Oil, EU exit and diversity will dominate law sector in 2017
Firms prepare for yet more uncertainty next year
THE impact of the downturn in the oil and gas industry will continue to be felt in 2017, despite some signs that the worst is over for the sector, according to Ledingham Chalmers chairman Jennifer Young.
However, Ms Young, who leads her firm from UK oil capital Aberdeen, said the impact of the energy industry downturn will “continue to be felt not just in the North East, but nationwide”.
“While we don’t expect a significant upturn in the sector over the next 12 months, there are signs of a steadying in the market, and perhaps even some glimmers of optimism,” she added.
“Taking this into account, there’s no doubt the effect of certain nationwide legal, policy and cost challenges will be felt disproportionately badly in and around the Granite City.
“With an implementation date of 2017, the business rate revaluation, for example, is seen as coming at the worst possible time for the local economy.”
Despite this, Ms Young said the outlook for the legal sector is reasonably good, with businesses “getting on with it” and going ahead with planned deals despite “widespread political and economic uncertainty”.
This is a sentiment shared by Morton Fraser chief executive Chris Harte, who said that while businesses always claim not to like uncertainty “in reality we are never without it”.
“Admittedly, the degree of uncertainty may be more or less acute from time to time, and when looking forward to 2017 most of us are expecting some choppier waters ahead,” he said.
“However, I’m not convinced that it’s any more challenging than the uncertainty which Scottish businesses faced when looking forward into 2009 or 2014.”
For Brodies managing partner Bill Drummond, a key factor in bringing about stability in 2017 will be the way in which the UK Government handles negotiations over Britain’s exit from the EU.
“The first thing on my 2017 wish-list has to be a sustained improvement in confidence right across the business community, leading to investment activity with which the legal sector can get engaged,” he said.
“This can be significantly helped by the Brexit negotiators striking a constructive and collaborative tone in their dealings with the EU, backed by some pragmatism in reaching agreement.
“I’m bound to say that we must not see one or another sector of importance to the Scottish economy – including the Scottish legal sector – being prejudiced or overlooked in order somehow to secure advantage for industries that are able to lobby effectively in Westminster, as investment activity across the board is vital to the long-term health of our diverse economy of just 5.3 million citizens.
“Making crystal clear that EU citizens working in Scotland – and indeed across the UK – will be allowed to continue to do so on the same basis as at present would be a good start.”
Away from the political scene, Harper Macleod chief executive Martin Darroch said the legal sector will experience even greater pressure on fees in 2017, as firms continue to compete for share in an ever-crowded marketplace.
“We believe a key feature of legal services provision in 2017 will be much more competitive market rates for legal services,” he said.
“Our primary target in the year ahead is the over-inflated fees that are sought and achieved by some of our competitors.
“If the value of the Scottish legal market itself isn’t growing, the only sustainable way forward is to increase your share of that market.”
Competition from other firms is one thing, but Mr Harte at Morton Fraser said 2017 could also be the year that technology finally starts to take over some of the roles traditionally carried out by qualified lawyers.
“The impact of technological change and the challenges around cyber-security will occupy the minds of most business leaders through 2017 and beyond,” he said.
“For a long number of years people have been predicting how technology will recast the professions and 2017 may yet prove to be something of a tipping point.
“We’re already seeing examples of how artificial intelligence can be applied to what we do as lawyers and software which was at one point revolutionary may become mainstream sooner than we think.”
Both Mr Darroch at Harper Macleod and Mr Drummond at Brodies said that next year should see the legal sector gets to grips with the diversity and inclusion agenda, as businesses place ever-greater demands on their advisers to reflect the communities they represent.
“Equality, diversity and social responsibility will continue to grow in importance,” Mr Darroch said.
“People want to partner with good businesses, in every sense of the word, and law firms which don’t take this seriously will find themselves out of step with their clients.”
Mr Drummond said he would like to see Scottish firms take a “sense check” over the question of diversity in the legal sector.
“Lots of firms and other organisations – such as PRIME, of which a number of Scottish firms are members, our own Law Society and the universities – work very hard indeed to ensure that a career in the law should be seen as being open to all, and can be highly rewarding from intellectual, social and financial perspectives,” he said.
“We absolutely want our top students, from all backgrounds, to be excited by the prospect of joining a diverse and dynamic business sector that really delivers for the economy.”
‘‘ There are signs of a steadying in the market, and perhaps even some glimmers of optimism