3.149     This chapter explores a range of quite diverse trends and perceptions concerning the development of a legal services market operating under conditions of considerable complexity.

3.150     It has sought to do two things: to identify those factors that will shape the size and distribution of the legal services sector, and to highlight those trends that may have an impact on the training required by the legal services sector.

The size and distribution of the sector

3.151     Viewed over the long term, the legal services sector has experienced a long period of steady growth, until the impact of the financial crisis began to be felt in 2008. The period since 2008 has been unstable in both economic growth and recruitment terms. As the Winmark Report (2012) concludes, the legal services market has entered a new phase. For many providers 2008-10 was about dealing with the immediate impact of recession; 2011-15 is much more about adaptation to a radically different environment.

3.152     The headline findings from the IER study present a mixed set of messages to the sector, and to the Review. Despite the depth of recession, there is no evidence historically or in the projections, taking the sector as a whole, of sustained negative growth. On that basis, the Law Society’s ‘Bleak House’ scenario may not appear to be the most likely outcome at this time, but there is little solid evidence on which we might rule out any of the other three.

3.153     The overall need for trainees will continue to be reasonably robust, fuelled by some growth but primarily by replacement demand, particularly in the commercial sphere. This overall picture is likely to disguise significant disparities beneath the surface. In the short term, diversification, market consolidation and inward investment through ABSs may all help sustain growth, but it is not possible to rule out that the market has already moved to a position where smaller numbers of trainees will become the norm, particularly in the private client sphere. Public funding cuts, commoditisation, outsourcing and technology could all play a part in shrinking demand for trainees. Continuing oversupply of LPC/BPTC graduates is likely also to have knock-on effects, including heightened competition in the traditionally non-graduate professions and paralegal pathways.

3.154     From the student perspective, competition generally for recruitment is likely to remain fierce for the remainder of the decade, possibly easing a little after 2018. For employers it is likely to remain a buyer’s market in the short-to-medium term, at least for those in the larger firms and in chambers generally, though inter-professional competition for those traditionally perceived to be the ‘best’ candidates is likely to continue to be strong, particularly in the commercial sphere.

3.155     The consequences of the decline in legal aid and changes to civil litigation funding will be felt across the professions; the question is, how deeply? Historically much of the Bar’s growth was supported by public funding, and there is a risk that, proportionately, the Bar will feel the greatest impact as legal aid continues to decline. Market consolidation and restructuring are likely to work for some of the larger legal businesses in the private client field, though size of itself may be no defence, as some recent high profile collapses indicate. To that extent, the future shape and scale of high street legal services remains uncertain.

3.156     The potential for further market stratification is likely to mean that the disparity of opportunities and rewards between the City and the high street will continue. The risk of advice deserts and, longer term, skills shortages must be taken seriously, particularly given the economic pressures faced by the NfPsector. The implications of this for the diversity of the traditional professions needs also to be considered (see further, Chapter 4).

3.157     The scale of replacement demand highlights the amount of experience and expertise that is lost routinely from the sector. Replacement opportunities to the end of the decade outnumber new jobs by a ratio of nearly 3:1. In the LETR context, this serves as a useful reminder of the importance of developing the skills of those who are moving into more senior roles, and assuring the right quality of starters now; as a solicitor from one City law firm observed:

If we make mistakes or we accept anything less than the very best now, again it won’t hurt us now, but in five, six, seven, certainly in 10 years time it will kill us.

Market trends and changing training needs

3.158     Indicative evidence has been gathered of some of the ways in which both new and conventional businesses are disrupting the traditional ways of working associated with particular titles or functions and, by opening up new roles, are creating opportunities for individuals to develop careers both vertically and laterally, bringing a broader range of competencies into play.

3.159     This is not to suggest that titles become irrelevant; they are likely to remain a feature for the foreseeable future, but it is increasingly likely that distinctions within the legal workforce will, in the future, reflect less the individual’s professional title, than their role in an organisation and, at least in the earlier stages of a career, the nature and level of supervision provided. This is already evident to some extent in the in-house and local/central government sectors. The extent to which regulation should move to formalise that, and develop perhaps a stronger focus on activity-based education and authorisation is an important question emerging from the work of this phase.

3.160     While the rise of ABSs may enable legal businesses to buy-in and reward additional specialist management and support functions, the assumption that new models will necessarily increase separation between technical legal and other – including managerial – roles, and therefore actually reduce the need for lawyers to have management or other complementary skills, remains largely unproven. The work highlighted in this chapter also points to the emergence of a number of new roles, and challenges for existing roles, created by the new regulatory and market environment. It particularly highlights the development of ‘triage’ functions and of narrow, paralegal, ‘technical’ specialisations. There are also some indications that new technologies and work processes are developing a need for the kind of hybrid functions proposed by Richard Susskind (2010): legal project managers, process analysts, risk managers, knowledge engineers, and so on. This adds both confirmation and a number of additional skills and knowledge gaps to the analysis begun in Chapter 2, with highlighted issues including:

  • additional emphasis on the importance of ethics and the need to consider enhancing both content and delivery of ethics education and training consequent on the development of OFR;
  • additional emphasis on client-facing and complementary skills, particularly for paralegal employees;
  • substantive needs to understand the new practice and regulatory environment, and the different roles and professional obligations that new forms of business organisation may entail;
  • some emerging evidence of the importance of developing a range of management competencies in the context of client relationship management, project management, and risk management, as well as the higher organisational management skills needed to provide leadership in a rapidly changing environment (this is developed further in discussions around CPD and continuing learning in the later chapters).

3.161     In relation to the structure of the market this chapter has highlighted the extent to which the trajectories of the corporate and private client spheres are continuing to diverge. This must bring into question the appropriateness of maintaining a ‘one size fits all’ training regime. The anticipated growth of multi-disciplinary practice, and the degree to which the LPC and BPTC are becoming, de facto, expensive paralegal training courses, also raise important challenges for the LETR. On the basis of these trends and developments, it is suggested that there are three issues that can be regarded as central emerging themes for the review:

  • the need to develop and redefine the notion of core legal competence;
  • the need to address the LSET implications of increased stratification in the legal services market;
  • the need to ensure that the LSET system is capable of responding flexibly and robustly to continuing uncertainty and a rapidly changing environment.

3.162     These insights will be taken forward into following chapters in order to define the nature of the issues the LETR needs to address, and begin identifying some potential solutions.