Five challenges facing the legal sector in 2024

In recent years, the legal industry has undergone significant transformation, with firms adjusting to a shifting landscape.

With the sector continuing to evolve in response to economic shifts and changing client expectations, we’ll continue to see this trend persist in 2024.

Building on our previous article about the five biggest challenges facing the legal profession, let’s take a look at five more areas legal professionals need to consider in 2024, the impacts they could have and opportunities for firms to tackle these challenges.

1. Economic pressures

The UK economy remains volatile in 2024, marked by the aftermath of the Ukraine invasion and ongoing geopolitical tensions.

With rising interest rates and the cost of living affecting practice areas, this is making clients even more price conscious when choosing a law firm. 

An industry survey of 200 partners by litigation funder Harbour found 44% are facing client pressure to reduce fees in the face of increasing costs, while 46% said clients are moving to less expensive competitors.

With costs for businesses – as well as clients – increasing and further price pressures, firms are having to look even closer at how to work more efficiently and reduce costs.

Continued stringent checks for anti-money laundering (AML) and source of funds are needed while firms are banned from doing transaction work for Russian clients. This is particularly prevalent in conveyancing, but it applies to all areas of law.

There is also an expectation for greater cybersecurity and verifications for online activity as IT professionals are wary of increased risks of cyberattacks. In 2023, a significant 63% of firms had been a victim of a cyber incident, highlighting the very real threat.

Surprisingly, however, 35% of firms are yet to implement effective cyber mitigation strategies. Our blog on cyber threats in 2024 delves into what firms can do to mitigate the risk of cyberattacks.

It is worth noting that here are opportunities for law firms amongst the economic pressures.

The need to work more efficiently to increase utilisation rates and reduce wastage means firms can interrogate current processes to see where they can streamline or automate tasks.

Integrating a case management system with other internal areas, such as legal accounting, online payments and website quotation tools, and external third-party systems, such as government portals or identity verification services, for example, can provide value to firms and the end client.

In regards to increased cybersecurity, moving to a hosted environment can provide significant security benefits as well as performance improvements.

Our blog on the hosting options for legal practice management software covers the options available.

2. Shifting conveyancing market demand

In 2022, the conveyancing sector saw a return to normality after the disruptions caused by the COVID-19 pandemic, which saw residential purchase cases exceed one million.

The year 2022 saw a 23% decrease in the number of transactions compared to the previous year.

This is the result of interest rates being at their highest since 2008, which has led to mortgage interest rates averaging from 5.35% and 4.85% for two- and five-year fixed rate deals.

High property prices – although these are predicted to fall by around 5% – and the high cost of living has led the market to slow down, meaning reducing demand for houses and work for conveyancers.

While competing with other firms will be a challenge, some argue this is a welcome period of calm for conveyancers who have been overworked for the last two years.

This levelling out in demand has provided a period of “normality” for the sector and gives conveyancers the opportunity to focus on client experience, digital journey and improving processes before it ramps up again.

Our article on modernising the conveyancing process looks at how conveyancers can take their services to the next level by enhancing client experiences and streamlining processes.

3. Integrating legal software

Integrating law firm software and systems is not a new challenge, but it’s increasingly important as firms strive for increased profitability while improving client service and experience.

Many firms have disparate systems that don’t share data, which can lead to inefficiencies and problems, from manual data entry and poor data quality to cybersecurity and reduced automation.

To operate efficiently, firms could encourage more collaborative working between teams. The foundations of this stems from the systems being used.

Integrating legal accounts, customer relationship management (CRM), human resources (HR), case management and more creates a digital ecosystem that can better manage workload and client engagements.

We explore the opportunities that can be realised in our article: is fully integrated software better than separate software packages?

4. Building a positive remote culture

Talent attraction and retention in the legal sector will continue to be a significant challenge in 2024, particularly with the flexible working act changes in April.

Cost-of-living pressures also play a role, as legal professionals consider moving jobs to increase their salaries, and remote working allows for greater flexibility and availability of roles.

Remote working can create challenges in maintaining or building a positive culture and keeping staff engaged with the values of the firm.

There are many benefits to remote working, including a better work-life balance for staff, reduced office overheads and attracting a wider talent pool.

But being at home, often alone, means some people lose that sense of community, which makes working collaboratively with colleagues more difficult.

Some may even start to feel isolated, which can have a negative impact on wellbeing.

Looking at culture, there are opportunities for firms to foster a positive and productive remote working environment.

Firstly, communication within the firm, both internally and to clients, needs to establish norms to ensure everyone is clear.

Sharing best practices, response time and email protocols will prevent people getting too many messages, reduce interruptions and make communication easier.

HR teams can then focus on sharing content with staff which talks to the firm’s values, celebrates achievements and gathers feedback to improve their experience working from home.

The second opportunity is to leverage technology to support staff to work remotely with ease and securely.

Providing hardware – such as laptops, keyboards, mice and comfortable chairs – and appropriate software to assist communications, productivity and cybersecurity are key to making the move from the office seamless.

This is where browser-based or cloud-hosted case management solutions are worth their weight in gold!

At our Access All Areas virtual conference, we ran a CPD-accredited panel discussion with industry experts on how to attract and retain the best talent while building a positive culture, which provides tips and case studies to support your firm.

5. Driving new business

An age-old challenge for law firms that has continued prominence this year is how to drive new business and be more competitive.

With client’s sensitivity to price and more legal services being made available online, competition in the sector is growing and it’s difficult for firms to stand out.

It’s not always sustainable or appropriate to cut prices to be the cheapest. Firms need to consider other ways to differentiate themselves.

Another challenge is that solicitors are legally trained, rather than trained in sales or marketing, so may lack some of the skills required to engage prospects and follow up with potential opportunities.

There are some quick wins to help surface new opportunities.

One is to leverage an automated online quotation tool that allows prospects to receive an estimate anytime they want, while you capture contact information to follow-up.

Better still, if you can integrate the quotation tool with your case management system, details can be passed directly into a case file. This saves time, improving accuracy and makes it easier to follow up.

Other useful activities include:

• attending local community events to network and build your profile
• using marketing initiatives, such as social media and email marketing
• collating positive feedback from existing clients to evidence the value your firm provides

Explore our seven tips to market your firm, which provides advice to support your business development.