2020 State of the Legal Market in Europe: Opportunities for Firms Willing to Adapt and Invest
Law firms across Europe had just one major challenge to overcome earlier this year: determining how to succeed in the post-Brexit market. Of course, the COVID-19 pandemic soon topped their list of challenges.
To explore how European firms are addressing these twin pressures, Thomson Reuters examined extensive data from Sharplegal and Peer Monitor for the 2020 State of Legal Market in Europe Report. Acritas, part of Thomson Reuters, conducted telephone interviews with more than 2,000 senior legal decision makers worldwide as part of its annual Sharplegal survey, and the report also draws on nearly 600 interviews with chief legal officers and general counsel conducted across Europe as part of a wider Sharplegal study.
The research reveals two key client-side pressures European firms must address to stay competitive in this rapidly changing environment.
Fees: Pressure on fees from clients is a continual concern. But at the end of 2019, most corporations indicated they were focusing on increasing efficiency, which inevitably puts pressure on budgets. The scrutiny on budgets is among the factors exacerbated by the impact of the pandemic.
Increased Competition: New entrants in the European legal market – including international law firms headquartered in the US – are putting more client-side pressure on independent, domestically focused firms. But the biggest threat may be alternative legal service providers (ALSPs), which are disrupting the market with their technology expertise and innovative approaches to delivering legal services.
Despite these challenges, the report explores how firms willing to adapt and invest can find multiple growth opportunities. As businesses deal with new risks and regulations – in areas from sustainability to privacy – they encounter more pressure on their in-house legal teams. Internally, they are tasked with embracing new technology, collaborating more closely with other functions, providing more strategic guidance and strengthening their value-add to the business – all while safeguarding their business from risk.
These trends, alongside issues including COVID-19, Brexit, GDPR, cross-border transactions and climate change represent new demand from businesses for legal services. The European legal market remains very localized, but this new demand is something all firms should pay attention to.
Amidst this increased flow of work driven by booming markets and regulatory change, the report urges firms not to become complacent as new competitors are ready for more business too. Firms best positioned to grow their revenues are those willing to embrace new technology to improve how they deliver services, especially those that can offer clients cross-border expertise.