Those are among the key findings of the State of the UK Legal Market 2021 report, published today by the Thomson Reuters Institute. In 2020, the Covid-19 pandemic led to firms switching to fully remote working environments, dealing with courthouse closures or restrictions, and adjusting to sudden shifts in client priorities. In addition, UK firms and corporates had to deal with the implementation of Brexit at year-end.

Now, firms and corporations are leveraging the disruptions as opportunities to re-evaluate how the evolving legal needs in the market can best be met. Demand for cross-border legal advice has increased since 2017, despite the economic uncertainty in the lead-up to Brexit, with 80 per cent of UK corporates actively looking for international legal support. Last year, 42 per cent of UK corporate legal spend was dedicated to international legal work – significantly higher than the global average of 35 per cent. Nearly twice as many UK corporates (38 per cent) are planning to increase their international legal spend compared with those planning decreases (21 per cent).

Amidst these changes, clients are increasingly turning to trusted, long-term relationships for their legal counsel as they look beyond short-term transactional goals. The report found that strong client-firm relationships are increasingly important, especially when a firm invests the time to thoroughly understand a client’s operations and business strategies, and views the relationship as more of a business partnership. Nearly half of corporates (47 per cent) state that the main way firms can bring more value is to commit to a longer-term partnership.

Corporates remain under budgetary pressures and are looking for firms with innovative, technology-driven legal service delivery models that can provide greater flexibility and value. Firms are increasingly adopting such models in response to both competition from alternative legal service providers (ALSPs) – non-law firm providers of legal services such as the Big Four accounting firms – as well as a desire by lawyers to continue aspects of flexible working arrangements.

An overwhelming 86 per cent of lawyers surveyed want to retain options such as remote working and flexible workdays – and many would consider leaving their firm otherwise.

The changing dynamics are proving to be a catalyst for greater investment in technology and knowledge-sharing platforms by firms. Three-quarters (74 per cent) of senior UK partners believe their firms should be investing more in technology, whilst 89 per cent of corporates believe their firms should be looking to explore more innovative ways to use technology.

“Despite dealing with Covid-19 and Brexit, the environment for UK law firms is reasonably healthy,” said Lucinda Case, head of Legal Professionals Europe, Thomson Reuters.

“Law firms, for the most part, successfully adjusted to work-from-home and other pandemic-related disruptions. The complexities of Brexit will mean greater demand for international legal work. However, clients’ concerns over pricing suggest that law firms will need to show they are providing strong value and investing in their relationship with the client.”

Download the report here