee structure.

Why did this happen?

The financial crisis – rather obviously – put extra pressure on both individuals and organisations which started putting more of a focus on their legal costs and how to reduce them, improve efficiency and value for money so clients essentially get a fairer deal from their legal partner.

However, it looks like this renewed focus has in fact had a negative impact and led to a decline in output. Firms’ productivity has traditionally been measured on billable hours per lawyer, which presents leaders with a challenging situation as remuneration and bonuses have also traditionally been calculated by total number of hours billed.

A report from Thomson Reuters has also highlighted how billable hours have dropped in the last 10 years and gone from an average of 134 per lawyer in 2007 to 122 in 2016. That may not seem like a huge fall, but this monthly reduction – extrapolated over a full year – equates to a loss of 144 billable hours per lawyer per year, which ‘costs’ firms around £53,000 annually.

It would be unfair to suggest that this is solely down to a shift towards AFAs in recent years, however legal firms have a challenge on their hands bringing productivity up to its previous level. And legal professionals will also need to be prepared for change.

New skills

It’s likely that, as a result of this changing market, negotiation will become an increasingly sought after and important trait as firms seek those who have the ability to agree upon and adopt more flexible fee structures that are embraced by legal consumers. Professionals will also have to change the way they document the work they’ve done for clients. And let’s not forget communication, which will be absolutely pivotal as clients cast a more discerning eye on their legal partners. Perhaps most importantly, lawyers will also need to find ways to demonstrate how they can show value to the business beyond the numbers of hours they can bill for.

Do you think the age of the billable hour is coming to an end?

For more legal insight check out our website

Or to see some of our other insights take a look at our blog