Five Legal Trends Expected to Take Center Stage in 2024

6 min read

Exploring the legal landscape for 2024, we delve into significant trends such as the increasing influence of generative AI, the adoption of alternative legal fees, the exploration of emerging markets, and various other noteworthy developments.

The legal industry is undergoing rapid transformation, navigating through challenges such as the cost-of-living crisis, a surge in demand for specialized knowledge, the emergence of alternative legal service providers (ALSPs), evolving client expectations, and dynamic shifts in practice areas. Despite these complexities, the legal sector has displayed remarkable adaptability and resilience in recent years.

In 2024, the legal landscape is poised to further evolve, with firms and practitioners demonstrating a commitment to embracing change. The industry is anticipated to integrate cutting-edge technologies, adopt innovative payment structures, venture into new markets, and more.

Firms that proactively embrace change and stay ahead of emerging trends are likely to thrive in the evolving legal landscape. Here, we delve into five key legal trends expected to shape the narrative in 2024.

The rise of generative artificial intelligence

Generative artificial intelligence (AI) platforms, such as ChatGPT, DALL·E, Jasper, and Soundraw, captured widespread attention in 2023, not only within the legal domain but across global industries. A recent report from LexisNexis, titled “Generative AI and the future of the legal profession,” sought to gauge the current awareness and application of AI in the legal sector. While the current adoption appeared modest, with only 36% of respondents acknowledging its use, the projected utilization is poised to be substantial.

In 2023, lawyers increasingly turned to generative AI for diverse applications, including generating briefs, documents, and content. The technology has proven instrumental in ideation, process improvement, and operational streamlining. Lawyers are leveraging AI for drafting, negotiating, and analyzing contracts, as well as expediting and enhancing legal research through reliable AI systems. Moreover, AI is being integrated into everyday tasks, including fundamental communication methods.

In essence, AI has initiated a transformative shift in the legal sector in 2023 and is anticipated to witness even greater adoption in 2024. The technology carries an air of inevitability, and legal professionals who overlook its potential advantages may find themselves trailing behind in the evolving landscape.

The acceptance of alternative legal fees

The billable hour, a long-standing billing method, has faced growing criticism from clients who argue that it fosters inefficiencies, delivers poor return on investment, encourages double billing, and creates perverse incentives. A recent report by LexisNexis titled “Calling time on the billable hour” delved into how clients are increasingly gravitating towards alternative fee arrangements (AFAs). Many platform law firms and alternative legal service providers (ALSPs) have embraced AFAs, with flat fees emerging as the most favored option. Under AFAs, clients and firms agree on prices before projects commence, offering flexibility through options like capped fees, fixed fees by phase, blended rates, and more. Clients often prefer AFAs for cost savings and a more accurate reflection of the work performed.

In 2024, the legal sector is poised to acknowledge and adopt AFAs. While initial acceptance may be met with some reluctance, the shift will be driven by the imperative to meet client expectations and compete with entities already offering AFAs.

Managing the decline in revenue

The LexisNexis GLP Index anticipates a 2% growth in demand for the legal services sector in 2024 compared to 2023. While this may appear positive, it represents a significant slowdown from the 6% growth observed in 2023. Several factors contribute to this deceleration, including geopolitical challenges impacting the professional services industry, macroeconomic uncertainties, and the lingering effects of the pandemic, coupled with regulatory complexities.

In the face of this slower growth, law firms may encounter revenue declines in 2024. To address this fiscal challenge, firms are compelled to explore innovative strategies such as leveraging AI and legal tech to reduce costs and enhance operational efficiency. Additionally, diversifying or expanding service offerings and embracing alternative fee arrangements (AFAs) to stimulate demand are avenues firms may consider in navigating this challenging landscape.

UK law firms may try to break the US market

Global law firms are experiencing growth in both size and number, and for UK firms, expanding into the US market is a logical progression toward becoming a global entity. The advantages of entering the US market are evident, including brand expansion, establishing a global client base, a presence in key financial and business centers, and meeting the expectations of multinational clients. However, breaking into the US market has historically been challenging for UK firms.

Signs of change are emerging as Magic Circle firm Allen & Overy (A&O) and US giant Shearman & Sterling have merged, adopting the name Allen Overy Shearman Sterling, or A&O Shearman. This merged entity comprises nearly 4000 lawyers, 800 partners, 48 offices in 29 countries, and a combined revenue of $3.4 billion.

The difficulties faced by Magic Circle firms in penetrating the US market have been longstanding. The establishment of A&O Shearman presents a notable opportunity, sparking increased interest among UK firms. Thus, 2024 is poised to witness more attempts by UK firms to make inroads into the US market, either through mergers and acquisitions or by forming strategic partnerships with established US firms. The coming year may witness greater success for these endeavors.

Smaller law firms look to organic ways to grow

Law firms face significant challenges in achieving growth, especially during periods of economic uncertainty where revenue drops and new entrants disrupt the legal market. Despite these challenges, a recent LexisNexis report indicates that law firms continue to harbor ambitious growth goals. Notably, there is a shift in focus toward organic growth strategies, distinguishing this approach from traditional methods.

The report reveals that smaller firms are inclined to pursue organic growth by strengthening their marketing and business development functions. Respondents emphasize holistic marketing strategies, leveraging online platforms, social media, and public relations to disseminate informative, engaging, and valuable content. Many firms are concentrating on building their brand, seeking referrals, networking, optimizing their online presence, creating thought-leadership content, enhancing SEO, refining communication strategies, and overall improving organic acquisition methods.

Additionally, the emphasis extends to client retention, with smaller firms prioritizing the retention of clients. A significant majority (79%) of small firms express concerns about client retention, underscoring the importance of maintaining existing client relationships alongside efforts for new client acquisition.

Indeed, the landscape of client expectations is evolving rapidly, and law firms must adapt to meet these changing demands. While acquisition efforts bring clients to the firm, the key to sustained growth lies in fulfilling client expectations and providing effective solutions. In 2024, the legal industry is poised to witness a significant trend focusing on organic methods for both client acquisition and retention.

Smaller firms are expected to prioritize solutions that align with shifting client expectations, including faster and more efficient legal services, innovative billing models, enhanced communication methods, and overall responsiveness to client needs. This client-centric approach recognizes that meeting and exceeding client expectations is crucial not only for initial acquisition but also for fostering long-term relationships and ensuring client retention. This trend emphasizes the importance of adapting to the evolving legal landscape to drive growth through client satisfaction and loyalty.

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