Outlook for 2022: Four legal trends to look out for this year

Virtual working, costs, client expectations and back end transformations – Mike Stevenson, managing director at Iceberg, explores the defining trends for law firms in 2022.

The last couple of years have certainly been transformative for the legal sector – from digital transformation, changes in client demand and expectations to a larger focus on wellbeing. The pandemic has precipitated significant change within the industry.

Here are some of the key trends legal professionals should have on their radar this year.

1. Working from home – what does this look like post pandemic?

With the government’s working from home guidance now lifted, the question of office working will be top of the agenda for many law firms as we begin to emerge from the pandemic.

Planning for the next few months will involve a careful balancing act. Managers will have to ask themselves a range of questions – do employees expect flexible working? What does a permanent hybrid working model look like for this firm? How can we implement this as a permanent solution without impacting productivity and training opportunities? What are the expectations of our clients? Do we have the digital resources required to implement this effectively?

With talent sourcing and staff retention being ongoing challenges in the sector, it’s crucial for firms to listen to the preferences of their employees and act accordingly.

2. Overhead costs and expenses

Although premises costs will have gone down for the firms that have downsized their office spaces during the pandemic, overheads promise to be high in 2022 for most.

A number of factors are driving this – resource challenges have driven up the cost of wages, and many firms will have had to invest in upgrading IT infrastructure in order to navigate a more hybrid working model. Many legal businesses will have also made use of government initiatives such as the furlough scheme, and will have secured loans through government schemes in order to ensure high liquidity levels during the most challenging parts of lockdown.

As we enter 2022, repayments will be starting on those loans, while many businesses will also still be getting used to managing cashflow without the support of the furlough scheme. All this at a time of year where client work can be quieter than usual.

Professional indemnity insurance (PII), which many firms will be renewing next month, continues to pose a significant, and increasing, cost for legal firms, most of which will have recently made expensive partners’ and members’ tax payments by the January deadline.

It’s important for managers to plan ahead and to consider how short-term financing solutions can

help you navigate shorter-term expenses, such as partners’ tax and PII premiums. As we continue to navigate a period of transition and uncertainty, short-term financing can be an invaluable resource to ensure stability and consistent cashflow.

3. Client-led communication and relationships

There is no doubt that clients’ worlds also changed during the pandemic, with many coming out with an evolved mindset of how they want to work with lawyers.

How clients view digital working and collaboration over video calls will have evolved as a result of the pandemic, with many clients also spending much less time in offices and more at home. Legal managers must take this into account when deciding on a permanent post-pandemic working model for their firm.

What do your clients want? Many clients will want flexibility and a ‘best of both worlds’ scenario – the opportunity to still commit to valuable face time while also strong enough digital capabilities to take a portion of the work and development of the relationship online.

4. Digital transformation and automation

Technology and automation are constantly evolving and investing in tech offers astounding value for legal firms.

As a first step, legal managers should explore what tasks and processes can be automated. Automated tasks free up time for lawyers to dedicate to client work or training, which means automation both reduces expenses and boosts productivity. Investing in your firm’s digital offering will also be key in streamlining data processes, filing, and storing – thereby improving a business’ administrative processes.