Legal jobs are already being lost to technology, with the figure climbing to tens of thousands over the next two decades as automation and the use of artificial intelligence (AI) take hold, according to the Law Society.
In the shorter term, the society also predicted that growth in the turnover of law firms over the next few years would be modest, with little or no ‘Brexit dividend’.
The forecasters estimated there could be 20% fewer legal jobs – 67,000 – by 2038 than there would have been if productivity continued at today’s rate, assuming that automation brought about an eventual doubling of productivity.
However, they predicted that jobs lost to automation would to some extent be offset by growing demand for legal services from elsewhere in the UK economy, meaning the total full-time equivalent job loss would be nearer 26,000.
The forecasts were produced by the society’s research unit, which based its predictive model on macroeconomic forecasts from the National Institute of Economic and Social Research and the IMF World Economic Outlook.
The unit said it was already seeing the adoption of new technologies by solicitors’ firms showing up in the results of recent annual surveys of the profession, with large firms more likely to be early adopters.
As well as functions carried out by paralegals and support staff being lost, it said, “we are also seeing functions previously carried out by qualified solicitors beginning to be replaced, with 15% of large firms in the 2015/16 survey reporting that this is happening in their firm, an increase from 3% in 2013/14”.
More immediately, the forecasters expected a modest increase in real turnover in the legal services sector in the near future – from 1.1% growth in 2017 to 2.7% in 2019 and by 2.8% in 2020 (totalling £30.8bn on 2010 prices). These figures were based on projections of tightening economic growth – especially in the important financial sector – and lower volumes of housing transactions.
Before the 2008 financial crash, growth averaged about 5% per year.
The modest expectations for growth were boosted by some causes for optimism: “We expect these factors to be offset, to some extent, by increased exports, and the potential for increased Brexit-related legal work.”
However, even the anticipated ‘Brexit dividend’ of extra work for law firms generated by leaving the EU was less than expected: firms asked by the Law Society self-estimated a boost in turnover of just 0.3-1% from 2017-2025, with the lion’s share of work predicted to go to large international law firms.
Law Society president Joe Egan said: “Our net export forecasts are the most sensitive of today’s data to Brexit negotiations. Today, our figures indicate a 13% increase in net exports of UK legal services this year, followed by a further 9% growth in 2018.
“We can thank a combination of increasing global demand for UK lawyers and a boost to international competitiveness from the depreciation of the pound for this anticipated growth.”
The forecasters said that although housing transactions accounted for only 4-6% of the total value of legal work, sharp changes in the number of transactions from year to year had an impact overall.
A big estimated drop from 925,000 transactions in 2016 to 850,00 in 2017 would have a significant effect on the total turnover of the sector as a whole.
They expected the volume of transactions would remain at that level for the next three years, and that housing affordability was unlikely to improve. The proposed ending of the help-to-buy equity loans scheme in 2020 could have a negative effect on transactions thereafter.